Document:

AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                    TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP

THE  LIMITED  PARTNERSHIP  INTERESTS  REPRESENTED  BY THIS  LIMITED  PARTNERSHIP
AGREEMENT HAVE NOT BEEN REGISTERED  WITH THE SECURITIES AND EXCHANGE  COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR REGISTERED OR QUALIFIED  UNDER
ANY STATE  SECURITIES LAWS OR ACTS IN RELIANCE UPON EXEMPTIONS  UNDER SUCH LAWS.
IN ADDITION,  NO TRANSFERS OF LIMITED PARTNERSHIP  INTERESTS MAY BE MADE WITHOUT
COMPLIANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE 16 HEREIN.

<PAGE>

                                    AGREEMENT

                             OF LIMITED PARTNERSHIP

                                       OF

                    TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP

                                TABLE OF CONTENTS

         1.       FORMATION..................................................1
                  ---------

         2.       NAME.......................................................1
                  ----

         3.       OFFICES....................................................1
                  -------

         4.       PURPOSE....................................................1
                  -------

         5.       TERM.......................................................2
                  ----

         6.       CERTAIN DEFINED TERMS......................................2
                  ---------------------

         7.       CAPITAL CONTRIBUTIONS AND DILUTION OFFERINGS...............6
                  --------------------------------------------

         8.       CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF CERTAIN LIMITED
                  ----------------------------------------------------------
                  PARTNERS...................................................6
                  --------

         9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GENERAL
                  --------------------------------------------------------
                  PARTNER....................................................7
                  -------

         10.      ADMISSION OF LIMITED PARTNERS..............................8
                  -----------------------------

         11.      CAPITAL ACCOUNTS...........................................8
                  ----------------

         12.      ALLOCATIONS................................................9
                  -----------

         13.      DISTRIBUTIONS.............................................13
                  -------------

         l4.      RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................13
                  ------------------------------------------

         15.      LIMITED LIABILITY.........................................15
                  -----------------

         16.      TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS...........16
                  -----------------------------------------------

                                                         i

<PAGE>

         17.      OPTIONAL PURCHASE OF LIMITED PARTNERSHIP INTERESTS ON
                  -----------------------------------------------------
                  CERTAIN EVENTS............................................20
                  --------------

         18.      SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL PARTNER'S
                  -----------------------------------------------------------
                  INTEREST..................................................24
                  --------

         19.      TERMINATION OF THE SERVICES OF THE GENERAL PARTNER........25
                  --------------------------------------------------

         20.      MANAGEMENT AND OPERATION OF BUSINESS......................26
                  ------------------------------------

         21.      RESERVES..................................................29
                  --------

         22.      INDEMNIFICATION AND EXCULPATION OF THE GENERAL PARTNER
                  ------------------------------------------------------
                   .........................................................29

         23.      DISSOLUTION OF THE PARTNERSHIP............................29
                  ------------------------------

         24.      DISTRIBUTION UPON DISSOLUTION.............................31
                  -----------------------------

         25.      BOOKS OF ACCOUNT, RECORDS AND REPORTS.....................31
                  -------------------------------------

         26.      NOTICES...................................................32
                  -------

         27.      AMENDMENTS................................................33
                  ----------

         28.      LIMITATIONS ON AMENDMENTS.................................33
                  -------------------------

         29.      MEETINGS, CONSENTS AND VOTING.............................33
                  -----------------------------

         30.      SUBMISSIONS TO THE LIMITED PARTNERS.......................34
                  -----------------------------------

         31.      ADDITIONAL DOCUMENTS......................................34
                  --------------------

         32.      SURVIVAL OF RIGHTS........................................34
                  ------------------

         33.      INTERPRETATION AND GOVERNING LAW..........................34
                  --------------------------------

         34.      SEVERABILITY..............................................34
                  ------------

         35.      AGREEMENT IN COUNTERPARTS.................................35
                  -------------------------

         36.      THIRD PARTIES.............................................35
                  -------------

                                                        ii

<PAGE>

         37.      POWER OF ATTORNEY.........................................35
                  -----------------

         38.      ARBITRATION...............................................36
                  -----------

         39.      CREDITORS.................................................36
                  ---------

                                    SCHEDULES

Schedule A  -  Schedule of Partnership Interests

                                                        iii

<PAGE>

                                    AGREEMENT

                             OF LIMITED PARTNERSHIP

                                       OF

                    TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP

                  THIS AGREEMENT OF LIMITED  PARTNERSHIP  (the  "Agreement")  is
made as of December 31,  1999,  by and among  PROSTATHERAPIES,  INC., a Delaware
corporation (the "General  Partner"),  and persons listed on Schedule A attached
hereto as the Limited Partners.

                  1.       FORMATION.
                           ---------

                  The  Partnership  was  formed  pursuant  to the  filing in the
Office  of the  Secretary  of State of Texas on or about  August  11,  1997 of a
Certificate of Limited Partnership in accordance with the provisions of the Act.

                  2.       NAME.
                           ----

     2.1  The  name  of  the  Partnership  is  "Texas  I  Prostatherapy  Limited
Partnership."

                  2.2 The  Partnership  business  shall be conducted  under such
names as the General  Partner may from time to time deem necessary or advisable,
provided that appropriate amendments to this Agreement and all necessary filings
under  applicable  assumed  or  fictitious  name  statutes  or the Act are first
obtained.

                  3.       OFFICES.
                           -------

                  3.1 The initial  principal office of the Partnership  shall be
at 1301 Capital of Texas Highway,  Suite C-300,  Austin, Texas 78746, or at such
other place as the General  Partner may, from time to time,  designate by notice
to the Limited Partners.

                  3.2 The Partnership  may have such  additional  offices as the
General Partner may, from time to time, deem necessary or advisable.

                  4.       PURPOSE.
                           -------

                  The purpose and business of the  Partnership  shall be: (i) to
acquire and operate one or more  Prostatron(R)  Mobile Systems for the treatment
of BPH  primarily  in the Service  Area or in other  location(s)  as the General
Partner may determine,  in its sole  discretion,  to be in the best interests of
the Partnership;  (ii) to acquire and operate in the future any other urological
device(s)  or  equipment,  provided  that  such  equipment  as of  the  date  of
acquisition by the  Partnership  has received FDA premarket  approval;  (iii) to
acquire an interest in any business entity, including,

                                                        -1-

<PAGE>

without  limitation,  a  limited  partnership,   limited  liability  company  or
corporation,  that engages in any business activity described in this Article 4;
and (iv) to  engage  in any and all  activities  incidental  or  related  to the
foregoing, upon and subject to the terms and conditions of this Agreement.

                  5.       TERM.
                           ----

                  The Partnership  shall terminate on December 31, 2047,  unless
sooner terminated as herein provided.

                  6.       CERTAIN DEFINED TERMS.
                           ---------------------

                  Certain terms used in this Agreement  shall have the following
meanings:

     Act. The Act means the Texas Revised  Limited  Partnership  Act, as then in
effect.

                  Affiliate.  An  Affiliate  is  (i)  any  person,  partnership,
corporation, association or other legal entity ("person") directly or indirectly
controlling, controlled by or under common control with another person; (ii) any
person owning or controlling 10% or more of the  outstanding  voting interest of
such other person;  (iii) any officer,  director or partner of such person;  and
(iv) if such other  person is an officer,  director  or partner,  any entity for
which such person acts in such capacity.

     Agreement.  This  Agreement  of  Limited  Partnership,  as the  same may be
amended from time to time.

                  BHP.  Benign prostatic hyperplasia.

     Capital Account.  The Partnership  capital account of a Partner as computed
pursuant to Article 11 of this Agreement.

                  Capital  Contributions.  All capital  contributions  made by a
Partner or his or her  predecessor  in  interest  which shall  include,  without
limitation, contributions made pursuant to Article 7 of this Agreement.

     Capital  Transaction.  Any transaction which, were it to generate proceeds,
would produce Partnership Sales Proceeds or Partnership Refinancing Proceeds.

     Code.  The Internal  Revenue  Code of 1986,  as amended,  or  corresponding
provisions of subsequent, superseding revenue laws.

                  Dilution  Offering.   As  provided  in  Article  7.4  of  this
Agreement,  the future offering of additional limited  partnership  interests in
the  Partnership  as  determined  by the General  Partner.  Except as  otherwise
provided in Article 7.4, any successful  Dilution Offering will  proportionately
reduce the Percentage Interests of the then current Partners in the Partnership.

                                                        -2-

<PAGE>

     Domestic Proceeding. Any divorce, annulment, separation or similar domestic
proceeding between a married couple.

                  Equipment.   The  equipment  used  in  the  operation  of  the
Prostatron(R)  Mobile System,  including the mobile coach, the Prostatron(R) and
miscellaneous  medical  equipment  and  supplies,  and  any  similar  additional
equipment acquired by the Partnership in the future.

                  FDA.  The United States Food and Drug Administration.

     General Partner.  The general partner of the Partnership,  Prostatherapies,
Inc., a Delaware corporation.

     Initial  Limited  Partner.  James Cochran,  M.D., a resident of Texas.  The
Initial  Limited  Partner is to be the only limited  partner of the  Partnership
until such time as the new Limited Partners are admitted to the Partnership,  at
which time the Initial Limited Partner shall withdraw from the Partnership.

                  Limited Partners.  The Limited Partners are those investors in
the Units  admitted  to the  Partnership  and any person  admitted  as a Limited
Partner in accordance with the provisions of this Agreement.

     Losses.  The net loss (including Net Losses from Capital  Transactions)  of
the  Partnership  for each Year of the  Partnership  as  determined  for federal
income tax purposes.

                  Majority  in Interest  of the  Limited  Partners.  The Limited
Partners who hold more than 50% of the Percentage  Interests in the  Partnership
held by the Limited Partners.

     Memorandum.   The  Confidential   Private   Placement   Memorandum  of  the
Partnership dated June 22, 1999, as amended or as supplemented.

                  Net Gains from Capital Transactions. The gains realized by the
Partnership  as a result of or upon any sale,  exchange,  condemnation  or other
disposition of the capital assets of the Partnership (which assets shall include
Code Section 1231 assets) or as a result of or upon the damage or destruction of
such capital assets.

                  Net Losses from Capital  Transactions.  The losses realized by
the Partnership as a result of or upon any sale, exchange, condemnation or other
disposition of the capital assets of the  Partnership  (which shall include Code
Section 1231 assets) or as a result of or upon the damage or destruction of such
capital assets.

     Offering.  The offer to potential  investors  of 320 Units  pursuant to the
Memorandum.

                                                        -3-

<PAGE>

     Partners. The General Partner and the Limited Partners, collectively, where
no distinction is required by the context in which the term is used herein.

     Partnership.  Texas I Prostatherapy  Limited  Partnership,  a Texas limited
partnership.

                  Partnership Cash Flow. For the applicable  period, the excess,
if any,  of (A) the sum of (i) all  gross  receipts  from  any  source  for such
period,  other than from  Partnership  loans,  Capital  Transactions and Capital
Contributions,  and (ii) any funds released by the  Partnership  from previously
established  reserves,  over  (B) the sum of (i) all cash  expenses  paid by the
Partnership  for such  period;  (ii) the amount of all  payments of principal on
loans to the Partnership;  (iii) capital  expenditures of the  Partnership;  and
(iv) such  reasonable  reserves as the General  Partner shall deem  necessary or
prudent to set aside for future repairs,  improvements or equipment  replacement
or additions,  or to meet working capital requirements or foreseen or unforeseen
future liabilities and contingencies of the Partnership; provided, however, that
the  amounts  referred  to in (B)(i),  (ii) and (iii)  above shall be taken into
account  only to the extent not funded by Capital  Contributions,  loans or paid
out of previously  established reserves.  Such term shall also include all other
funds deemed  available for  distribution  and designated as  "Partnership  Cash
Flow" by the General Partner.

     Partnership  Interest.  The  interest  of a Partner in the  Partnership  as
defined by the Act and this Agreement.

                  Partnership  Refinancing Proceeds.  The cash realized from the
refinancing of Partnership assets after retirement of any secured loans and less
(i) payment of all expenses  relating to the transaction and (ii)  establishment
of such  reasonable  reserves as the General  Partner  shall deem  necessary  or
prudent to set aside for future repairs,  improvements, or equipment replacement
or additions,  or to meet working capital requirements or foreseen or unforeseen
future liabilities or contingencies of the Partnership.

                  Partnership  Sales Proceeds.  The cash realized from the sale,
exchange,  casualty  or other  disposition  of all or a portion  of  Partnership
assets after the retirement of all secured loans and less (i) the payment of all
expenses  related to the transaction and (ii)  establishment  of such reasonable
reserves as the General Partner shall deem necessary or prudent to set aside for
future repairs,  improvements, or equipment replacement or additions, or to meet
working  capital  requirements or foreseen or unforeseen  future  liabilities or
contingencies of the Partnership.

                  Percentage  Interest.  The  interest  of each  Partner  in the
Partnership,  to be  determined  initially  in the case of a Limited  Partner by
reference to his or her Unit ownership based upon the Limited  Partners  holding
an aggregate 80% Percentage Interest in the Partnership,  with each initial Unit
sold representing an initial 0.25% interest.  The General Partner will initially
own a 20%  Percentage  Interest  in  the  Partnership.  A  Partner's  Percentage
Interest may be reduced by a future Dilution Offering.  The Partners' Percentage
Interests in the  Partnership as of the date hereof are as set forth in Schedule
A attached hereto. Any future adjustments in the Partners' Percentage Interests,
due to  future  Dilution  Offerings  or  otherwise,  will also be  reflected  by
amendments to Schedule A.

                                                        -4-

<PAGE>

                  Pro  Rata  Basis.   In   connection   with  an  allocation  or
distribution,  an allocation  or  distribution  in proportion to the  respective
Percentage Interests of the class of Partners to which reference is made.

     Profit. The net income of the Partnership (including Net Gains from Capital
Transactions)  for each Year of the Partnership as determined for federal income
tax purposes.

                  Prostatron(R).     The    Prostatron(R)    Praktis(R)    Model
transurethral  microwave  thermotherapy  device  for  treatment  of BPH which is
manufactured by EDAP Technomed, Inc.. The Prostratron(R) will be acquired by the
Partnership with the proceeds of this Offering and the General Partner's initial
cash contributions upon the successful closing of this Offering.

     Prostatron(R)Mobile  System.  The  mobile  coach  with  the  installed  and
operational Prostatron(R)and ultrasound system.

     Sales Agency  Agreement.  The sales agency agreement  through which MedTech
Investments,  Inc.,  an  Affiliate  of the General  Partner and a  broker-dealer
company  registered with the Securities and Exchange  commission and a member of
the National Association of Securities Dealers,  Inc. shall offer and sell up to
320 Units pursuant to the Memorandum.

     Sales  Commission.  The $75 sales  commission paid to MedTech  Investments,
Inc. for each Unit sold.

                  Service.  The Internal Revenue Service.

                  Service  Area.  The  geographic  region  in which  Partnership
operations  are expected to be conducted and which is  anticipated to consist of
various  regions in the State of Texas.  The General Partner has sole discretion
to expand the service area.

                  TUMT.  Transurethral microwave thermotherapy.

     Units. The 320 equal limited partner  interests in the Partnership  offered
pursuant to the Memorandum for a price per Unit of $1,875 in cash.

     Year. An annual accounting period ending on December 31 of each year during
the term of the Partnership.

                  7.       CAPITAL CONTRIBUTIONS AND DILUTION OFFERINGS.
                           --------------------------------------------

                  7.1  General  Partner  Contribution.  On or before the date of
this  Agreement,  the  General  Partner  will  contribute  to the capital of the
Partnership  cash in the amount  equal to 20% (up to $150,000) of the total cash
contributed to the  Partnership by the Partners in the Offering made pursuant to
the Memorandum.

                                                        -5-

<PAGE>

                  7.2 Limited Partner Contribution.  Each Limited Partner hereby
agrees to contribute and shall  contribute to the capital of the  Partnership on
the date of his or her  admission to the  Partnership  the cash amount set forth
opposite his or her name on Schedule A attached hereto.

     7.3 No Interest.  Except as otherwise provided herein, no interest shall be
paid on any contribution to the capital of the Partnership.

                  7.4 Dilution  Offerings.  If the General Partner,  in its sole
discretion,  determines that it is in the best interest of the Partnership,  the
General Partner may, from time to time, offer, sell and issue, for and on behalf
of the Partnership,  additional limited partnership interests in the Partnership
(a  "Dilution  Offering")  to  investors  who are not already  Limited  Partners
("Qualified  Investors").  The primary purpose of any Dilution Offering would be
to raise additional capital for any legitimate  Partnership purpose as set forth
in Article 4. Any limited partnership  interests offered by the Partnership in a
Dilution  Offering  shall  be sold in the  manner  and  according  to the  terms
prescribed in the sole  discretion of the General  Partner;  provided,  however,
that any additional limited partnership interests offered in a Dilution Offering
will be sold for a price no lower than the highest price for which proportionate
limited  partnership  interests in the Partnership  have been previously sold by
the Partnership unless otherwise determined by a vote of the General Partner and
a Majority in Interest of the Limited  Partners.  Notwithstanding  the above, in
the event of a Dilution  Offering,  the General  Partner may elect,  in its sole
discretion,   to  prevent   dilution  of  its  Percentage   Interest  by  either
contributing  additional  capital to the  Partnership  or purchasing  additional
limited partnership  interests in any Dilution Offering.  Limited Partners shall
have no right to purchase  additional  limited partner interests in any Dilution
Offering or to make additional capital contributions or take any other action to
prevent dilution of their Percentage  Interest.  Any sale of additional  limited
partnership  interests  will  result  in  the  proportionate   dilution  of  the
Percentage Interests of the existing Partners.  Any investor acquiring a limited
partnership interest in a Dilution Offering shall agree to be bound by the terms
of this Agreement,  and shall be automatically  admitted as a Limited Partner of
the Partnership.  Any adjustment in the Partners' Percentage Interests resulting
from a  Dilution  Offering  shall be set forth on an  amended  Schedule  A to be
attached hereto.

                  8.       CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF CERTAIN
                           --------------------------------------------------
                           LIMITED PARTNERS.
                           ----------------

                  The  obligations  of  any  Limited  Partners  acquiring  their
Partnership  Interests  in the  Offering  or a  Dilution  Offering  to make cash
Capital   Contributions   hereunder  are  subject  to  the  condition  that  the
representations, warranties, agreements and covenants of the General Partner set
forth in Article 9 of this  Agreement  are and shall be true and correct or have
been and will have been complied with in all material  respects on the date such
Capital  Contributions  are  required to be made,  except to the extent that any
such representation or warranty expressly pertains to an earlier date.

                                                        -6-

<PAGE>

                  9.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
                           ------------------------------------------------
                           GENERAL PARTNER.
                           ---------------

     9.1 The  General  Partner  hereby  represents  and  warrants to the Limited
Partners that:

     (a) The Partnership is a limited  partnership formed in accordance with and
validly  existing  under the Act and the other  applicable  laws of the State of
Texas;

                           (b) The interests in the  Partnership  of the Limited
         Partners will have been duly  authorized or created and validly  issued
         and the Limited Partners shall have no personal liability to contribute
         money  to  the  Partnership   other  than  the  amounts  agreed  to  be
         contributed  by them in the  manner  and on the terms set forth in this
         Agreement,  subject,  however,  to such  limitations  as may be imposed
         under the Act;

                           (c)  Except  as  disclosed  in  the   Memorandum   or
         documentation  prepared  in  connection  with a Dilution  Offering,  no
         material breach or default adverse to the Partnership  exists under the
         terms of any other material agreement affecting the Partnership; and

               (d) The  General  Partner  is a Delaware  corporation  formed and
          existing under the laws of the State of Delaware.

          9.2 The General Partner hereby covenants to the Limited Partners that:

          (a) It will at all times act in a fiduciary manner with respect to the
          Partnership and the Limited Partners;

          (b) Except as  provided  in Article  18, it will serve as the  General
          Partner of the Partnership until the Partnership is terminated without
          reconstitution; and

                           (c) It will cause the  Partnership  to carry adequate
         public  liability,  property damage and other insurance as is customary
         in the business to be engaged in by the Partnership.

                  10.      ADMISSION OF LIMITED PARTNERS.
                           -----------------------------

                  The  General  Partner may permit the offer and sale of limited
partnership  interests on the terms and conditions provided in the Memorandum or
future Dilution Offerings and may admit

                                                        -7-

<PAGE>

persons  subscribing for interests as Limited Partners in the Partnership on the
terms and conditions set forth in this Article 10.

                           (a) The General  Partner  shall have  approved of the
         admission of said person in writing on such terms and conditions as the
         General Partner shall determine;

                           (b) Said person shall have executed such documents or
         instruments  as the General  Partner may deem necessary or desirable to
         effect his or her admission as a Limited Partner;

               (c)  Said person shall have accepted and adopted all of the terms
                    and provisions of this Agreement, as then amended;

                           (d) Said person (if a  corporation)  shall deliver to
         the General  Partner a certified  copy of a resolution  of its Board of
         Directors  authorizing  it to become a Limited  Partner under the terms
         and conditions of this Agreement; and

                           (e) Said person, upon request by the General Partner,
         shall pay such  reasonable  expenses as may be  incurred in  connection
         with its admission as a Limited Partner.

                  11.      CAPITAL ACCOUNTS.
                           ----------------

                  A Capital  Account shall be  established  for each Partner and
shall at all times be determined  and  maintained  in accordance  with the Final
Treasury  Regulations  under  Section  704(b)  of the  Code,  as the same may be
amended.  A Partner  shall not be entitled  to  withdraw  any part of his or her
Capital Account or to receive any distribution  from the Partnership,  except as
provided in Articles 13 and 24.

               (a) Each Partners' Capital Account shall be increased by:

               (i) The amount of his or her  Capital  Contribution  pursuant  to
          Article 7; and

               (ii) The amount of Profits  allocated  to him or her  pursuant to
          Article 12; and

                                    (iii)   The   Partner's   pro   rata   share
                  (determined  in the same  manner  as such  Partner's  share of
                  Profits and Losses allocated pursuant to Article 12 hereof) of
                  any income or gain exempt from tax.

               (b) Each Partner's Capital Account shall be decreased by:

                                                        -8-

<PAGE>

               (i) The  amount of Losses  allocated  to him or her  pursuant  to
          Article 12; and

                                    (ii) The  amount of  Partnership  Cash Flow,
                  Partnership   Sales  Proceeds  and   Partnership   Refinancing
                  Proceeds distributed to him or her pursuant to Article 13; and

                                    (iii) The  Partner's  pro rata  share of any
                  other expenditures of the Partnership which are not deductible
                  in computing  Partnership  Profits or Losses and which are not
                  added to the tax basis of any Partnership property, including,
                  without   limitation,   expenditures   described   in  Section
                  705(a)(2)(B) of the Code. The Partner's pro rata share of such
                  expenditures  shall be  determined  in the same manner as such
                  Partner's  share of Profits and Losses  allocated  pursuant to
                  Article 12.

                  12.      ALLOCATIONS

               (a)  Nonrecourse  Deductions.  Nonrecourse  Deductions  shall  be
          allocated  among the  Partners  in  accordance  with their  respective
          Percentage Interests.

                           (b)  Partner  Nonrecourse  Deductions.   Any  Partner
         Nonrecourse  Deductions shall be specially allocated to the Partner who
         bears the economic risk of loss with respect to the Partner Nonrecourse
         Debt to which such Partner  Nonrecourse  Deductions are attributable in
         accordance with Treasury Regulations Section 1.704-2(i).

                           (c)      Profits and Losses.

                                    (i)   The   Profits   and   Losses   of  the
                  Partnership   shall  be   allocated   among  the  Partners  in
                  accordance  with their  respective  Percentage  Interests.  In
                  allocating  Profits  and  Losses,  Net Gains and  Losses  from
                  Capital  Transactions (a part of Profits and Losses),  if any,
                  shall be allocated first.

                                    (ii) In no event shall  Losses be  allocated
                  under this  Article  12(c) to a Limited  Partner if and to the
                  extent that such allocation  would cause, as of the end of the
                  Year, the negative balance in such Limited  Partner's  Capital
                  Account to exceed such Limited  Partner's share of Partnership
                  Minimum Gain plus such  Limited  Partner's  share,  if any, of
                  Partner  Minimum  Gain.  Any Losses which are not allocated to
                  the Limited Partner by virtue of the

                                                        -9-

<PAGE>

                  application  of the preceding  sentence  shall be allocated to
                  the General  Partner.  For purposes of this Article  12(c),  a
                  Partner's  Capital  Account  shall be  treated  as  reduced by
                  Qualified   Income   Offset   Items  as  provided  in  Article
                  12(d)(iii).  All items of income,  gain, loss,  deduction,  or
                  credit shall be allocated among the Partners  proportionately.
                  Further, notwithstanding the foregoing, after giving effect to
                  the special  allocations in Article 12(d), the General Partner
                  shall be allocated  at least 1% of all items of income,  gain,
                  loss, deduction or credit.

               (d) Special Allocations.  The following special allocations shall
          be made:

                                    (i) Partnership Minimum Gain Chargeback.  If
                  there is a net decrease in Partnership Minimum Gain during any
                  Year,  each  Partner  shall be  specially  allocated  items of
                  Partnership  income and gain for such Year (and, if necessary,
                  subsequent  Years) in an amount equal to such Partner's  share
                  of the net decrease in Partnership Minimum Gain, determined in
                  accordance with Treasury  Regulations  Section  1.704-2(g)(2).
                  Allocations pursuant to the previous sentence shall be made in
                  proportion to the respective  amounts required to be allocated
                  to  each  Partner.  The  items  to be so  allocated  shall  be
                  determined in accordance  with  Treasury  Regulations  Section
                  1.704-2(f).  This Article  12(d)(i) is intended to comply with
                  the minimum gain chargeback requirement in such Section of the
                  Regulations and shall be interpreted consistently therewith.

                                    (ii)  Partner   Minimum   Gain   Chargeback.
                  Notwithstanding  any other provision of this Article 12 except
                  Article  12(d)(i),  if  there  is a net  decrease  in  Partner
                  Minimum Gain attributable to a Partner Nonrecourse Debt during
                  any Year,  each Partner who has a share of the Partner Minimum
                  Gain attributable to such Partner Nonrecourse Debt, determined
                  in accordance with Treasury  Regulations  Section  1.704-2(f),
                  shall be specially  allocated items of Partnership  income and
                  gain for such Year (and, if necessary, subsequent Years) in an
                  amount  equal to such  Partner's  share of the net decrease in
                  Partner Minimum Gain attributable to such Partner  Nonrecourse
                  Debt, to the extent  required by and  determined in accordance
                  with Treasury Regulations Section 1.704- 2(i)(4).  Allocations
                  pursuant to the previous  sentence shall be made in proportion
                  to the  respective  amounts  required to be  allocated to each
                  Partner pursuant  thereto.  The items to be so allocated shall
                  be

                                                       -10-

<PAGE>

                  determined in accordance  with  Treasury  Regulations  Section
                  1.704- 2(i)(4).  This Article  12(d)(ii) is intended to comply
                  with the minimum gain  chargeback  requirement in such Section
                  of the  Regulations  and  shall  be  interpreted  consistently
                  therewith.

                                    (iii)  Qualified   Income  Offset.   If  any
                  Partner  unexpectedly  receives any adjustment,  allocation or
                  distribution   described  in  Treasury   Regulations   Section
                  1.704-1(b)(2)(ii)(d)(4)  through (6) which causes or increases
                  a deficit balance in such Partner's  Capital Account (adjusted
                  for  this   purpose  in  the  manner   provided   in  Treasury
                  Regulations    Section    1.704-1(b)(2)(ii)(d)),    items   of
                  Partnership  income and gain shall be  specially  allocated to
                  each  such  Partner  in an amount  and  manner  sufficient  to
                  eliminate,  to the extent  required  by the  Regulations,  the
                  deficit   Capital  Account  of  such  Partner  as  quickly  as
                  possible, provided that an allocation pursuant to this Article
                  12(d)(iii)  shall be made if and only to the extent  that such
                  Partner would have a deficit  Capital  Account after all other
                  allocations   provided  for  in  this  Article  12  have  been
                  tentatively made as if this Article 12(d)(iii) were not in the
                  Agreement.  This  provision  is  intended  to be a  "qualified
                  income  offset,"  as defined in Treasury  Regulations  Section
                  1.704-1(b)(2)(ii)(d),   such  Regulation  being   specifically
                  incorporated herein by reference.

                                    (iv) Sales Commission.  The Sales Commission
                  shall be  allocated  to the  Units  which  are not held by the
                  General  Partner and its  Affiliates  and are  acquired in the
                  Offering in proportion to the respective capital contributions
                  represented by such Units (i.e., $75 in Sales  Commissions per
                  each such Unit).  The purpose of this Article  12(d)(iv) is to
                  allocate the Sales  Commission to those  Partners who actually
                  bore the burden of paying the Sales Commission.

               (e) Ordering Provision. In applying the provisions of Articles 12
          and 13 with respect to distributions  and  allocations,  the following
          ordering of priorities shall apply:

               (i) Capital  Accounts  shall be deemed to be reduced by Qualified
          Income Offset Items.

                                    (ii)  Capital  Accounts  shall be reduced by
                  Distributions of Partnership Cash Flow under Article 13(a).

                                    (iii)   Capital Accounts shall be reduced by

                                                       -11-

<PAGE>

                  Distributions of Partnership Sales Proceeds and Partnership
                  Refinancing Proceeds under Article 13(b).

                                    (iv) Capital  Accounts shall be increased by
                  any Minimum Gain Chargeback under Articles 12(d)(i) and (ii).

               (v) Capital  Accounts shall be increased by any Qualified  Income
          Offset under Article 12(d)(iii).

                                    (vi)  Capital  Accounts  shall be reduced by
                  allocations of Nonrecourse Deductions under Article 12(a).

                                    (vii) Capital  Accounts  shall be reduced by
                  allocations of Partner  Nonrecourse  Deductions  under Article
                  12(b).

                                    (viii)  Capital  Accounts shall be increased
                  by allocations of Profits under Article 12(c).

                                    (ix)  Capital  Accounts  shall be reduced by
                  allocations of Losses under Article 12(c).

                           To the  maximum  extent  permitted  under  the  Code,
         allocations  of  Profits  and  Losses  shall  be  modified  so that the
         Partners' Capital Accounts reflect the amount they would have reflected
         if adjustments  required by Articles  12(d)(i),  (ii) and (iii) had not
         occurred.

                           (f) Allocations Between Transferor and Transferee. In
         the  event of the  transfer  (other  than the  pledges  of the  General
         Partner's  interest  permitted  by  Article  18  or  Permitted  Pledges
         described  in  Article  16.2(b))  of  all or any  part  of a  Partner's
         interest (in accordance  with the provisions of this  Agreement) in the
         Partnership  at any  time  other  than  at the  end of a  Year,  or the
         admission  of a new  Partner  (in  accordance  with  the  terms of this
         Agreement),  the  transferring  Partner or new  Partner's  share of the
         Partnership's  income, gain, loss,  deductions and credits, as computed
         both for accounting purposes and for federal income tax purposes, shall
         be allocated between the transferor  Partner and the transferee Partner
         (or Partners),  or the new Partner and the other Partners,  as the case
         may be, in the same ratio as the number of days in such Year before and
         after the date of the transfer or admission; provided, however, that if
         there  has  been a sale  or  other  disposition  of the  assets  of the
         Partnership  (or any part thereof)  during such Year,  then the General
         Partner may elect, in its sole discretion,  to treat the periods before
         and after the date of the transfer or  admission as separate  Years and
         allocate the Partnership's net income,  gain, net loss,  deductions and
         credits for each of such deemed  separate  Years.  Notwithstanding  the
         foregoing, the Partnership's "allocable cash basis items," as that term
         is used in

                                                       -12-

<PAGE>

         Section  706(d)(2)(B)  of the Code,  shall be  allocated as required by
         Section 706(d)(2) of the Code and the regulations thereunder.

                           (g)  Tax  Withholding.   The  Partnership   shall  be
         authorized  to pay,  on  behalf  of any  Partner,  any  amounts  to any
         federal,  state or local taxing authority,  as may be necessary for the
         Partnership  to comply with tax  withholding  provisions of the Code or
         the other  income tax or revenue laws of any taxing  authority.  To the
         extent the Partnership pays any such amounts that it may be required to
         pay on behalf of a  Partner,  such  amounts  shall be treated as a cash
         distribution  to such  Partner  and shall  reduce the amount  otherwise
         distributable to such Partner.

                  13.      DISTRIBUTIONS.
                           -------------

                           (a)    Distribution   of   Partnership   Cash   Flow.
         Partnership  Cash Flow shall be distributed  to the Partners  within 60
         days after the end of each Year,  or earlier in the  discretion  of the
         General Partner, in proportion to their respective Percentage Interests
         at the time of distribution.

                           (b) Distribution of Partnership  Refinancing Proceeds
         and Partnership Sales Proceeds.  Partnership  Refinancing  Proceeds and
         Partnership  Sales Proceeds shall be distributed to the Partners within
         60 days of the Capital  Transaction  giving rise to such  proceeds,  or
         earlier in the  discretion  of the General  Partner,  in  proportion to
         their respective Percentage Interests at the time of distribution.

                           (c) Distribution in Liquidation.  Upon liquidation of
         the Partnership,  all of the  Partnership's  property shall be sold and
         Profits and Losses allocated accordingly. Proceeds from the liquidation
         of the Partnership shall be distributed in accordance with Article 24.

                  l4.      RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.
                           ------------------------------------------

                  14.1  Management.  The Limited Partners shall not take part in
the management of the business,  nor transact any business for the  Partnership,
nor  shall  they  have  power  to  sign  for or to  bind  the  Partnership.  The
Partnership may,  however,  contract with one or more Limited Partners to act as
the local medical  director(s) of the  Prostatron(R)  Mobile System.  No Limited
Partner may withdraw from the Partnership except as expressly permitted herein.

                  14.2 Operation of  Prostatron(R)  Mobile  System.  The Limited
Partners  shall not  operate or utilize  the  Partnership  Prostatron(R)  Mobile
System or other  Partnership  equipment except pursuant to (i) an agreement with
the  Partnership;  or (ii) any other  arrangement  specifically  approved by the
General Partner.

                                                       -13-

<PAGE>

                  14.3 Outside Activities.  The Limited Partners agree that they
owe fiduciary  duties to the  Partnership  and, as a  consequence,  each Limited
Partner (that is not the General Partner or an Affiliate of the General Partner)
agrees that (s)he shall not engage in "Outside Activities" (as defined below) in
the "Market  Area" (as defined  below)  while (s)he is a Limited  Partner in the
Partnership  and shall  otherwise be subject to the  provisions  of this Article
14.3.  The phrase  "Outside  Activities"  means  directly or indirectly  owning,
leasing or  subleasing  a TUMT device (or any  similar  equipment  or  competing
devices used for treating BPH) or any other  therapeutic  equipment  acquired by
the Partnership;  provided that an ownership  interest in the General Partner or
an Affiliate of the General  Partner shall not  constitute an Outside  Activity.
Prohibited  indirect  ownership shall include  without  limitation the direct or
indirect  ownership  of  any  interest  in a  business  venture  (through  stock
ownership,  partnership  interest  ownership,  ownership  by or  through a close
family member, or as otherwise  determined in good faith by the General Partner)
involving the ownership,  purchase,  lease, sublease,  promotion,  management or
operation of a TUMT device (or similar  equipment or competing  devices used for
treating BPH) or other competing device or equipment, unless the General Partner
determines that such activity by the Limited  Partners is not detrimental to the
best interests of the Partnership. Notwithstanding the above, Outside Activities
shall not include (i) ownership of less than 1% of the capital stock (calculated
on a fully  diluted  basis) of a  corporation  whose stock is publicly  owned or
regularly  traded on any public  exchange,  (ii) any  ownership  interest  in an
entity  engaging  in an  Outside  Activity  acquired  before  the  date  hereof;
provided,  that  the  Limited  Partner  may not  increase  or  enhance  any such
previously held  investment  during the term of the  Partnership,  and (iii) any
other activity determined by the General Partner, in its sole discretion, not to
be detrimental to the best interests of the Partnership.

                  Upon  the  termination  or  transfer  of a  Limited  Partner's
interest in the  Partnership  for any reason,  including a transfer  pursuant to
Article 17.3 hereof, the withdrawing  Limited Partner shall not, for a period of
two (2) years following the date of withdrawal, engage in any Outside Activities
in any "Market Area" in which the Partnership is transacting  business or within
the prior twelve months has transacted  business (the "Restricted  Facilities").
For the purposes of this Article 14.3, the term "Market Area" shall mean (i) the
area within a fifty (50) mile  radius of any  Restricted  Facility,  but if such
area is determined by a court of competent jurisdiction to be too broad, then it
shall  mean (ii) the area  within a thirty  (30) mile  radius of any  Restricted
Facility, but if such area is determined by a court of competent jurisdiction to
be too broad then it shall mean (iii) the area within a fifteen (15) mile radius
of any Restricted Facility.

                  In the event a Limited Partner wishes and intends to engage in
an Outside  Activity in a Market Area, he or she must provide  written notice of
such intent to the General  Partner  prior to engaging in the Outside  Activity.
The  written  notice  shall be deemed an  election  by the  Limited  Partner  to
withdraw from the Partnership (the "Notice of  Withdrawal"),  and shall give the
General  Partner the purchase  rights as provided in Article 17.3 hereof.  After
the Notice of Withdrawal,  the former  Limited  Partner may engage in an Outside
Activity in the Market Area only after waiting the period of two years specified
in this  Article  14.3.  In the  event of  breach  of the  waiting  period,  the
Partnership  shall be entitled  to any remedy at law or equity  with  respect to
such breach, including without limitation an injunction or suit for damages.

                                                       -14-

<PAGE>

                  If a Limited  Partner during his or her  participation  in the
Partnership  engages in an  Outside  Activity  in a Market  Area  without  first
notifying  the General  Partner in violation of this Article  14.3,  the Limited
Partner  shall be deemed to have  given a Notice of  Withdrawal  on the date the
General Partner first becomes aware of the Limited Partner's Outside Activity in
the Market Area.  Upon  receiving a Limited  Partner's  Notice of  Withdrawal or
equivalent  thereof,  the Partnership may invoke the purchase rights provided in
Article  17.3  and  shall be  entitled  to any  other  remedy  at law or  equity
including without limitation an injunction or suit for damages.

                  14.4  Disclosure  of  Confidential  Information.  Each Limited
Partner acknowledges and agrees that his or her participation in the Partnership
under this Agreement necessarily involves his or her understanding of and access
to certain trade secrets and other  confidential  information  pertaining to the
business of the Partnership.  Accordingly,  each Limited Partner (other than the
General   Partner  and  its  Affiliates  that  may  also  hold  Limited  Partner
Partnership  Interests) agrees that at all times during his or her participation
in the Partnership as a Limited Partner and thereafter, (s)he will not, directly
or indirectly, without the express written authority of the Partnership,  unless
required by law or directed by a applicable legal authority having  jurisdiction
over  the  Limited  Partner,  disclose  or use for the  benefit  of any  person,
corporation  or other  entity  (other  than  the  Partnership),  or the  Limited
Partner, (i) any trade, technical, operational, management or other secrets, any
patient or customer  lists or other  confidential  or secret data,  or any other
proprietary,  confidential or secret  information of the Partnership or (ii) any
confidential information concerning any of the financial arrangements, financial
condition,  hospital or  physician  contracts,  third party payor  arrangements,
quality assurance and outcome analysis programs, competitive status, customer or
supplier matters, internal organizational matters, technical abilities, or other
business affairs of or relating to the Partnership.  The Limited Partners (other
than the General  Partner and its Affiliates  that may also hold Limited Partner
Partnership  Interests)  acknowledge  that  all  of  the  foregoing  constitutes
proprietary information,  which is the exclusive property of the Partnership. In
the event of breach of this Article 14.4 as determined  by the General  Partner,
the Partnership shall be entitled to any remedy at law or equity with respect to
such breach, including without limitation, an injunction or suit for damages.

                  15.      LIMITED LIABILITY.
                           -----------------

                  No Limited Partner shall be required to make any  contribution
to the  capital of the  Partnership  except as set forth in Article 7, nor shall
any Limited  Partner in his or her capacity as such,  be bound by, or personally
liable for, any expense,  liability or obligation of the  Partnership  except to
the extent of his or her (i) interest in the  Partnership and (ii) obligation to
return distributions made to him or her under certain  circumstances as required
by the Act.

                                                       -15-

<PAGE>

                  16.      TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS.
                           -----------------------------------------------

                  16.1     Transferability.
                           ---------------

                           (a) The term  "transfer"  when used in this Agreement
         with respect to a  Partnership  Interest  includes a sale,  assignment,
         gift,  pledge,  exchange or any other disposition (but does not include
         the  issuance  of new  Partnership  Interests  pursuant  to a  Dilution
         Offering);

               (b) Except as  otherwise  provided  herein,  the General  Partner
          shall not at any time transfer or assign its interest or obligation as
          General Partner;

                           (c) The  Partnership  Interest of any Limited Partner
         shall not be  transferred,  in whole or in part,  except in  accordance
         with the conditions and limitations set forth in Articles 16.2 or 17;

                           (d)  The  transferee  of a  Partnership  Interest  by
         assignment,  operation of law or otherwise, shall have only the rights,
         powers and privileges  enumerated in Article 16.3 or otherwise provided
         by law and may not be admitted to the  Partnership as a Limited Partner
         except as provided in Article  16.4 or as a General  Partner  except as
         provided in Article 16.5;

                           (e)  Notwithstanding  any  provision  herein  to  the
         contrary,  the  Partnership  Agreement  shall  in no way  restrict  the
         issuance or transfers of stock of the General  Partner or the merger of
         the General Partner with another person or entity; and

                           (f)  Notwithstanding  any  provision  herein  to  the
         contrary,  the issuance of Partnership Interests pursuant to a Dilution
         Offering  and the  admission  of new  Limited  Partners  pursuant  to a
         Dilution Offering shall be governed by the provisions of Article 7.4 of
         this Agreement.

                  16.2     Restrictions on Transfers by Limited Partners.
                           ---------------------------------------------

                           (a)  All or  part of a  Partnership  Interest  may be
         transferred by a Limited  Partner only with the prior written  approval
         of the General Partner,  which approval may be granted or denied in the
         sole discretion of the General Partner.

                           (b)  The  General   Partner  shall  not  approve  any
         transfer of a Partnership Interest,  except a pledge of any Partnership
         Interest by the General Partner to any bank, insurance company or other
         financial  institution to secure payment of  indebtedness (a "Permitted
         Pledge"),  or  otherwise  unless  the  proposed  transferee  shall have
         furnished the General Partner with a sworn statement that:

                                                       -16-

<PAGE>

               (i)  The  proposed  transferee  proposes  to  acquire  his or her
          Partnership  Interest as a principal,  for  investment  and not with a
          view to resale or distribution;

                                    (ii)  The  proposed  transferee  meets  such
                  requirements regarding sophistication, income and net worth as
                  required by applicable state and federal securities laws;

                                    (iii) The proposed  transferee  has met such
                  net  worth  and  income  suitability  standards  as have  been
                  established by the General Partner;

                                    (iv) The proposed transferee recognizes that
                  investment in the Partnership  involves  certain risks and has
                  taken  full  cognizance  of and  understands  all of the  risk
                  factors related to the purchase of a Partnership Interest; and

               (v) The proposed transferee has met all other requirements of the
          General Partner for the proposed transfer.

                           (c) Other than in the case of a Permitted  Pledge,  a
         transfer of a  Partnership  Interest  may be made only if, prior to the
         date  thereof,  the  Partnership  upon  request  receives an opinion of
         counsel,  satisfactory  in form and  substance to the General  Partner,
         that  neither the  offering  nor the  proposed  transfer  will  require
         registration  under  federal or  applicable  state  securities  laws or
         regulations.

                  16.3 Rights of Transferee.  Unless admitted to the Partnership
in accordance  with Article 16.4, the transferee of a Partnership  Interest or a
part thereof or any right,  title or interest  therein  shall not be entitled to
any of the rights,  powers, or privileges of his or her predecessor in interest,
except that (s)he  shall be entitled to receive and be credited or debited  with
his or her proportionate share of Partnership income,  gains,  Profits,  Losses,
deductions, credits or distributions.

                  16.4  Admission  of  Limited  Partners.  Except  as  otherwise
provided in Article 17, the General Partner, or the transferee of all or part of
the Partnership  Interest of either a General Partner or a Limited Partner,  may
be admitted to the  Partnership  as a Limited  Partner  upon  furnishing  to the
General Partner all of the following:

                           (a) The written approval of a Majority in Interest of
         all of the Limited  Partners  (except  the  assignor  Partner),  or the
         assignor Partner alone,  which approval may be granted or denied in the
         sole discretion of such Partners or Partner (as the case may be);

                                                       -17-

<PAGE>

               (b) The written approval of the General  Partner,  which approval
          may be  granted  or  denied  in the  sole  discretion  of the  General
          Partner;

                           (c) Acceptance, in a form satisfactory to the General
         Partner,  of all the terms and  conditions  of this  Agreement  and any
         other  documents  required  in  connection  with the  operation  of the
         Partnership pursuant to the terms of this Agreement;

               (d) A properly executed power of attorney substantially identical
          to that contained in Article 37;

               (e) Such other  documents  or  instruments  as may be required in
          order to effect his or her admission as a Limited Partner; and

               (f)  Payment of such  reasonable  expenses  as may be incurred in
          connection with his or her admission as a Limited Partner.

               16.5 Admission of General  Partners.  A Limited  Partner,  or the
          transferee of all or part of the  Partnership  Interest of the General
          Partner,  may be admitted to the Partnership as a general partner upon
          furnishing to the General Partner all of the following:

                           (a) The written  consent of both the General  Partner
         and a Majority in Interest of the Limited  Partners,  which consent may
         be granted or denied in the sole discretion of the Partners;

                           (b) Such  financial  statements,  guarantees or other
         assurances  as the  General  Partner  may  require  with  regard to the
         ability  of the  proposed  general  partner to  fulfill  the  financial
         obligations of a general partner hereunder;

                           (c) Acceptance,  in form  satisfactory to the General
         Partner,  of all the terms and  provisions  of this  Agreement  and any
         other  documents  required  in  connection  with the  operation  of the
         Partnership pursuant to the terms of this Agreement;

               (d) A certified  copy of a  resolution  of its Board of Directors
          (if it is a corporation)  authorizing  it to become a general  partner
          under the terms and conditions of this Agreement;

               (e) A power of attorney substantially identical to that contained
          in Article 37;

               (f) Such other  documents  or  instruments  as may be required in
          order to effect his, her or its admission as a general partner; and

                                                       -18-

<PAGE>

               (g)  Payment of such  reasonable  expenses  as may be incurred in
          connection with his, her or its admission as a general partner.

                  Notwithstanding  the above,  a transferee  that controls or is
controlled by the General Partner or one or more of its Affiliates that receives
all or part of the  Partnership  Interest of the General Partner may be admitted
to the  Partnership as a general  partner upon complying with all the provisions
of Article  16.5  except for  subparagraph  16.5(a).  As long as the  transferee
either  controls or is controlled  by the General  Partner or one or more of its
Affiliates,  no  Limited  Partner  consents  will  be  required  to  admit  such
transferee as a general partner to the Partnership.

                  16.6  Amendment  of  Certificate  of Limited  Partnership  and
Qualification.   The  General   Partner  shall  take  all  steps  necessary  and
appropriate to prepare and record any  amendments to the  Certificate of Limited
Partnership, as may be necessary or appropriate from time to time to comply with
the requirements of the Act, including,  without limitation,  upon the admission
to the Partnership of any general partner  pursuant to the provisions of Article
16.5, and may for this purpose  exercise the power of attorney  delivered to the
General Partner pursuant to Article 16.5 or 37. In addition, the General Partner
shall take all steps necessary and appropriate to prepare and record any and all
documents  necessary to qualify the Partnership to do business in  jurisdictions
where the Partnership is doing business,  and may for this purpose  exercise the
power of attorney  delivered to the General  Partner  pursuant to Articles 16.4,
16.5 or 37.

                  16.7 Fundamental  Changes.  In the event a plan is approved by
the General Partner and a Majority in Interest of the Limited Partners providing
for the  merger or  consolidation  of the  Partnership  with  another  person or
entity,  or the sale of all or substantially  all of the Partnership  Interests,
including  without  limitation the exchange of Partnership  Interests for equity
interests  in  another  person or entity or for cash or other  consideration  or
combination  thereof,  then and in such  event,  the Limited  Partners  shall be
obligated to take or refrain  from  taking,  as the case may be, such actions as
the plan may provide, including, without limitation, executing such instruments,
and providing such information as the General Partner shall reasonably  request.
Any plan  described  in this  Article  16.7 may also effect an  amendment to the
Partnership Agreement or the adoption of a new partnership agreement as provided
in Section 2.11 of the Act.  The plan may also provide that the General  Partner
and its Affiliates  shall receive fees for services  rendered in connection with
the  operation  of  the  Partnership  or  any  successor  entity  following  the
consummation  of  the  transactions  described  in the  plan,  and  neither  the
Partnership nor the Partners shall have any right by virtue of this Agreement in
the income  derived  therefrom.  Any  securities  or other  consideration  to be
distributed  to the Partners  pursuant to the plan shall be  distributed  in the
manner  set  forth in  Article  24(c)  as  though  the  Partnership  were  being
liquidated.  For this purpose only,  the fair market value of the  securities or
other  consideration  to be  received  pursuant  to the plan shall be treated as
"Profits"  and the capital  accounts of the  Partners  shall be increased in the
manner  provided  in Article  11(a)(ii).  No Partner  shall be  entitled  to any
dissent,  appraisal or similar rights in connection with a plan  contemplated by
this Article 16.7.

                                                       -19-

<PAGE>

                  16.8 Withdrawal of Initial Limited Partner.  Upon the date the
first Limited  Partner is admitted to the Partnership in accordance with Article
10 of this  Agreement,  the Initial  Limited  Partner  shall  withdraw  from the
Partnership,  and thereupon his Capital  Contribution  shall be returned and his
Partnership Interest canceled and reallocated to the Limited Partners.

                  17.      OPTIONAL PURCHASE OF LIMITED PARTNERSHIP INTERESTS
                           --------------------------------------------------
                           ON CERTAIN EVENTS.
                           -----------------

                  17.1 Death. Upon the death of a Limited Partner,  the deceased
Limited  Partner's   executor,   administrator,   or  other  legal  or  personal
representative  shall give written  notice of that fact to the General  Partner.
The General Partner shall have the option to purchase at the Closing (as defined
below) the Partnership Interest of the deceased Limited Partner (whose executor,
administrator  or other  legal or  personal  representative  shall  then  become
obligated  to sell such  Partnership  Interest) at the price  determined  in the
manner  provided  in  Article  17.6  of  this  Agreement  and on the  terms  and
conditions provided in Article 17.7 of this Agreement. The General Partner shall
have a period of thirty (30) days  following  the date of notice of the death of
the Limited Partner (the "Option  Period") within which to notify in writing the
deceased Limited  Partner's  executor,  administrator or other legal or personal
representative,  whether the General Partner wishes to purchase all or a portion
of the  Partnership  Interest of the deceased  Limited  Partner.  If the General
Partner  does not elect to  purchase  the  entire  Partnership  Interest  of the
deceased  Limited  Partner before the expiration of the Option Period and in the
manner provided  herein,  the portion of the Partnership  Interest not purchased
shall be held by the deceased Limited Partner's executor, administrator or other
legal  representative  pursuant  to the  terms of this  Agreement.  The  General
Partner, in its sole discretion,  may elect to assign its rights to purchase the
Partnership  Interest of the deceased Limited Partner under this Article 17.1 to
the Partnership and, in such case, the Partnership shall have the same rights as
provided for the General Partner in this Article 17.1.

                  17.2  Bankruptcy,  Insolvency  or  Assignment  for  Benefit of
Creditors of a Limited  Partner.  In the event that an  involuntary or voluntary
proceeding  under the  Federal  Bankruptcy  Code,  as  amended,  is filed for or
against any Limited Partner,  or if any Limited Partner shall make an assignment
for the benefit of his  creditors,  or if any Limited  Partner has a receiver or
custodian  appointed for his assets,  or any Limited Partner  generally fails to
pay his debts when due, the insolvent  Limited Partner shall give written notice
(the "Notice of Insolvency")  to the General Partner of the  commencement of any
such  proceeding  or the  occurrence of such event within five days of the first
notice to him of such  commencement  or  occurrence  of such event.  The General
Partner shall have the option to purchase at the Closing (as defined  below) the
Partnership  Interest of the  insolvent  Limited  Partner  (which the  insolvent
Limited Partner or his trustee,  custodian,  receiver or other personal or legal
representative,  as the case may be, shall then become obligated to sell) at the
price determined in the manner provided in Article 17.6 of this Agreement and on
the terms and conditions provided in Article 17.7 of this Agreement. The General
Partner shall have a period of thirty (30) days following the date of the Notice
of  Insolvency  (the  "Option  Period")  within  which to notify in writing  the
insolvent Limited Partner or his trustee, custodian, receiver, or other legal or
personal representative, whether the General Partner wishes to purchase all or a
portion of

                                                       -20-

<PAGE>

the  Partnership  Interest  of the  insolvent  Limited  Partner.  If the General
Partner  does not elect to  purchase  the  entire  Partnership  Interest  of the
insolvent  Limited Partner before the expiration of the Option Period and in the
manner provided  herein,  the portion of the Partnership  Interest not purchased
shall be held by the  insolvent  Partner,  his trustee,  custodian,  receiver or
other legal or personal  representative pursuant to the terms of this Agreement.
The General Partner,  in its sole discretion,  may elect to assign its rights to
purchase the  Partnership  Interest of an insolvent  Limited  Partner under this
Article 17.2 to the Partnership  and, in such case, the  Partnership  shall have
the same rights as provided for the General Partner in this Article 17.2.

                  17.3 Breach of Article 14.3. In the event the General  Partner
either  receives a Notice of  Withdrawal as provided in Article 14.3 or receives
notice of a breach of Article 14.3 by or with respect to a Limited  Partner (the
"Competing  Limited  Partner"),  the  General  Partner  may  elect,  in its sole
discretion,  to treat such event as a default  under this  Agreement and enforce
the  provisions of this Article 17.3. If the General  Partner  elects to enforce
the  provisions  of this Article  17.3,  the General  Partner shall give written
notice of such  election  (the  "Notice of Default")  to the  Competing  Limited
Partner  within 180 days of the date the  General  Partner  first  received  the
Notice of  Withdrawal or notice of the  defaulting  event.  The General  Partner
shall  have the  option to  purchase  at the  Closing  (as  defined  below)  the
Partnership  Interest of the  Competing  Limited  Partner  (which the  Competing
Limited Partner shall then become  obligated to sell) at the price determined in
the manner  provided  in  Article  17.6 of this  Agreement  and on the terms and
conditions provided in Article 17.7 of this Agreement. The General Partner shall
have a period of  thirty  (30) days  following  the date it sends the  Notice of
Default (the "Option  Period")  within which to notify in writing the  Competing
Limited  Partner,  whether the  [General  Partner]  wishes to purchase  all or a
portion of the Partnership  Interest of the Competing  Limited  Partner.  If the
General  Partner does not elect to purchase the entire  Partnership  Interest of
the Competing  Limited Partner before the expiration of the Option Period and in
the  manner  provided  herein,  the  portion  of the  Partnership  Interest  not
purchased shall be held by the Competing  Limited Partner  pursuant to the terms
of this Agreement.  The General Partner,  in its sole  discretion,  may elect to
assign its rights to purchase the  Partnership  Interest of a Competing  Limited
Partner  under this  Article  17.3 to the  Partnership  and,  in such case,  the
Partnership  shall have the same rights as provided  for the General  Partner in
this Article 17.3.

                  17.4  Domestic  Proceeding.  In the  event  that a spouse of a
Limited Partner  commences  against a Limited  Partner,  or a Limited Partner is
named in, a Domestic  Proceeding,  the Limited Partner shall give written notice
(the "Notice of Domestic Proceeding") to the General Partner of the commencement
of any such  proceeding  within  five  days of the  first  notice to him of such
commencement.  The  General  Partner  shall have the option to  purchase  at the
Closing  (as defined  below) the  Partnership  Interest  of the Limited  Partner
involved in the Domestic Proceeding (which the Limited Partner shall then become
obligated to sell),  at the price  determined in the manner  provided in Article
17.6 of this Agreement and on the terms and conditions  provided in Article 17.7
of this  Agreement.  The General Partner shall have a period of thirty (30) days
following the date of the Notice of Domestic  Proceeding  (the "Option  Period")
within which to notify in writing the Limited  Partner  involved in the Domestic
Proceeding, whether the General Partner

                                                       -21-

<PAGE>

wishes to purchase all or a portion of the Partnership  Interest of such Limited
Partner.  If the  General  Partner  does not elect to purchase  the  Partnership
Interest of the Limited Partner involved in the Domestic  Proceeding  before the
expiration of the Option Period and in the manner provided  herein,  the portion
of the Partnership  Interest not purchased shall be held by such Limited Partner
pursuant  to the  terms of this  Agreement.  The  General  Partner,  in its sole
discretion,  may elect to assign its rights to purchase the Partnership Interest
of the Limited Partner  involved in the Domestic  Proceeding  under this Article
17.4 to the Partnership  and, in such case, the Partnership  shall have the same
rights as provided for the General Partner in this Article 17.4.

                  17.5 Divestiture  Option.  If state or federal  regulations or
laws are enacted or applied, or if any other legal developments occur, which, in
the opinion of the General Partner  adversely  affect (or potentially  adversely
affect) the operation of the Partnership  (e.g., the enactment or application of
prohibitory physician  self-referral  legislation against the Partnership or its
Partners),  the General Partner shall promptly  either,  in its sole discretion,
(i) take the steps outlined in this Article 17.5 to divest the Limited  Partners
of their Partnership Interests,  or (ii) dissolve the Partnership as provided in
Article  23.1(e).  If the General Partner chooses option (i), it shall deliver a
written  notice to all of the Limited  Partners (the "Notice of  Election")  and
purchase such Partnership  Interests for its own account.  The purchase price to
be paid for each  Partnership  Interest  shall be  determined  in the  manner as
provided in Article 17.6 and shall be on the terms and conditions as provided in
Article  17.7.  The transfer of the  Partnership  Interests,  the payment of the
purchase price and the  assumption of the Limited  Partners'  obligations  under
their respective  Guaranties (as provided in Article 17.6) shall be made at such
time as  determined  by the General  Partner to be in the best  interests of the
Partnership  and its  Limited  Partners.  Each  Limited  Partner  hereby  makes,
constitutes and appoints the General  Partner,  with full power of substitution,
his true and lawful  attorney-in-fact,  to take such  actions and  execute  such
documents  on his behalf to effect the transfer of his  Partnership  Interest as
provided in this Article  17.5.  The  foregoing  power of attorney  shall not be
affected by the  subsequent  incapacity,  mental  incompetence,  dissolution  or
bankruptcy of any Limited Partner.

                  17.6  Purchase  Price.  The purchase  price to be paid for the
Partnership  Interest of any Limited  Partner whose interest is being  purchased
pursuant to the  provisions  of Articles  17.1,  17.2,  17.3,  17.4 or 17.5 (the
"Selling  Limited  Partner")  shall be determined in the manner provided in this
Article 17.6. The purchase price for a Partnership  Interest  purchased pursuant
to the provisions of Articles 17.1,  17.2, 17.3, 17.4 or 17.5 shall be an amount
equal to the Limited Partner's share of the Partnership's book value, if any, as
reflected  by  the  Limited   Partner's   capital  account  in  the  Partnership
(unadjusted  for any  appreciation  in  Partnership  assets  and as  reduced  by
depreciation  deductions  claimed by the Partnership for tax purposes) as of the
Valuation  Date. The Valuation Date means the last day of the month  immediately
preceding the month in which occurs: (i) the death of a Selling Limited Partner,
in the case of a purchase by reason of death;  (ii) the bankruptcy or insolvency
of a  Selling  Limited  Partner  in the case of a  purchase  by  reason  of such
bankruptcy or insolvency; (iii) the Notice of Withdrawal or breach of Article 14
as provided in Article  17.3 in the case of a purchase by reason  thereof;  (iv)
the commencement of the Domestic Proceeding, in the case of a purchase by reason
thereof; or (v) the Notice of Election as provided in Article 17.5, in the

                                                       -22-

<PAGE>

in the  case  of a  purchase  by  reason  thereof.  Any  Limited  Partner  whose
Partnership  Interest is purchased  pursuant to the  provisions of Article 17.1,
17.2,  17.3,  17.4 or 17.5 shall be entitled  only to the  purchase  price which
shall be paid at the Closing in cash (or by certified  or  cashier's  check) and
shall not be entitled to any Partnership  distributions made after the Valuation
Date.  The  Partnership  shall  have the right to deduct  the amount of any such
distributions  made to the Selling Limited Partner after the Valuation Date from
the purchase price. The transfer of a Partnership  Interest of a Selling Limited
Partner  shall be  deemed to occur as of the  valuation  Date,  and the  Selling
Limited  Partner shall have no voting or other rights as a Limited Partner after
such date.  Such price is likely to be  considerably  less than the fair  market
value of the Limited  Partner's  interest in the Partnership and may not provide
any positive return on the Limited  Partner's  investment.  Because  Partnership
losses,  depreciation  deductions and Distributions reduce capital accounts, and
because appreciation in Partnership assets is not reflected in capital accounts,
it is the opinion of the General  Partner that the option purchase price will be
nominal in amount.

                  17.7     Closing.
                           -------

                  17.7.1  Closing  of  Purchase  and Sale.  The  Closing  of any
         purchase and sale of a Partnership  Interest  pursuant to Article 17.1,
         17.2,  17.3,  17.4 or 17.5 of this  Agreement  shall  take place at the
         principal office of the Partnership,  or such other place designated by
         the General Partner, on the date determined as follows (the "Closing"):

                           (a) In the case of a purchase  and sale  occurring by
         reason of the death of a Limited Partner as provided in Article 17.1 of
         this  Agreement,  the Closing shall be held on the thirtieth day (or if
         such  thirtieth  day is not a  business  day,  the  next  business  day
         following the thirtieth day) next following the last to occur of:

               (i)  Qualification  of the executor or personal  administrator of
          the deceased Limited Partner's estate;

               (ii)  The  date  on  which  any  necessary  determination  of the
          purchase  price of the  Partnership  Interest to be purchased has been
          made; or

               (iii)  The  date  that  coincides  with the  close of the  Option
          Period.

                           (b) In the case of a purchase  and sale  occurring by
         reason of the  occurrence  of one of the  events  described  in Article
         17.2,  17.3, 17.4 or 17.5 of this Agreement,  the Closing shall be held
         on the thirtieth  day (or if such  thirtieth day is not a business day,
         the next business day following the thirtieth  day) next  following the
         later to occur of:

                                                       -23-

<PAGE>

               (i) The date on which any necessary determination of the purchase
          price of the Partnership Interest to be purchased has been made; or

               (ii) The date that coincides with the close of the Option Period.

         At the Closing,  although not  necessary  to effect the  transfer,  the
         Selling Limited Partner shall  concurrently  with tender and receipt of
         the applicable  purchase price,  deliver to the purchaser duly executed
         instruments of transfer and  assignment,  assigning good and marketable
         title to the  portion or  portions  of the  Selling  Limited  Partner's
         entire  Partnership  Interest thus  purchased,  free and clear from any
         liens  or  encumbrances  or  rights  of  others  therein.  The  parties
         acknowledge  that occurrence of any of the triggering  events described
         in Article 17.1,  17.2,  17.3, 17.4 or 17.5 and compliance with all the
         Articles  of this  Agreement,  except  the  execution  of the  transfer
         documents  by the Selling  Limited  Partner as  provided  above in this
         Article 17.7.1,  are sufficient to effect the complete  transfer of the
         Selling Limited Partner's  Partnership Interest and the Selling Limited
         Partner shall be deemed to consent to admission of the  transferee as a
         substitute Limited Partner.  Notwithstanding the date of the Closing or
         whether a Closing is  successfully  held, the transfer of a Partnership
         Interest of a Selling  Limited  Partner  shall be deemed to occur as of
         the Valuation Date as defined in Article 17.6.  The deemed  transfer is
         effective  regardless of whether the Selling Limited  Partner  performs
         the duties set forth in this Article 17.7.1.

                           (c) In case of a purchase  occurring by reason of the
         occurrence of an event  described in Article 17.5, the Closing shall be
         held as soon as possible  following the  determination  of the purchase
         price.

                  17.7.2  Terms and  Conditions  of  Purchase.  The  Partnership
         Interest of a Limited  Partner shall not be  transferred to any Partner
         unless the  requirements  of Articles 16.2 and 16.4 (b) through (f) are
         satisfied  with  respect to it. The  purchaser  shall be liable for all
         obligations  and  liabilities   connected  with  that  portion  of  the
         Partnership  Interest  transferred  to it  unless  otherwise  agreed in
         writing.

                  18.      SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL
                           -------------------------------------------------
                           PARTNER'S INTEREST.
                           ------------------

                  18.1  The   General   Partner   may  not   mortgage,   pledge,
hypothecate,  transfer,  sell, assign or otherwise dispose of all or any part of
its interest in the  Partnership,  whether  voluntarily,  by operation of law or
otherwise (the foregoing  actions being  hereafter  collectively  referred to as
"Transfers" or singularly as a "Transfer") except as permitted by this Article.

                                                       -24-

<PAGE>

                  18.2 If the  General  Partner  makes a Transfer  (other than a
mortgage,  pledge or  hypothecation)  of its  general  partner  interest  in the
Partnership pursuant to this Article, it shall be liable for all obligations and
liabilities  incurred  by it as the  general  partner of the  Partnership  on or
before  the  effective  date of such  Transfer,  but shall not be liable for any
obligations or liabilities of the  Partnership  arising after the effective date
of the Transfer.

          18.3 No Transfer by the General Partner shall be permitted unless:

                           (a) Counsel for the  Partnership  shall have rendered
         an  opinion  that none of the  actions  taken in  connection  with such
         Transfer will cause the  Partnership  to be classified  other than as a
         partnership   for  federal  income  tax  purposes  or  will  cause  the
         termination or dissolution of the Partnership under state law; and

                           (b)  Such  documents  or  instruments,  in  form  and
         substance satisfactory to counsel for the Partnership,  shall have been
         executed and delivered as may be required in the opinion of counsel for
         the Partnership to effect fully any such Transfer.

                  Notwithstanding the foregoing provisions of this Article 18.3,
the General  Partner may pledge its  interest  in the  Partnership  to any bank,
insurance   company  or  other  financial   institution  to  secure  payment  of
indebtedness.

                  19.      TERMINATION OF THE SERVICES OF THE GENERAL PARTNER.
                           --------------------------------------------------

                  If the General Partner shall be finally adjudged by a court of
competent  jurisdiction to be liable to the Limited  Partners or the Partnership
for any act of gross negligence or willful  misconduct in the performance of its
duties under the terms of this Agreement, the General Partner may be removed and
another  substituted  with the  consent  of all of the  Limited  Partners.  Such
consent  shall be evidenced  by a  certificate  of removal  signed by all of the
Limited Partners. In the event of removal, the new general partner shall succeed
to all of the powers, privileges and obligations of the General Partner, and the
General  Partner's  interest in the  Partnership  shall become that of a Limited
Partner,  and the General Partner shall maintain its same Percentage Interest in
the Partnership  notwithstanding  anything contained in the Act to the contrary.
In addition,  in the event of removal,  the new general  partner  shall take all
steps  necessary  and  appropriate  to prepare  and record an  amendment  to the
Certificate of Limited Partnership to reflect the removal of the General Partner
and the admission of such new general partner.

                  20.      MANAGEMENT AND OPERATION OF BUSINESS.
                           ------------------------------------

                  20.1 All  decisions  with  respect  to the  management  of the
business and affairs of the Partnership shall be made by the General Partner.

                                                       -25-

<PAGE>

                  20.2 The General  Partner shall be under no duty to devote all
of its time to the business of the Partnership,  but shall devote only such time
as it deems  necessary  to conduct the  Partnership  business and to operate and
manage the Partnership in an efficient manner.

                  20.3 The  General  Partner may charge to the  Partnership  all
ordinary and necessary costs and expenses, direct and indirect,  attributable to
the activities,  conduct and management of the business of the Partnership.  The
costs and expenses to be borne by the  Partnership  shall  include,  but are not
limited to, all  expenditures  incurred in acquiring and financing the Equipment
or other Partnership property, legal and accounting fees and expenses,  salaries
of employees of the Partnership,  consulting and quality  assurance fees paid to
independent contractors, insurance premiums and interest.

                  20.4 In addition to, and not in limitation  of, any rights and
powers  covenanted by law or other  provisions of this Agreement,  and except as
limited,  restricted or prohibited by the express  provisions of this Agreement,
the General Partner shall have and may exercise on behalf of the Partnership all
powers and rights necessary,  proper,  convenient or advisable to effectuate and
carry out the purposes, business and objectives of the Partnership.  Such powers
shall include, without limitation, the following:

               (a) To conduct the Offering  and any Dilution  Offering on behalf
          of the Partnership;

                           (b) To acquire on behalf of the  Partnership  (i) one
         or  more  Prostatron(R)  Mobile  Systems;  (ii)  any  other  urological
         device(s)  or  equipment  so  long  as such  device  has FDA  premarket
         approval at the time it is required  by the  Partnership;  or (iii) any
         other assets or equipment or an interest in another  entity  consistent
         with  the  purposes  of  the  Partnership  as  provided  in  Article  4
         (collectively,  the  "Additional  Assets"),  at such  times and at such
         price and upon such terms,  as the General  Partner  deems to be in the
         best interest of the Partnership;

                           (c) To purchase,  hold,  manage,  lease,  license and
         dispose of Partnership assets, including the purchase,  exchange, trade
         or sale of the Partnership's assets at such price, or amount, for cash,
         securities  or other  property  and upon  such  terms,  as the  General
         Partner deems to be in the best interest of the Partnership;  provided,
         that  should  the  Partnership   assets  be  exchanged  or  traded  for
         securities or other property (the  "Replacement  Property") the General
         Partner  shall  have the same  powers  with  regard to the  Replacement
         Property as it does towards the traded property;

               (d)  To  exercise  the  option  of  the  General  Partner  or the
          Partnership  to  purchase  a Limited  Partner's  Partnership  Interest
          pursuant to Article 17;

                                                       -26-

<PAGE>

               (e) To determine the travel  itinerary and site locations for the
          Prostatron(R)Mobile System or other Partnership technology;

                           (f) To  borrow  money  for  any  Partnership  purpose
         (including the  acquisition of the Additional  Assets) and, if security
         is required therefor,  to subject to any security device any portion of
         the property for the Partnership,  to obtain  replacements of any other
         security device, to prepay, in whole or in part,  refinance,  increase,
         modify, consolidate or extend any encumbrance or other security device;

                           (g)  To  deposit,   withdraw,   invest,  pay,  retain
         (including  the  establishment  of  reserves  in order to  acquire  the
         Additional Assets) and distribute the Partnership's funds in any manner
         consistent with the provisions of this Agreement;

               (h) To institute and defend actions at law or in equity;

                           (i)  To  enter  into  and  carry  out  contracts  and
         agreements and any or all documents and  instruments  and to do any and
         all such other things as may be in furtherance of Partnership  purposes
         or  necessary  or  appropriate  to  the  conduct  of  the   Partnership
         activities;

               (j) To execute,  acknowledge  and deliver any and all instruments
          which may be deemed necessary or convenient to effect the foregoing;

                           (k) To  engage  or  retain  one or  more  persons  to
         perform   acts  or  provide   materials  as  may  be  required  by  the
         Partnership,  at the  Partnership's  expense,  and to  compensate  such
         person or persons at a rate to be set by the General Partner,  provided
         that the  compensation  is at the then  prevailing rate for the type of
         services  and  materials  provided,  or both.  Any  person,  whether  a
         Partner,  an Affiliate  of a Partner or  otherwise,  including  without
         limitation  the  General  Partner,  may be  employed  or engaged by the
         Partnership to render services and provide  materials,  including,  but
         not limited to, management services,  professional services, accounting
         services,  quality  assessment  services,  legal  services,   marketing
         services, maintenance services or provide materials; and if such person
         is a Partner or an Affiliate of a Partner,  (s)he shall be entitled to,
         and shall be paid compensation for said services or materials, anything
         in this  Agreement to the contrary  notwithstanding,  provided that the
         compensation   to  be  received  for  such  services  or  materials  is
         competitive in price and terms with then  prevailing  rate for the type
         of services and/or materials provided. The Partnership, pursuant to the
         terms of a Management Agreement, will contract with the General Partner
         with respect to the supervision and  coordination of the management and
         administration  of  the  day-to-day  operations  of  the  Partnership's
         business  for a  monthly  fee  equal  to the  greater  of  7.5%  of net
         Partnership  Cash Flow per month or $8,000 per month  (beginning  as of
         the Closing  Date but not to be paid for more than four  months  before
         the month in which Partnership's treatment

                                                       -27-

<PAGE>

         operations  commence).  All costs incurred by the General Partner under
         the Management Agreement shall be paid or reimbursed by the Partnership
         directly.  The Partnership may also contract with healthcare facilities
         and/or qualified  physicians  desiring to use its Prostatron(R)  Mobile
         System  for the  treatment  of  patients.  Owning  an  interest  in the
         Partnership shall not be a condition to using the Prostatron(R)  Mobile
         System. The General Partner and its Affiliates may engage in or possess
         an interest in other  business  ventures of any nature and  description
         independently  or with  others,  including,  but not  limited  to,  the
         operation  of a  fixed-base  or mobile  TUMT unit,  whether or not such
         business  ventures  are in  direct  or  indirect  competition  with the
         Partnership,  and neither the  Partnership  nor the Partners shall have
         any  right  by  virtue  of this  Agreement  in and to said  independent
         ventures or to the income or profits derived therefrom.

                  20.5  In  addition  to  other  acts  expressly  prohibited  or
restricted  by this  Agreement  or by law,  the  General  Partner  shall have no
authority to act on behalf of the Partnership in:

               (a)  Doing  any act in  contravention  of this  Agreement  or the
          Partnership's Certificate of Limited Partnership;

               (b) Doing any act which would make it  impossible to carry on the
          ordinary business of the Partnership;

               (c)  Possessing or in any manner  dealing with the  Partnership's
          property  or  assigning   the  rights  of  the   Partnership   in  the
          Partnership's property for other than Partnership purposes;

               (d) Admitting a person as a Limited  Partner or a General Partner
          except as provided in this Agreement; or

                           (e) Performing any act (other than an act required by
         this  Agreement or any act taken in good faith  reliance upon counsel's
         opinion)  which  would,  at the time  such act  occurred,  subject  any
         Limited Partner to liability as a general partner in any jurisdiction.

                  21.      RESERVES.
                           --------

                  The  General  Partner  may cause the  Partnership  to create a
reserve account to be used exclusively for repairs and acquisition of Additional
Assets and for any other valid Partnership  purpose.  The General Partner shall,
in its sole discretion, determine the amount of payments to such reserve.

                                                       -28-

<PAGE>

                  22.      INDEMNIFICATION AND EXCULPATION OF THE GENERAL
                           PARTNER.

                  22.1 The General  Partner is accountable to the Partnership as
a fiduciary and consequently  must exercise good faith and integrity in handling
Partnership  affairs.  The  General  Partner  and its  Affiliates  shall have no
liability to the  Partnership  which arises out of any action or inaction of the
General Partner or its Affiliates if the General  Partner or its Affiliates,  in
good faith,  determined  that such course of conduct was in the best interest of
the Partnership and such course of conduct did not constitute  gross  negligence
or willful  misconduct  of the General  Partner or its  Affiliates.  The General
Partner and its Affiliates  shall be indemnified by the Partnership  against any
losses, judgments,  liabilities,  expenses and amounts paid in settlement of any
claims sustained by them in connection with the  Partnership,  provided that the
same were not the result of gross  negligence or willful  misconduct on the part
of the General Partner or its Affiliates.

                  22.2 The General Partner shall not be liable for the return of
the Capital Contributions of the Limited Partners, and upon dissolution, Limited
Partners shall look solely to the assets of the Partnership.

                  23.      DISSOLUTION OF THE PARTNERSHIP.
                           ------------------------------

               23.1 The  Partnership  shall be dissolved and  terminated and its
          business  wound up upon  the  occurrence  of any one of the  following
          events:

                           (a) The expiration of its term on December 31, 2047;

                           (b) The  filing  by, on behalf  of,  or  against  the
         General Partner of any petition or pleading,  voluntary or involuntary,
         to declare the General  Partner  bankrupt  under any  bankruptcy law or
         act, or the  commencement in any court of any proceeding,  voluntary or
         involuntary,  to declare the General Partner insolvent or unable to pay
         its debts, or the appointment by any court or supervisory  authority of
         a  receiver,  trustee or other  custodian  of the  property,  assets or
         business of the General  Partner or the  assignment by it of all or any
         part of its  property or assets for the benefit of  creditors,  if said
         action,  proceeding  or  appointment  is  not  dismissed,   vacated  or
         otherwise terminated within ninety (90) days of its commencement;

               (c) The determination of the General Partner that the Partnership
          should be dissolved;

                           (d) The  occurrence  of an event  described in a plan
         approved  by the  General  Partner  and a Majority  in  Interest of the
         Limited Partners  pursuant to Article 16.7 resulting in the dissolution
         of the Partnership;

                                                       -29-

<PAGE>

               (e)  The  election  of  the  General   Partner  to  dissolve  the
          Partnership  following the occurrence of an event described in Article
          17.5;

                           (f) Except as otherwise provided in any plan approved
         by the  General  Partner  and a Majority  in  Interest  of the  Limited
         Partners  pursuant  to  Article  16.7,  the  sale,  exchange  or  other
         disposition  of  all  or  substantially  all  of  the  property  of the
         Partnership without making provision for the replacement thereof; or

                           (g) The dissolution,  retirement, resignation, death,
         disability  or legal  incapacity  of a general  partner,  and any other
         event  resulting in the  dissolution or termination of the  Partnership
         under the laws of the State of Texas.

                  23.2  Notwithstanding  the  provisions  of Article  23.1,  the
Partnership   shall  not  be  dissolved  and  terminated  upon  the  retirement,
resignation,  bankruptcy,  assignment for the benefit of creditors, dissolution,
death,  disability or legal  incapacity of a general  partner,  and its business
shall continue  pursuant to the terms and conditions of this  Agreement,  if any
general partner or general partners remain  following such event;  provided that
such  remaining  general  partner or general  partners  are hereby  obligated to
continue the business of the  Partnership.  If no general  partner remains after
the  occurrence of such event,  the business of the  Partnership  shall continue
pursuant to the terms and conditions of this  Agreement,  if, within ninety (90)
days after the  occurrence of such event,  a Majority in Interest of the Limited
Partners agree in writing to continue the business of the  Partnership,  and, if
necessary,  to  the  appointment  of one  or  more  persons  or  entities  to be
substituted as the general  partner.  In the event the Limited Partners agree as
provided  above to continue  the  business of the  Partnership,  the new general
partner or general  partners shall succeed to all of the powers,  privileges and
obligations of the General Partner,  and the General  Partner's  interest in the
Partnership shall become a Limited Partner's interest hereunder. Furthermore, in
the event a remaining general partner or the Limited  Partners,  as the case may
be, agree to continue the business of the  Partnership as provided  herein,  the
remaining  general  partner or the newly  appointed  general  partner or general
partners,  as the case may be, shall take all steps necessary and appropriate to
prepare and record an amendment to the  Certificate  of Limited  Partnership  to
reflect the continuation of the business of the Partnership and the admission of
a new general partner or general partners, if any.

                  24.      DISTRIBUTION UPON DISSOLUTION.
                           -----------------------------

                  Upon the dissolution and termination of the  Partnership,  the
General Partner or, if there is none, a representative  of the Limited Partners,
shall  cause  the  cancellation  of the  Partnership's  Certificate  of  Limited
Partnership,  shall liquidate the assets of the Partnership, and shall apply and
distribute the proceeds of such liquidation in the following order of priority:

               (a) First,  to the  payment of the debts and  liabilities  of the
          Partnership, and the expenses of liquidation;

                                                       -30-

<PAGE>

                           (b) Second, to the creation of any reserves which the
         General Partner (or such  representatives  of the Limited Partners) may
         deem  reasonably  necessary  for  the  payment  of  any  contingent  or
         unforeseen  liabilities  or  obligations  of the  Partnership or of the
         General  Partner  arising out of or in connection with the business and
         operation of the Partnership; and

                           (c) Third, the balance,  if any, shall be distributed
         to the  Partners in  accordance  with the  Partners'  positive  Capital
         Account  balances after such Capital  Accounts are adjusted as provided
         by Article 12, and any other adjustments required by the Final Treasury
         Regulations  under Section 704(b) of the Code. Any general partner with
         a negative  Capital Account  following the  distribution of liquidation
         proceeds or the  liquidation  of its interest  must  contribute  to the
         Partnership  an amount  equal to such  negative  Capital  Account on or
         before the end of the Partnership's  taxable year (or, if later, within
         ninety days after the date of liquidation).  Any capital so contributed
         shall  be (i)  distributed  to those  Partners  with  positive  Capital
         Accounts until such Capital  Accounts are reduced to zero,  and/or (ii)
         used to discharge recourse liabilities.

                  25.      BOOKS OF ACCOUNT, RECORDS AND REPORTS.
                           -------------------------------------

                  25.1 Proper and complete records and books of account shall be
kept by the General  Partner in which shall be entered fully and  accurately all
transactions  and such other matters relating to the  Partnership's  business as
are usually  entered  into  records and books of account  maintained  by persons
engaged  in  businesses  of a like  character.  The  books  and  records  of the
Partnership  shall be prepared  according to the accounting method determined by
the General Partner.  The Partnership's  fiscal year shall be the calendar year.
The books and  records  shall at all times be  maintained  at the  Partnership's
Records Office and shall be open to the reasonable inspection and examination of
the Partners or their duly authorized representatives during reasonable business
hours.

                  25.2 Within  ninety (90) days after the end of each Year,  the
General  Partner shall send to each person who was a Limited Partner at any time
during such year such tax information,  including,  without limitation,  federal
tax Schedule K-1, as shall be reasonably  necessary for the  preparation by such
person of his or her federal  income tax return.  The General  Partner will also
make  available to the Limited  Partners any other  information  required by the
Act.

                  25.3 The General  Partner shall maintain at the  Partnership's
Records  Office  copies of the  Partnership's  original  Certificate  of Limited
Partnership   and  any  certificate  of  amendment,   restated   certificate  or
certificate of cancellation with respect thereto and such other documents as the
Act shall require.  The General Partner will furnish to any Limited Partner upon
request or as  otherwise  required by law a copy of the  Partnership's  original
Certificate of Limited  Partnership and any  certificate of amendment,  restated
certificate, or certificate of cancellation, if any.

                                                       -31-

<PAGE>

                  25.4 The General Partner shall, in its sole  discretion,  make
for the  Partnership  any and all  elections  for  federal,  state and local tax
purposes including, without limitation, any election, if permitted by applicable
law, to adjust the basis of the Partnership's property pursuant to Code Sections
754,  734(b) and  743(b),  or  comparable  provisions  of state or local law, in
connection  with  transfers  of  interests in the  Partnership  and  Partnership
Distributions.

                  25.5 The  General  Partner is  designated  as the Tax  Matters
Partner  (as  defined  in  Section  6231 of the Code) and to act in any  similar
capacity  under  state or local law,  and is  authorized  (at the  Partnership's
expense):   (i)  to  represent  the   Partnership  and  Partners  before  taxing
authorities  or courts of competent  jurisdiction  in tax matters  affecting the
Partnership  or  Partners  in their  capacity  as  Partners;  (ii) to extend the
statute of limitations for assessment of tax deficiencies  against Partners with
respect to adjustments to the Partnership's federal, state or local tax returns;
(iii) to execute any agreements or other documents relating to or affecting such
tax matters, including agreements or other documents that bind the Partners with
respect to such tax matters or  otherwise  affect the rights of the  Partnership
and Partners; and (iv) to expend Partnership funds for professional services and
costs  associated  therewith.  The General Partner is authorized and required to
notify the federal,  state or local tax  authorities of the appointment of a Tax
Matters  Partner  in  the  manner  provided  in  Treasury   Regulations  Section
301.6231(a)(7)-1,  as modified from time to time. In its capacity as Tax Matters
Partner,  the General Partner shall oversee the Partnership's tax affairs in the
manner which, in its best judgment, is in the interests of the Partners.

                  26.      NOTICES.
                           -------

                  All notices under this Agreement shall be in writing and shall
be deemed to have been given when delivered  personally,  or mailed by certified
or registered mail, postage prepaid,  return receipt  requested.  Notices to the
General  Partner  shall be  delivered  at, or mailed to, its  principal  office.
Notices to the  Partnership  shall be delivered  at, or mailed to, its principal
office with a copy to each of its business offices.  Notice to a Limited Partner
shall be  delivered  to such  Limited  Partner,  or mailed  to the last  address
furnished  by him or her for  such  purposes  to the  General  Partner.  Limited
Partners shall give notice of a change of address to the General  Partner in the
manner provided in this Article.

                  27.      AMENDMENTS.
                           ----------

                  Subject to the  provisions  of Article 28, this  Agreement  is
subject to  amendment  only by  written  consent of the  General  Partner  and a
Majority in Interest of the Limited Partners;  provided, however, the consent of
the Limited Partners shall not be required if such amendments are ministerial in
nature and do not contravene the provisions of Article 28.  Further,  no Limited
Partner  consent shall be required to amend  Schedule A to reflect the admission
of  Partners  as  contemplated  by the  Offering,  any  Dilution  Offering or as
otherwise herein permitted.

                                                       -32-

<PAGE>

                  28.      LIMITATIONS ON AMENDMENTS.
                           -------------------------

                  Notwithstanding  the provisions of Article 27, no amendment to
this Agreement shall:

                           (a) Enlarge the obligations of any Partner under this
         Agreement  or convert the  interest in the  Partnership  of any Limited
         Partner  into the  interest of a general  partner or modify the limited
         liability of any Limited Partner, without the consent of such Partner;

                           (b) Amend the  provisions of Article 12, 13, 15 or 24
         without the approval of the General  Partner and a Majority in Interest
         of the Limited Partners;  provided,  however,  that the General Partner
         may at any time amend such Articles  without the consent of the Limited
         Partners in order to permit the Partnership allocations to be sustained
         for federal  income tax  purposes,  but only if such  amendments do not
         materially  affect  adversely the rights and obligations of the Limited
         Partners, in which case such amendments may only be made as provided in
         this Article 28(b); or

               (c) Amend this Article 28 without the consent of all Partners.

                  29.      MEETINGS, CONSENTS AND VOTING.
                           -----------------------------

                  29.1 A meeting of the  Partnership to consider any matter with
respect to which the  Partners  may vote as set forth in this  Agreement  may be
called  by the  General  Partner  or by  Limited  Partners  who hold  more  than
twenty-five  percent (25%) of the aggregate interests in the Partnership held by
all the Limited Partners.  Upon receipt of a notice requesting a meeting by such
Partner or Partners and stating the purpose of the meeting,  the General Partner
shall, within ten (10) days thereafter, give notice to the Partners of a meeting
of the  Partnership to be held at a time and place  generally  convenient to the
Limited  Partners on a date not earlier than fifteen (15) days after  receipt by
the  General  Partner of the  notice  requesting  a  meeting.  The notice of the
meeting shall set forth the time, date, location and purpose of the meeting.

     29.2 Any consent of a Partner  required by this  Agreement  may be given as
follows:

     (a) By a written  consent given by the  consenting  Partner and received by
the  General  Partner at or prior to the doing of the act or thing for which the
consent is solicited, or

                           (b) By the affirmative vote by the consenting Partner
         to the doing of the act or thing for which the consent is  solicited at
         any meeting  called  pursuant to this  Article to consider the doing of
         such act or thing.

                                                      -33-

<PAGE>

                  29.3 When exercising voting rights expressly granted under the
Articles of this  Agreement,  each Partner shall have that number of votes as is
equal to the  Percentage  Interest  of such  Partner  at the  time of the  vote,
multiplied by 100.

                  30.      SUBMISSIONS TO THE LIMITED PARTNERS.
                           -----------------------------------

                  The General Partner shall give the Limited  Partners notice of
any proposal or other matter  required by any provision of this  Agreement or by
law to be submitted for consideration and approval of the Limited Partners. Such
notice shall include any  information  required by the relevant  provision or by
law.

                  31.      ADDITIONAL DOCUMENTS.
                           --------------------

                  Each  party  hereto  agrees to  execute  and  acknowledge  all
documents and writings which the General Partner may deem necessary or expedient
in the creation of this Partnership and the achievement of its purpose.

                  32.      SURVIVAL OF RIGHTS.
                           ------------------

                  Except as herein  otherwise  provided  to the  contrary,  this
Agreement  shall be binding upon and inure to the benefit of the parties hereto,
their successor and assigns.

                  33.      INTERPRETATION AND GOVERNING LAW.
                           --------------------------------

                  When the  context  in which  words are used in this  Agreement
indicates  that such is the intent,  words in the singular  number shall include
the plural and vise versa; in addition,  the masculine  gender shall include the
feminine and neuter  counterparts.  The Article headings or titles and the table
of  contents  shall not define,  limit,  extend or  interpret  the scope of this
Agreement  or any  particular  Article.  This  Agreement  shall be governed  and
construed  in  accordance  with the laws of the  State of Texas  without  giving
effect to the conflicts of laws provisions thereof.

                  34.      SEVERABILITY.
                           ------------

                  If any provision,  sentence,  phrase or word of this Agreement
or the application  thereof to any person or circumstance shall be held invalid,
the remainder of this Agreement, or the application of such provision, sentence,
phrase, or word to persons or circumstances,  other than those as to which it is
held invalid, shall not be affected thereby.

                  35.      AGREEMENT IN COUNTERPARTS.
                           -------------------------

                  This Agreement may be executed in several  counterparts,  each
of which shall be deemed an original,  but all of which shall constitute one and
the same  instrument.  In  addition,  this  Agreement  may contain more than one
counterpart of the signature page and this Agreement may

                                                       -34-

<PAGE>

be executed by the affixing of the  signatures of each of the Partners to one of
such  counterpart  signature pages; all of such signature pages shall be read as
though  one,  and they shall have the same force and effect as though all of the
signers had signed a single signature page.

                  36.      THIRD PARTIES.
                           -------------

                  The agreements, covenants and representations contained herein
are for the benefit of the parties  hereto  inter se and are not for the benefit
of any  third  parties  including,  without  limitation,  any  creditors  of the
Partnership.

                  37.      POWER OF ATTORNEY.
                           -----------------

                  Each Limited  Partner hereby makes,  constitutes  and appoints
Joseph  Jenkins,  M.D.  and David  Vela,  M.D.,  severally,  with full  power of
substitution,  his or her true and lawful attorneys- in-fact, for him or her and
in his or her name,  place and stead and for his or her use and  benefit to sign
and acknowledge,  file and record,  any amendments hereto among the Partners for
the further  purpose of executing and filing on behalf of each Limited  Partner,
any and all certificates of limited  partnership or other documents necessary to
constitute the Partnership or to effect the continuation of the Partnership, the
admission  or  withdrawal  of a  general  partner  or  a  limited  partner,  the
qualification of the Partnership in a foreign jurisdiction (or amendment to such
qualification),  the admission of substitute Limited Partners or the dissolution
or  termination  of the  Partnership,  provided  such  continuation,  admission,
withdrawal, qualification, or dissolution and termination are in accordance with
the terms of this Agreement.

                  The foregoing power of attorney is a special power of attorney
coupled with an interest,  is  irrevocable  and shall  survive the death,  legal
incapacity,  dissolution  or  bankruptcy  of  each  Limited  Partner.  It may be
exercised by any one of said  attorneys  by listing all of the Limited  Partners
executing any instrument over the signature of the  attorney-in-fact  acting for
all of them.  The power of attorney  shall survive the delivery of an assignment
by a Limited  Partner of the whole or any  portion of his or her Unit.  In those
cases in which the assignee of, or the successor to, a Limited  Partner owning a
Unit has been  approved by the Partners for  admission to the  Partnership  as a
substitute  Limited  Partner,  the power of attorney  shall survive for the sole
purpose of enabling  the General  Partner to execute,  acknowledge  and file any
instrument necessary to effect such substitution.

                  This power of attorney shall not be affected by the subsequent
bankruptcy,  dissolution,  incapacity  or  mental  incompetence  of any  Limited
Partner.

                  38.      ARBITRATION.
                           -----------

                  Any  dispute  arising  out  of  or  in  connection  with  this
Agreement or the breach thereof shall be decided by arbitration in Austin, Texas
in accordance with the then effective commercial

                                                       -35-

<PAGE>

arbitration rules of the American Arbitration Association,  and judgment thereof
may be entered in any court having jurisdiction thereof.

                  39.      CREDITORS.
                           ---------

                  None of the  provisions  of this  Agreement  shall  be for the
benefit of or enforceable by any creditors of the Partnership.

                                             [signature page follows]

                                                       -36-

<PAGE>

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

                                                     GENERAL PARTNER:

                                                By:      PROSTATHERAPIES, INC.,
                                                         a Delaware corporation

                                                     By:/s/ Joseph Jenkins, M.D.
                                                     ---------------------------
                                                         Joseph Jenkins, M.D.
                                                         President

ATTEST:

_________________________                                  [CORPORATE SEAL]
Secretary

                                                     INITIAL LIMITED PARTNER:
                                                     -----------------------

                                                     /s/ James Cochran, M.D.
                                                     -----------------------
                                                     James Cochran, M.D.

                                                       -37-

<PAGE>

STATE OF ____________________)
                                            )
COUNTY OF __________________                         )

                  On this  _______  day of  ___________,  _____,  before me, the
undersigned  Notary Public in and for the County of _______________ in the State
of ___________________________, personally came Joseph Jenkins, M.D., who, being
by me duly sworn, said that he is President of  Prostatherapies,  Inc., the sole
general  partner of Texas I  Prostatherapy  Limited  Partnership,  that the seal
affixed to the  foregoing  instrument  in writing is the  corporate  seal of the
corporation,  and that said  writing was signed,  sworn to, and sealed by him in
behalf  of said  corporation  by its  authority  duly  given.  And the said Stan
Johnson, further certified that the facts set forth in said writing are true and
correct,  and  acknowledged  said  instrument  to be the  act  and  deed of said
corporation.

                  WITNESS my hand and notarial seal.

                                                     Notary Public

My commission expires:

---------------------------

STATE OF ________________                   )
                                            )
COUNTY OF ______________                    )

                  I, _______________________________, a notary public in and for
the State and County set forth  above,  do hereby  certify  that James  Cochran,
M.D.,  personally appeared before me this _____ day of _____________,  _____ and
acknowledged and swore to the due execution of the foregoing Limited Partnership
Agreement in his capacity as the initial limited partner.

                                                     Notary Public

My commission expires:

---------------------------

                                                       -38-

<PAGE>

                           COUNTERPART SIGNATURE PAGE

                  By signing this  Counterpart  Signature  Page, the undersigned
acknowledges  his or  her  acceptance  of  that  certain  Agreement  of  Limited
Partnership  of  Texas  I  Prostatherapy  Limited  Partnership,  and  his or her
intention to be legally bound thereby.

                  Dated this _________ day of ___________________, _______.

                                                     Signature

                                                     Printed Name

STATE OF _______________                    )
                                            )
COUNTY OF _____________                     )

                  BEFORE ME, the undersigned  Notary Public in and for the State
and County set forth  above,  on the _______ day of  __________________,  _____,
personally appeared ___________________________________,  and, being by me first
duly sworn,  stated that (s)he signed this  Counterpart  Signature  Page for the
purpose set forth above and that the statements contained therein are true.

                                                     Signature of Notary Public

                                                     Printed Name of Notary

My Commission Expires:

---------------------------
[SEAL]

                                                       -39-

<PAGE>
                                  SCHEDULE A-1

                        Schedule of Partnership Interests

                    Texas I Prostatherapy Limited Partnership

           CONTRIBUTIONS OF CAPITAL TO THE PARTNERSHIP AND GUARANTIES

                                  Cash Contribution         Percentage Interest

General Partner

Prostatherapies, Inc.                  $147,488                      20
1301 Capital of Texas Highway
Suite C-300
Austin, TX  78746

Limited Partners

Danilo Asase                              1,875                      0.25
Charles Bamberger                        30,000                      4
Marc T. Barrett                           1,875                      0.25
Steve Best                                7,500                      1
Christopher Brehm                         7,500                      1
Robert M. Brenner                         7,500                      1
James Cochran                            30,000                      4
Robert Corwin                             3,750                      0.5
Stephen Corwin                            3,750                      0.5
Richard B. Dulany                         1,875                      0.25
William P. Fitch, III                     7,500                      1
Ralph Fritzsch                            3,750                      0.5
Frederick M. Fry                          1,875                      0.25
Carole Gordon                             7,500                      1
Rudy Haddad                               7,500                      1
Martin E. Hanisch                         1,875                      0.25
Wayne A. Hey                              7,500                      1
Ira Hollander                             5,625                      0.75
Madelyn Holzman                           7,500                      1
Daniel Johnson                            3,750                      0.5
John Johnson                              7,500                      1

<PAGE>

                                  Cash Contribution         Percentage Interest

Alfred A. Kopecky                         7,500                       1
Edward M. Lee                             7,500                       1
Barney Maddox                             3,750                       0.5
David W. McNichols                        5,625                       0.75
Raul Mireles                              7,500                       1
Yondell E. Moore                          3,750                       0.5
Michael Newell                            9,375                       1.25
Dennis Ortiz                              3,750                       0.5
M. Sheldon Polsky                         7,500                       1
John A. Pumphrey                          7,500                       1
William Risk                             18,750                       2.5
Dave Rittenhouse                          3,750                       0.5
Lewis Russell                             7,500                       1
Clifford T. Sarnacki                      7,500                       1
Michael F. Sarosdy                        7,500                       1
Randall Singleton                         9,375                       1.25
Howard Solomon                            9,375                       1.25
C. Ritchie Spence                        13,125                       1.75
Robert G. Stroud                          7,500                       1
Leopoldo Tecauanhuey                      7,500                       1
Addison E. Thurman                        7,500                       1
James B. Tyree                            7,500                       1
Michael Walter                            1,875                       0.25
Gordon R. Welch                           1,875                       0.25
Marshall Wiener                           1,875                       0.25
Donald Willis                             7,500                       1
Sidney Worsham                            1,875                       0.25
Randolph Zuber                            5,625                       0.75
Prostatherapies, Inc.                   241,200                      33.5
                                        -------                     ----
         TOTAL                          737,438                     100%

                                        2

<PAGE>PRIME REFRACTIVE MANAGEMENT, L.L.C.

                                 LOAN AGREEMENT

                       $14,000,000.00 ADVANCING TERM LOAN

                              BANK OF AMERICA, N.A.

                             as Administrative Agent

                                BANKBOSTON, N.A.

                             as Documentation Agent

                                       and

                            THE LENDERS NAMED HEREIN,

                                   as Lenders

                          Dated as of January 31, 2000

                         BANC OF AMERICA SECURITIES LLC

                        as Lead Arranger and Book Manager

<PAGE>

                                 LOAN AGREEMENT

                                       vi

                                TABLE OF CONTENTS

ARTICLE I --  DEFINITIONS...................................................2
         Section 1.1       Amendment and Restatement........................2
         Section 1.2       Definitions......................................2
         Section 1.3       Other Definitional Provisions...................17

ARTICLE II --  ADVANCES....................................................17
         Section 2.1       Commitments.....................................17
         Section 2.2        Notes..........................................18
         Section 2.3       Repayment of Notes..............................18
         Section 2.4       Interest........................................19
         Section 2.5       Borrowing Procedure.............................19
         Section 2.6       Continuations; Conversions......................20
         Section 2.7       Use of Proceeds.................................20
         Section 2.8       Fees............................................20

ARTICLE III --  PAYMENTS...................................................20
         Section 3.1       Method of Payment...............................20
         Section 3.2       Optional Prepayment.............................21
         Section 3.3       Pro Rata Treatment..............................21
         Section 3.4       Non-Receipt of Funds by the
                                 Administrative Agent......................21
         Section 3.5       Withholding Taxes...............................21
         Section 3.6       Withholding Tax Exemption.......................22
         Section 3.7       Computation of Interest.........................22
         Section 3.8       Order of Application............................22

ARTICLE IV --  YIELD PROTECTION AND ILLEGALITY.............................23
         Section 4.1       Additional Costs................................23
         Section 4.2       Limitation on Eurodollar Advances...............24
         Section 4.3       Illegality......................................24
         Section 4.4       Treatment of Eurodollar Advances................25
         Section 4.5       Compensation....................................25
         Section 4.6       Capital Adequacy................................26

ARTICLE V --  SECURITY.....................................................26
         Section 5.1       Collateral......................................26
         Section 5.2       Future Liens. ..................................27
         Section 5.3       Release of Collateral...........................28
         Section 5.4       Setoff..........................................28

ARTICLE VI --  CONDITIONS PRECEDENT........................................28
         Section 6.1       Initial Advance.................................28
         Section 6.2       All Advances....................................30

ARTICLE VII --  REPRESENTATIONS AND WARRANTIES.............................31
         Section 7.1       Existence.......................................31
         Section 7.2       Financial Statements............................31
         Section 7.3       Corporate Action:  No Breach....................32
         Section 7.4       Operation of Business...........................32
         Section 7.5       Litigation and Judgments........................32
         Section 7.6       Rights in Properties; Liens.....................32
         Section 7.7       Enforceability..................................32
         Section 7.8       Approvals.......................................33
         Section 7.9       Debt............................................33
         Section 7.10      Taxes...........................................33
         Section 7.11      Use of Proceeds; Margin Securities..............33
         Section 7.12      ERISA...........................................33
         Section 7.13      Disclosure......................................33
         Section 7.14      Subsidiaries; Partnerships......................34
         Section 7.15      Agreements......................................34
         Section 7.16      Compliance with Legal Requirements;
                                Governmental Authorizations................34
         Section 7.17      Investment Company Act..........................35
         Section 7.18      Public Utility Holding Company Act..............35
         Section 7.19      Environmental Matters...........................35
         Section 7.20      Year 2000 Compliance............................35

ARTICLE VIII --  POSITIVE COVENANTS........................................35
         Section 8.1       Reporting Requirements..........................35
         Section 8.2       Maintenance of Existence; Conduct of Business...38
         Section 8.3       Maintenance of Properties.......................38
         Section 8.4       Taxes and Claims................................38
         Section 8.5       Insurance.......................................39
         Section 8.6       Inspection Rights...............................39
         Section 8.7       Keeping Books and Records.......................39
         Section 8.8       Compliance with Laws............................39
         Section 8.9       Compliance with Agreements......................39
         Section 8.10      Further Assurances..............................39
         Section 8.11      ERISA...........................................40
         Section 8.12      Information Relating to Proposed Acquisitions...40
         Section 8.13      After-Acquired Subsidiaries.....................40
         Section 8.14      Syndication Cooperation.........................40

ARTICLE IX --  NEGATIVE COVENANTS..........................................40
         Section 9.1       Debt............................................40
         Section 9.2       Limitation on Liens.............................41
         Section 9.3       Mergers, Etc....................................42
         Section 9.4       Restricted Payments.............................42
         Section 9.5       Investments.....................................42
         Section 9.6       Limitation on Issuance of Capital Stock.........43
         Section 9.7       Transactions With Affiliates....................43
         Section 9.8       Disposition of Assets.  ........................43
         Section 9.9       Sale and Leaseback..............................43
         Section 9.10      Prepayment of Debt..............................43
         Section 9.11      Nature of Business..............................44
         Section 9.12      Environmental Protection........................44
         Section 9.13      Accounting......................................44
         Section 9.14      Amendment of Partnership
                                and Management Agreements..................44
         Section 9.15      Financial Hedges................................44
         Section 9.16      Capital Expenditures............................44
         Section 9.17      Operating Expenses..............................44
         Section 9.18      Control of Prime Refractive, L.L.C..............45

ARTICLE X --  FINANCIAL COVENANTS..........................................45
         Section 10.1      Senior Funded Debt To EBITDA Ratio..............45
         Section 10.2      Debt Service Coverage Ratio.....................45

ARTICLE XI --  DEFAULT.....................................................45
         Section 11.1      Events of Default...............................45
         Section 11.2      Remedies........................................47
         Section 11.3      Performance by the Administrative Agent.........48

ARTICLE XII --  THE ADMINISTRATIVE AGENT...................................48
         Section 12.1      Appointment, Powers and Immunities..............48
         Section 12.2      Rights of Administrative Agent as a Lender......49
         Section 12.3      Sharing of Payments, Etc........................50
         Section 12.4      Indemnification.................................50
         Section 12.5      Independent Credit Decisions....................51
         Section 12.6      Several Commitments.............................51
         Section 12.7      Successor Administrative Agent..................51
         Section 12.8      Independent Contractor..........................52

ARTICLE XIII --  MISCELLANEOUS.............................................52
         Section 13.1      Expenses........................................52
         Section 13.2      Indemnification.................................52
         Section 13.3      No Duty.........................................53
         Section 13.4      No Fiduciary Relationship.......................53
         Section 13.5      No Waiver; Cumulative Remedies..................53
         Section 13.6      Successors and Assigns..........................53
         Section 13.7      Survival........................................56
         Section 13.8      ENTIRE AGREEMENT................................56
         Section 13.9      Amendments, Etc.................................56
         Section 13.10     Maximum Interest Rate...........................56
         Section 13.11     Notices.........................................57
         Section 13.12     Governing Law...................................57
         Section 13.13     Counterparts....................................57
         Section 13.14     Severability....................................57
         Section 13.15     Headings........................................57
         Section 13.16     Construction....................................57
         Section 13.17     Independence of Covenants.......................57
         Section 13.18     Confidentiality.................................58
         Section 13.19     Waiver of Jury Trial............................58
         Section 13.20     Choice of Forum; Consent to
                                Service of Process and Jurisdiction. ......58
         Section 13.21     Chapter 346.....................................59

<PAGE>

                                INDEX TO EXHIBITS

Exhibit           Description of Exhibit

A                 Advance Request Form
B                 Form of Assignment and Acceptance
C                 Form of Note
D                 Perfection Certificate

E                 Form of Opinion of Counsel for Borrower and Guarantors
F                 Compliance Certificate
G                 Permitted Refractive Acquisition Certificate

                                                 INDEX TO SCHEDULES

Schedule Description of Schedule

1                 Commitments
2                 Guarantors
3                 Partnerships
7.5               Existing Litigation
7.9               Existing Debt
7.14.1            Capitalization of Subsidiaries
7.14.2            Partners
7.15              Agreements
7.16              Governmental Disclosures
7.19              Environmental Matters
9.2               Existing Liens

<PAGE>

                                 LOAN AGREEMENT

                                 LOAN AGREEMENT

         THIS LOAN AGREEMENT (the "Agreement"), dated as of January 31, 2000, is
among PRIME REFRACTIVE MANAGEMENT,  L.L.C., a Delaware limited liability company
("Borrower"),  each of the  lenders or other  lending  institutions  which is or
which may from  time to time  become a  signatory  hereto  or any  successor  or
assignee thereof  (collectively,  the "Lenders" and  individually,  a "Lender"),
BANK OF AMERICA,  N.A. ("Bank of America"),  a national banking association,  as
Administrative  Agent  for  itself  and the  other  Lenders  (in such  capacity,
together with its successors in such capacity, the "Administrative  Agent"), and
BANKBOSTON,   N.A.   ("BankBoston"),   a  national   banking   association,   as
Documentation Agent for itself and the other Lenders (in such capacity, together
with its successors in such capacity, the "Documentation Agent").

                                 R E C I T A L S

         1. Reference is hereby made to that certain Loan Agreement  dated as of
November 28,  1994,  by and between  Prime  Medical  Services,  Inc., a Delaware
corporation ("Prime Medical"),  of which Borrower is a Wholly-Owned  Subsidiary,
the Banks defined therein, and BankBoston (then known as The First National Bank
of Boston),  as Agent for the Banks defined therein,  as amended by that certain
First Amendment to Loan Agreement dated as of August 17, 1995, as amended by the
Amended  and  Restated  Loan  Agreement  dated as of April 26,  1996 among Prime
Medical,  Bank of  America  (then  known as  NationsBank  of  Texas,  N.A.),  as
Documentation Agent,  BankBoston,  as Administrative  Agent, and BankBoston,  as
Syndication  Agent,  as amended by the First  Amendment  to Amended and Restated
Loan Agreement dated as of June 14, 1996 among Prime Medical,  BankBoston,  Bank
of America (then known as NationsBank of Texas, N.A.), and the other banks named
therein,  as further  amended by the Second  Amended and Restated Loan Agreement
dated as of March 31, 1997 among Prime Medical,  BankBoston,  as  Administrative
Agent,  Bank  of  America  (then  known  as  NationsBank  of  Texas,  N.A.),  as
Documentation  Agent,  and NationsBanc  Capital  Markets,  Inc., and the lenders
named  therein,  as amended and waived from time to time, as further  amended by
the Third Amended and Restated Loan  Agreement  dated as of April 20, 1998 among
Prime  Medical,  BankBoston,  as original  Administrative  Agent,  and successor
Documentation Agent, Bank of America (then known as NationsBank of Texas, N.A.),
as original  Documentation  Agent and successor  Administrative  Agent,  and the
lenders named  therein,  as amended and waived from time to time  (collectively,
the "Original Credit Agreement").

         2. The parties hereto desire to  restructure,  modify,  refinance,  and
replace a $14,000,000  portion of the credit  available  under  Original  Credit
Agreement, subject to the terms and conditions set forth in this Agreement.

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants herein contained, the parties hereto agree as follows:

<PAGE>

                            ARTICLE I -- DEFINITIONS

         Section 1.1 Amendment and Restatement.  The Obligations (as hereinafter
defined) are in  restructure,  modification,  refinancing,  and replacement of a
portion  of the  credit  available  under  the  Original  Credit  Agreement  and
constitutes and is hereby designated by Borrower as "Designated  Senior Debt" as
defined in the Senior  Subordinated  Indenture,  and is a portion of the "Senior
Credit Facility" under the Senior Subordinated Indenture.

     Section 1.2  Definitions.  As used in this  Agreement,  the following terms
shall have the following meanings:  "Acquisition" means any transaction,  or any
series of related  transactions,  consummated  on or after the date  hereof,  by
which Borrower or Prime Refractive,  L.L.C.  directly or indirectly (a) acquires
all or substantially  all of the assets of any Person,  whether through purchase
of assets, merger, or otherwise, (b) acquires (in one transaction or as the most
recent  transaction in a series of  transactions) at least a majority (in number
of votes) of the securities (or similar  ownership  interests) of any Person, or
(c) acquires (in one  transaction or as the most recent  transaction in a series
of  transactions)  at least a majority  of the general  partnership  or managing
member interests of any Person, or (d) acquires additional  Partnership or other
equity interests in any Subsidiary.

         "Additional Costs" has the meaning specified in Section 4.1.

         "Adjusted EBITDA" means for any Person for any period,  the sum of: (i)
EBITDA,  except  in  the  case  of  any  Target  Company  in  respect  of  which
Consolidated  Earn-Out  Indebtedness  is payable,  EBITDA of such Target Company
shall be increased by the amount, if any, by which the annualized fiscal year to
date EBITDA used in the definition of Consolidated Earn-Out Indebtedness exceeds
the actual EBITDA for the four previous  fiscal quarters of such Person for such
period,  plus  (ii)  without  duplication,  all cash  Distributions  related  to
minority  interests in Partnerships  actually  received by Borrower;  plus (iii)
without  duplication,  on a pro forma  basis the  EBITDA of any  Target  Company
acquired  during  such  period as if it were  acquired  on the first day of such
period.

         "Adjusted  Eurodollar Rate" means,  for any Eurodollar  Advance for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,  to
the nearest 0.01%) determined by the Administrative Agent to be equal to (a) the
Eurodollar Rate for such Eurodollar  Advance for such Interest Period divided by
(b) 1.00 minus the  Reserve  Requirement  for such  Eurodollar  Advance for such
Interest Period.

     "Administrative  Agent"  means Bank of  America,  N.A.,  and its  permitted
successors  and  assigns  as  "Administrative  Agent"  for  Lenders  under  this
Agreement.

         "Advance"  means each advance of funds by the Lenders or any of them to
Borrower pursuant to Section 2.5(a).

         "Advance Request Form" means a certificate,  in substantially  the form
of Exhibit A, properly completed and signed by Borrower requesting an Advance.

<PAGE>

         "Affiliate" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, Controls or is Controlled by,
or is under common  Control with,  such Person,  (b) that directly or indirectly
beneficially  owns or holds  five  percent  (5%) or more of any  class of voting
stock of such  Person,  or (c) five  percent (5%) or more of the voting stock of
which is  directly  or  indirectly  beneficially  owned or held by the Person in
question;  provided,  however,  in no event  shall the  Agents or any  Lender be
deemed an Affiliate of Borrower or any of its Subsidiaries.

         "After-Acquired Subsidiary" has the meaning specified in Section 8.13.

     "Agents" means the Administrative  Agent, the Documentation  Agent, and the
Lead Arranger. "Agent" means any one of the Agents.

         "Alternate  Base  Rate"  means,  at any time,  the  greater  of (a) the
variable rate of interest  established  from time to time by the  Administrative
Agent as its  "base  rate"  and set by the  Administrative  Agent  as a  general
reference  rate of interest  charged by the  Administrative  Agent,  and (b) the
Federal Funds Rate plus  one-half of one percent  (.5%).  Borrower  acknowledges
that the  Administrative  Agent may,  from time to time,  extend credit to other
borrowers at rates of interest varying from, and having no relationship to, such
general  reference  rate.  Each change in the  Alternate  Base Rate shall become
effective  without prior notice to Borrower  automatically  as of the opening of
business on the date of such change in the Alternate Base Rate.

         "Alternate  Base Rate  Advances"  means  Advances that bear interest at
rates based upon the Alternate Base Rate.

         "Applicable  Lending  Office"  means for each  Lender  and each Type of
Advance,  the lending  office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Advance below its name on the signature pages hereof
or an Assignment and  Acceptance,  or such other office of such Lender (or of an
Affiliate  of such  Lender)  as such  Lender  may from time to time  specify  to
Borrower  and the  Administrative  Agent as the office by which its  Advances of
such Type are to be made and maintained.

         "Applicable  Margin" means the interest  margin over the Alternate Base
Rate or the Adjusted Eurodollar Rate, as the case may be, for Advances under the
Commitment  (a) from the date hereof until the delivery of financial  statements
and a  compliance  certificate  for the period  ending  December  31,  1999,  as
required hereunder, three-eighths of one percent (.375%) for Alternate Base Rate
Advances,  and one and  seven-eighths  of one percent  (1.875%)  for  Eurodollar
Advances; and (b) thereafter,  based on the Total Funded Debt to EBITDA Ratio as
of and for the most recent four (4) quarter  period ending on or before the date
of determination, the margin set forth opposite such ratio below:

========================== =========================== =========================

                                Applicable Margin

       Total Funded               Alternate Base Rate        Applicable Margin
   Debt to EBITDA Ratio                Advances             Eurodollar Advances

-------------------------- --------------------------- -------------------------
-------------------------- --------------------------- -------------------------

Less than 1.5 to 1.0                   0.375%                     1.875%
-------------------------- --------------------------- -------------------------
-------------------------- --------------------------- -------------------------

-------------------------- --------------------------- -------------------------
-------------------------- --------------------------- -------------------------

-------------------------- --------------------------- -------------------------
-------------------------- --------------------------- -------------------------

Greater than or equal
         to 2.75 to 1.0                1.375%                     2.875%
========================== =========================== =========================

<PAGE>

The Total  Funded Debt to EBITDA  Ratio shall be  determined  from the then most
current of either (a) the quarterly or annual  financial  statements and related
compliance certificate delivered pursuant to Section 8.1, or (b) the most recent
Advance  Request Form for a Permitted  Refractive  Acquisition,  calculating any
adjustments to such ratio  necessitated as a result of the Permitted  Refractive
Acquisition  for which such  Advance was made.  The  adjustment,  if any, to the
Applicable Margin shall be effective  commencing on the fifth (5th) Business Day
after delivery of such financial statements (and related compliance certificate)
or the respective date of Advance for a Permitted Refractive Acquisition, as the
case may be. If  Borrower  fails at any time to  furnish  to the  Administrative
Agent  and  the  Lenders  the  financial   statements  and  related   compliance
certificate  as  required to be  delivered  pursuant  to Section  8.1,  then the
maximum  Applicable  Margin  shall  apply  until  such  time as  such  financial
statements and compliance certificates are so delivered.

         "Applicable  Rate"  means:  (a) during any period that an Advance is an
Alternate Base Rate Advance, the Alternate Base Rate plus the Applicable Margin;
and (b) during any period that an Advance is a Eurodollar Advance,  the Adjusted
Eurodollar Rate plus the Applicable Margin.

         "Applicable  Unused  Fee  Percentage"  means  the per  annum  rate with
respect to the unused portion of the  Commitments as follows:  (a) from the date
hereof until delivery of financial  statements and a compliance  certificate for
the period ending December 31,1999, as required  hereunder,  three-eights of one
percent  (.375%);  and (b) thereafter,  based on the Total Funded Debt to EBITDA
Ratio as of and for the most recent four (4) quarter  period ending on or before
the date of determination, the percentage set forth opposite such ratio below:

====================================================== =========================

                       Total Funded Applicable Unused Fee

          Debt to EBITDA Ratio                         Percentage

------------------------------------------------------ -------------------------
------------------------------------------------------ -------------------------

          Less than 1.5 to 1.0                                            .375%
------------------------------------------------------ -------------------------
------------------------------------------------------ -------------------------

          Greater than or equal to 1.5 to 1.0                             .500%
====================================================== =========================

The Applicable  Unused Fee Percentage  shall be adjusted,  if necessary,  at the
same time as adjustments to the Applicable Margin. If Borrower fails at any time
to furnish to the Administrative  Agent and the Lenders the financial statements
and related  compliance  certificate  as required  to be  delivered  pursuant to
Section 8.1, then the maximum Applicable Unused Fee Percentage shall apply until
such  time as such  financial  statements  and  compliance  certificates  are so
delivered.

         "Assignee" has the meaning specified in Section 13.6.

         "Assigning Lender" has the meaning specified in Section 13.6.

         "Assignment and Acceptance" means an assignment and acceptance  entered
into by an Assigning Lender and its Assignee and accepted by the  Administrative
Agent pursuant to Section 13.6, in substantially the form of Exhibit B.

     "Bank of America" means Bank of America,  N.A. and its permitted successors
and assigns.

     "BankBoston"  means  BankBoston,  N.A.  and its  permitted  successors  and
assigns.

<PAGE>

         "Basle  Accord" means the proposals for  risk-based  capital  framework
described  by  the  Basle  Committee  on  Banking  Regulations  and  Supervisory
Practices  in  its  paper   entitled   "International   Convergence  of  Capital
Measurement and Capital  Standards" dated July,  1988, as amended,  supplemented
and  otherwise  modified  and in effect  from time to time,  or any  replacement
thereof.

         "Borrower Security Agreement" means (a) the Borrower Security Agreement
dated as of the date  hereof,  executed by  Borrower in favor of  Administrative
Agent for the benefit of the Lenders, as the same may be amended,  supplemented,
or modified from time to time.

         "Business Day" means (a) any day on which the  Administrative  Agent is
open for regular  business,  and (b) with respect to all  borrowings,  payments,
Conversions,  Continuations,  Interest  Periods,  and notices in connection with
Eurodollar  Advances,  any day which is a Business  Day  described in clause (a)
above and which is also a day on which  dealings in Dollar  deposits are carried
out in the London interbank market.

         "Capital  Expenditure"  means any  expenditure by a Person for an asset
which  will be used in a year or  years  subsequent  to the  year in  which  the
expenditure  is made  and  which  asset is  properly  classifiable  in  relevant
financial  statements  of such Person as property,  equipment  or  improvements,
fixed assets, or a similar type of capitalized asset in accordance with GAAP.

         "Capital Lease Obligations" means, as to any Person, the obligations of
such Person to pay rent or other  amounts  under a lease of (or other  agreement
conveying the right to use) real and/or personal property, which obligations are
required to be  classified  and  accounted  for as a capital  lease on a balance
sheet of such Person under GAAP. For purposes of this  Agreement,  the amount of
such Capital Lease  Obligations  shall be the  capitalized  amount  thereof,  as
determined in accordance with GAAP.

         "Change  in  Control"  means any of the  following  has  occurred:  (i)
Borrower  ceases to own legally and  beneficially at least 51% of the membership
interests in Prime Refractive,  LLC or ceases to Control Prime Refractive,  LLC,
(ii) Prime RVC ceases to own  legally  and  beneficially  100% of the issued and
outstanding equity securities of Borrower,  (iii) PMOI ceases to own legally and
beneficially  100% of the issued  and  outstanding  stock of Prime RVC,  or (iv)
Prime Medical Services,  Inc. ceases to own legally and beneficially 100% of the
issued and outstanding stock of PMOI.

         "Code" means the Internal  Revenue  Code of 1986,  as amended,  and the
regulations promulgated and rulings issued thereunder.

         "Collateral" has the meaning specified in Section 5.1.

         "Collateral  Documents"  means the  Borrower  Security  Agreement,  the
Guarantor Security Agreements,  the Pledge Agreements, and all other collateral,
security,  lien  creating  agreements  executed or  delivered  pursuant to or in
connection with this Agreement, as the same may be amended,  modified,  renewed,
or supplemented from time to time.

<PAGE>

         "Commitment" means, as to each Lender as of any date, the obligation of
such Lender on such date to make  Advances  hereunder in an aggregate  principal
amount at any time  outstanding  up to but not  exceeding  the  amount  shown on
Schedule 1 as its  Commitment,  as the same may be reduced  pursuant  to Section
2.1(b) or terminated  pursuant to Section 2.1(b) or Section 11.2 and as the same
may be increased or decreased from time to time by further  assignment  pursuant
to Section 13.6.  "Commitments"  means the  Commitments of all of the Lenders in
the original aggregate amount of $14,000,000.00.

         "Companies" means Borrower and its Subsidiaries.

         "Confidential  Information"  means any and all information  relating to
the Companies,  including,  without limitation,  information relating to each of
the Company's financial condition, business plans, management, earnings, assets,
liabilities,   contracts,   processes,   products,   research  and   development
activities, intellectual property, services, customers, suppliers, marketing and
sales.  In addition,  Confidential  Information  shall include any and all other
information  marked  or  identified  in  writing  by  any of  the  Companies  as
"Confidential"  or  "Confidential  Information"  and  provided  by  each  of the
Companies or its representatives to any of the Lenders or the Agents or obtained
by the  Lenders or the  Agents  after an  inspection  pursuant  to Section  8.6.
Notwithstanding the foregoing, "Confidential Information" shall not include:

                  (i) any  information  known to an  Agent or a Lender  prior to
         disclosure  by  any  of  the  Companies  or  its  representatives,   as
         documented prior to such disclosure in such Agent's or Lender's written
         records;

                  (ii) any information  which an Agent or a Lender  demonstrates
         became available to it on a non-confidential basis from a source (other
         than  any of the  Companies)  who is  not  bound  by a  confidentiality
         agreement with, or any other contractual, legal or fiduciary obligation
         of  confidentiality  to, any of the  Companies  or any other party with
         respect to such information;

                  (iii) any information which an Agent or a Lender  demonstrates
         is or becomes generally  available to the public other than as a result
         of a disclosure by it in breach of Section 13.18; and

                  (iv) any information  which an Agent or a Lender  demonstrates
         was  conceived of or developed  by it or any of its  employees  without
         access  or  reference,  directly  or  indirectly,  to the  Confidential
         Information.

         "Consolidated  Earn-Out  Indebtedness"  means as to any Person,  at any
time, in connection with each  applicable  Permitted  Refractive  Acquisition in
which an earn-out payment or other post-closing payment or payments is or may be
due pursuant to the applicable purchase or acquisition agreement,  the projected
aggregate  amount of such  earn-out or  post-closing  payments  that would be or
become due based upon all events or  circumstances  that have occurred as of any
date of determination, regardless of whether any such payments are then actually
payable under the terms of the  applicable  purchase or  acquisition  agreement;
provided that to the extent any such payments are based on net income, revenues,
EBITDA or similar  financial  performance  criteria of any Target  Company for a
defined   post-closing  period  or  periods,  the  actual  applicable  financial
performance  during the  applicable  period to date shall be  utilized in making
such projection.  Borrower shall submit the calculation of Consolidated Earn-Out
Indebtedness with respect to each applicable Permitted  Refractive  Acquisition,
together with each compliance  certificate delivered pursuant to Section 8.1(d),
together  with any  applicable  supporting  documentation,  all of which must be
satisfactory to Administrative Agent.

         "Consolidated  Net Income"  means,  for any Person for any period,  the
amount which, in conformity with GAAP,  would be shown on a consolidated  income
statement of such Person as net income for such period,  after  deduction of any
minority interests.

<PAGE>

         "Continue,"  "Continuation," and "Continued" refers to the continuation
pursuant to Section 2.6 of a Eurodollar  Advance from one Interest Period to the
next Interest Period.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting  securities  or other  ownership  interests,  by
contract or otherwise.  "Controlling" and "Controlled" have meanings correlative
thereto.

         "Conversion" and "Converted" refers to a conversion pursuant to Section
2.6 of one Type of Advance into another Type of Advance.

         "Debt"  means as to any  Person at any time  (without  duplication  and
without duplication among the Companies): (a) all obligations of such Person for
borrowed money;  (b) all obligations of such Person  evidenced by bonds,  notes,
debentures,  or  other  similar  instruments,   including,  without  limitation,
Subordinated  Debt;  (c) all  obligations  of such  Person  to pay the  deferred
purchase  price  of  property  or  services,   including,   without  limitation,
Consolidated Earn-Out Indebtedness, except trade accounts payable of such Person
arising in the  ordinary  course of business  that are not past due by more than
ninety (90) days;  (d) all Capital  Lease  Obligations  of such Person;  (e) all
indebtedness  or other  obligations  of others of the  types  described  in this
definition, if Guaranteed by such Person or for which such Person is liable as a
partner in any  partnership  or joint  venturer  in any joint  venture;  (f) all
obligations secured by a Lien existing on property owned by such Person, whether
or not the  obligations  secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person; (g) all reimbursement  obligations of
such Person  (whether  contingent or otherwise) in respect of letters of credit,
banker's  acceptances,  surety  or other  bonds  and  similar  instruments;  (h)
obligations under any Financial Hedge; and (i) all liabilities of such Person in
respect of unfunded vested benefits under any Plan; provided,  however, that the
term  Debt  shall  not  include  endorsements  of  instruments  for  deposit  or
collection in the ordinary course of business.

         "Debt Service Coverage Ratio" means, as to the Companies  (including on
a pro forma basis any Company acquired in any Permitted  Refractive  Acquisition
for each of the  components of and for the entire period of  calculation of Debt
Service  Coverage  Ratio)  for any  period,  the  ratio  of (a) the sum of:  (i)
Adjusted  EBITDA for such  period,  minus (ii) the  aggregate  amount of capital
expenditures made during such period, minus (iii) all cash tax payments, divided
by (b) the sum of: (w) all cash interest  payments payable during such period in
respect  of all  Debt of the  Companies  (without  deduction  for  any  minority
interests),  plus (x) 1/7 of the outstanding principal amount of the Loans as of
any  date of  determination,  plus  (y)  1/7 of the  then  applicable  aggregate
Earn-Out  Indebtedness,  plus (z) any regularly  scheduled principal payments on
Debt  (including   Subordinated  Debt,  but  excluding   Consolidated   Earn-Out
Indebtedness)  all as determined on a rolling four (4) quarter and  consolidated
basis in accordance with GAAP.

         "Default"  means an Event of Default or the  occurrence  of an event or
condition  which  with the  giving of notice or the lapse of time or both  would
become an Event of Default.

         "Default  Rate" means the lesser of (a) the Maximum  Rate,  and (b) the
sum of the  Alternate  Base Rate in effect  from day to day plus the  Applicable
Margin plus two percent (2%).

         "Defaulting  Lender"  means any Lender that in  Administrative  Agent's
reasonable  judgment  has  defaulted  on  any  of  its  obligations  under  this
Agreement.

<PAGE>

         "Distribution"  for any Person means, with respect to any shares of any
capital  stock,  general  or  limited  partnership  interests,  or other  equity
securities issued by such Person, (a) the retirement,  redemption,  purchase, or
other  acquisition  for value of any such  securities,  (b) the  declaration  or
payment of any  dividend,  distribution,  income,  or other  amount,  on or with
respect to any such  securities or interests,  and (c) any other payment by such
Person with respect to such securities or interests.

         "Documentation  Agent"  means  BankBoston,   N.A.,  and  its  permitted
successors  and  assigns  as  "Documentation   Agent"  for  Lenders  under  this
Agreement.

         "Dollars" and "$" mean lawful money of the United States of America.

         "EBITDA" means,  for any Person for any period:  (a)  Consolidated  Net
Income  of such  Person  for such  period,  determined  after  deduction  of any
minority interests,  plus (b) all amounts deducted therefrom during such period,
in conformity with GAAP, for interest, taxes, depreciation and amortization.

         "Eligible  Assignee" means (i) a Lender; (ii) an Affiliate of a Lender;
or (iii) any other Person approved by the  Administrative  Agent (which approval
shall not be  unreasonably  withheld  or delayed by  Administrative  Agent) and,
unless  an Event of  Default  has  occurred  and is  continuing  at the time any
assignment is effected in accordance with Section 13.6, Borrower,  such approval
not to be  unreasonably  withheld or delayed by Borrower and such approval to be
deemed given by Borrower if no objection is received by the assigning Lender and
the Administrative Agent from Borrower within two (2) Business Days after notice
of such  proposed  assignment  has been  provided  by the  assigning  Lender  to
Borrower;  provided, however, that neither Borrower nor an Affiliate of Borrower
shall qualify as an Eligible Assignee.

     "Environmental  Laws"  means any and all  federal,  state,  and local laws,
regulations,  and requirements pertaining to health, safety, or the environment,
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation and Liability Act of 1980, 42 U.S.C.ss.  9601 et seq., the Resource
Conservation  and  Recovery  Act  of  1976,  42  U.S.C.ss.  6901  et  seq.,  the
Occupational Safety and Health Act, 29 U.S.C.ss. 651 et seq., the Clean Air Act,
42 U.S.C.ss.7401 et seq., the Clean Water Act, 33 U.S.C.ss.1251 et seq., and the
Toxic  Substances   Control  Act,  15  U.S.C.ss.2601  et  seq.,  as  such  laws,
regulations, and requirements may be amended or supplemented from time to time.

         "Environmental  Liabilities"  means, as to any Person, all liabilities,
obligations,  responsibilities,  Remedial  Actions,  losses,  damages,  punitive
damages,  consequential damages, treble damages, costs, and expenses (including,
without limitation,  all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility  studies),
fines, penalties,  sanctions,  and interest incurred as a result of any claim or
demand,  by any Person,  whether  based in  contract,  tort,  implied or express
warranty,   strict   liability,   criminal  or  civil  statute,   including  any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person,  arising from  environmental,  health or safety  conditions or the
Release or  threatened  Release of a Hazardous  Material  into the  environment,
resulting  from the past,  present,  or future  operations of such Person or its
Affiliates.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time,  and the  regulations  and published  interpretations
thereunder.

<PAGE>

         "ERISA Affiliate" means any corporation or trade or business which is a
member of the same  controlled  group of  corporations  (within  the  meaning of
Section 414(b) of the Code) as Borrower or is under common  control  (within the
meaning of Section 414(c) of the Code) with Borrower.

         "Eurodollar  Advances"  means  Advances the interest rates on which are
determined on the basis of the rates  referred to in the definition of "Adjusted
Eurodollar Rate" in this Section 1.1.

         "Eurodollar  Rate" means,  for any Eurodollar  Advance for any Interest
Period  therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor  page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m.  (London  time) two Business  Days prior to the first day of such  Interest
Period for a term  comparable  to such Interest  Period.  If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Advance for any Interest Period therefor,  the rate per annum (rounded  upwards,
if necessary,  to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London  interbank  offered rate for deposits in Dollars at  approximately
11:00  a.m.  (London  time)  two  Business  Days  prior to the first day of such
Interest  Period  for a term  comparable  to  such  Interest  Period,  provided,
however,  if more than one rate is  specified on Reuters  Screen LIBO Page,  the
applicable rate shall be the arithmetic mean of all such rates.

         "Event of Default" has the meaning specified in Section 11.1.

         "Federal  Funds Rate" means,  for any day, the rate per annum  (rounded
upwards,  if necessary,  to the nearest 0.01%) equal to the weighted  average of
the rates on overnight  Federal funds  transactions  with members of the Federal
Reserve  System  arranged by Federal  funds brokers on such day, as published by
the Federal  Reserve Bank of New York on the Business Day next  succeeding  such
day, provided that (a) if the day for which such rate is to be determined is not
a Business  Day, the Federal  Funds Rate for such day shall be such rate on such
transactions  on the next  preceding  Business  Day as so  published on the next
succeeding  Business  Day, and (b) if such rate is not so published on such next
succeeding Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the  Administrative  Agent on such day on such  transactions  as
determined by the Administrative Agent.

         "Financial Hedge" means either (a) a swap, collar, floor, cap, or other
contract  which is intended to reduce or eliminate the risk of  fluctuations  in
interest rates, or (b) a foreign exchange,  currency hedging, commodity hedging,
or other  contract  which is intended to reduce or eliminate  the market risk of
holding  currency or a commodity  in either the cash or futures  markets,  which
Financial  Hedge  under  either  clause  (a) or clause  (b) is  entered  into by
Borrower with any Lender or an Affiliate of any Lender.

         "GAAP" means generally  accepted  accounting  principles,  applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American  Institute of Certified Public  Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective  successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent  basis" when the  accounting  principles
applied in a current  period are  comparable  in all material  respects to those
accounting principles applied in a preceding period, except for changes required
by GAAP.  In the event of a change in GAAP,  Administrative  Agent and  Borrower
will  thereafter  negotiate  in good  faith  to  revise  any  covenants  of this
Agreement affected thereby in order to make such covenants  consistent with GAAP
then in effect.

<PAGE>

         "Governmental  Authority" means any nation or government,  any state or
political subdivision thereof and any entity exercising executive,  legislative,
judicial,   regulatory,   or  administrative   functions  of  or  pertaining  to
government.

         "Governmental Authorization" shall mean any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.

         "Guarantee"  by  any  Person  means  any   obligation,   contingent  or
otherwise,  of such Person directly or indirectly guaranteeing any Debt or other
obligation  of any other  Person and,  without  limiting the  generality  of the
foregoing, any obligation,  direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or  advance or supply  funds for the  purchase or
payment  of)  such  Debt or other  obligation  (whether  arising  by  virtue  of
partnership arrangements,  by agreement to keep-well, to purchase assets, goods,
securities  or services,  to  take-or-pay,  or to maintain  financial  statement
conditions or otherwise), or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term "Guarantee" shall not include endorsements for collection
or deposit in the ordinary course of business.  The term  "Guarantee"  used as a
verb has a corresponding meaning.

         "Guaranties" means,  collectively,  (a) the Guaranty  Agreements,  each
dated  as of the  date  hereof,  executed  by the  Guarantors  in  favor  of the
Administrative  Agent for the benefit of the Lenders, and shall also include any
other guaranty  agreement  heretofore or hereafter from time to time executed by
any  Guarantor  and  delivered  to the  Administrative  Agent for the benefit of
Lenders,  as the same may be amended,  restated,  renewed,  and substituted from
time to time. "Guaranty" means any one of the Guaranties.

         "Guarantors" means, collectively, Prime Medical, all "Guarantors" under
the Prime Facility, Prime Refractive,  LLC, and all Wholly-Owned Subsidiaries of
Borrower,  now owned or hereafter  acquired or formed, and "Guarantor" means any
one of the Guarantors.

         "Guarantor Security Agreements" means (a) the Security Agreements, each
dated  as  of  the  date  hereof,   executed  by  the  Guarantors  in  favor  of
Administrative Agent for the benefit of the Lenders , (b) the Security Agreement
dated as of the date  hereof,  executed  by LASIK  Investors,  LLC,  in favor of
Administrative Agent for the benefit of the Lenders, relating to its interest in
Prime Refractive,  LLC, and (c) shall also include any other security agreements
heretofore  or hereafter  from time to time  executed by any  Guarantor or LASIK
Investors,  LLC and  delivered  to the  Administrative  Agent for the benefit of
Lenders,  as amended,  restated,  renewed,  and  substituted  from time to time.
"Guarantor   Security  Agreement"  means  any  one  of  the  Guarantor  Security
Agreements.

         "Hazardous Material" means any substance,  product,  waste,  pollutant,
material,  chemical,  contaminant,  constituent,  or other  material which is or
becomes listed,  regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.

<PAGE>

         "Interest Period" means, with respect to any Eurodollar  Advance,  each
period  commencing on the date such Advance is made or Converted from an Advance
of another Type or, in the case of each subsequent,  successive  Interest Period
applicable to a Eurodollar Advance,  the last day of the next preceding Interest
Period with respect to such Advance, and ending on the numerically corresponding
day in the first (1st),  second (2nd), third (3rd) or sixth (6th) calendar month
thereafter,  as Borrower  may select as  provided in Section 2.5 or 2.6,  except
that each such  Interest  Period which  commences on the last  Business Day of a
calendar  month (or on any day for which there is no  numerically  corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the foregoing:
(a) each  Interest  Period  which  would  otherwise  end on a day which is not a
Business  Day  shall  end on the  next  succeeding  Business  Day  (or,  if such
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding  Business Day); (b) any Interest Period which would  otherwise  extend
beyond the Termination Date shall end on the Termination  Date; (c) no more than
four (4)  Interest  Periods  shall be in  effect  at the same  time;  and (d) no
Interest  Period  shall have a duration  of less than one (1) month and,  if any
Interest Period would otherwise be a shorter period,  such Advances shall not be
available hereunder.

         "Lead Arranger" means Bank of America Securities LLC.

         "Legal Requirement" shall mean any federal,  state,  local,  municipal,
foreign,   international,   multinational,   or  other   administrative   order,
constitution,  law, ordinance, principle of common law, regulation,  statute, or
treaty as in effect on the date hereof.

         "Lenders"   mean,   on  any  date  of   determination,   the  financial
institutions named on Schedule 2.1 (as the same may be amended from time to time
by  Administrative  Agent to reflect the  assignments  made in  accordance  with
Section 13.6(b) of this  Agreement),  and subject to the terms and conditions of
this  Agreement,  and  their  respective  successors  and  assigns  (but not any
Participant  who is not  otherwise a party to this  Agreement);  provided  that,
solely for purposes of any Collateral  Documents and Section 12, "Lenders" shall
also  include any Lender or  Affiliate of a Lender who is a party to a Financial
Hedge with Borrower and their  respective  successors  and assigns (for purposes
hereof,  each Lender shall be deemed to have entered into this Agreement for and
on behalf of any  Affiliate  now or  hereafter  party to a Financial  Hedge with
Borrower).

         "Lien" means any lien, mortgage, security interest, tax lien, financing
statement, pledge, charge, hypothecation,  assignment,  preference, priority, or
other  encumbrance  of  any  kind  or  nature  whatsoever  (including,   without
limitation, any conditional sale or title retention agreement),  whether arising
by contract, operation of law, or otherwise.

         "Loan" means all Advances with respect to the Commitment,  evidenced by
the Notes.

         "Loan Documents" means this Agreement,  the Notes, the Guaranties,  the
Borrower  Security  Agreement,  the Guarantor  Security  Agreements,  the Pledge
Agreements, any Financial Hedge documents, and all other instruments, documents,
and  agreements  executed and delivered  pursuant to or in connection  with this
Agreement,  as such  instruments,  documents,  and  agreements  may be  amended,
modified, renewed, extended, or supplemented from time to time.

         "Maximum Rate" means,  at any time and with respect to any Lender,  the
maximum  rate of  interest  under  applicable  law that such  Lender  may charge
Borrower.  The  Maximum  Rate shall be  calculated  in a manner  that takes into
account  any and all fees,  payments,  and other  charges in respect of the Loan
Documents  that  constitute  interest under  applicable  law. Each change in any
interest rate provided for herein based upon the Maximum Rate  resulting  from a
change in the Maximum Rate shall take effect  without  notice to Borrower at the
time of such change in the Maximum Rate.

<PAGE>

         "Multiemployer  Plan" means a multiemployer  plan as defined in Section
3(37) of ERISA to which  contributions  have been made by  Borrower or any ERISA
Affiliate of Borrower and which is covered by Title IV of ERISA.

         "Note"  means  an  advancing  term  loan  note  executed  by  Borrower,
substantially  in the form of  Exhibit C,  payable  to each  Lender in an amount
equal to such  Lender's  Commitment,  as the same may be amended,  supplemented,
modified or restated from time to time, evidencing the obligation of Borrower to
repay the Loan, and all renewals,  modifications and extensions thereof. "Notes"
means all of the Notes of the Lenders.

         "Obligated  Party"  means any  Person  who is or  becomes  party to any
agreement that  guarantees or secures payment and performance of the Obligations
or any part thereof.

         "Obligations" means all obligations,  indebtedness,  and liabilities of
Borrower to the Agents and the Lenders,  or any of them, arising pursuant to any
of the Loan  Documents,  now  existing or  hereafter  arising,  whether  direct,
indirect,  related,  unrelated,  fixed,  contingent,  liquidated,  unliquidated,
joint,  several, or joint and several, and all interest accruing thereon and all
attorneys'  fees and other  expenses  incurred in the  enforcement or collection
thereof;  provided that, all references to the  "Obligations"  in the Collateral
Documents, and in Section 12, shall, in addition to the foregoing,  also include
all present  and future  indebtedness,  liabilities,  and  obligations  (and all
renewals and  extensions  thereof or any part thereof) now or hereafter  owed to
any Lender or any Affiliate of a Lender  arising from, by virtue of, or pursuant
to any Financial Hedge entered into by any Company.

         "Partnerships"  means the partnerships and limited liability  companies
in which  Borrower or any  Subsidiary  now owns or  hereafter  acquires  general
and/or limited partnership interests or membership interests, including, without
limitation,   the   partnerships   and  other  Persons  listed  on  Schedule  3.
"Partnership" means any one of the Partnerships,  and shall also include any non
Wholly-Owned Subsidiaries of Borrower.

         "Payment  Date" means (a) with respect to Alternate  Base Rate Advances
and the commitment fees payable  pursuant to Section  2.8(a),  the last Business
Day of each April, July, October, and January,  commencing January 31, 2000, and
(b) with respect to Eurodollar Advances, the last day of the respective Interest
Period therefor,  provided that if any Interest Period is greater than three (3)
months,  then accrued interest shall also be due and payable on the date that is
three (3) months after the commencement of such Interest Period.

         "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any entity
succeeding to all or any of its functions under ERISA.

         "Permitted  Refractive  Acquisition"  means an acquisition by Borrower,
any Guarantor,  or Prime Refractive,  L.L.C.,  with respect to which each of the
following conditions shall have been satisfied:

                  (a) the  acquisition  by  Borrower,  any  Guarantor,  or Prime
         Refractive, LLC is of a business, assets, or Person (as applicable, the
         "Target  Company ") which is engaged in the  businesses  of  correcting
         refractive error of the eye which are  substantially  the same as those
         which are  conducted by Borrower or any Company on the date hereof,  or
         any other business reasonably related thereto;

<PAGE>

                  (b)  as  of  the   closing   of  such   Permitted   Refractive
         Acquisition,  the Permitted Refractive Acquisition has been approved by
         the board of directors or other applicable governing body of the Target
         Company and the Person from which the Target Company is to be acquired;

               (c)  prior  to  the   closing   of  such   Permitted   Refractive
          Acquisition,  the Target  Company and the Person from which the Target
          Company is to be acquired must be Solvent;

                  (d)  as  of  the   closing   of  such   Permitted   Refractive
         Acquisition,   after  giving  effect  to  such   Permitted   Refractive
         Acquisition,  Borrower, the Guarantor, or Prime Refractive LLC, that is
         the  acquiring  party,  as the case  may be,  must be  Solvent  and the
         Companies, on a consolidated basis, must be Solvent;

                  (e)  as  of  the   closing   of  such   Permitted   Refractive
         Acquisition,   after  giving  effect  to  such   Permitted   Refractive
         Acquisition,  no Default shall exist or occur as a result of, and after
         giving effect to, such Permitted Refractive Acquisition;

                  (f)  the  aggregate   purchase  price  with  respect  to  such
         Permitted  Refractive  Acquisition does not exceed six (6) times EBITDA
         of  the  Target  Company,  subject  to  adjustments  acceptable  to the
         Administrative  Agent,  for the four (4) fiscal  quarters ending on the
         most recently  ended fiscal period prior to the date of such  Permitted
         Refractive Acquisition;

               (g)  the  aggregate  nonstock  consideration  for  any  Permitted
          Refractive Acquisition (including,  without limitation,  any financing
          of interests  acquired by LASIK  Investors,  L.L.C.  and  Consolidated
          Earn-Out Indebtedness reasonably estimated by Administrative Agent and
          Borrower) does not exceed $10,000,000.00;

                  (h) not less than 15 Business Days prior to the closing of any
         Permitted Refractive  Acquisition,  the Administrative Agent shall have
         received pro forma  financial  statements  of the  Companies (as if the
         business,  assets or Person  acquired had been acquired since the first
         (1st) day of the period for which such pro forma  financial  statements
         are delivered and had been managed and conducted in accordance with the
         Borrower's  standard business  practices) for the prior four (4) fiscal
         quarters of Borrower and the Companies;

               (i) if the Target Company is to be an After-Acquired  Subsidiary,
          then Borrower  shall have complied with the terms and  conditions  set
          forth in Section 8.13;

                  (j) review by a third party  acceptable to the  Administrative
         Agent of Borrower's due diligence  process and procedures as related to
         Permitted Refractive  Acquisitions,  acceptable to Administrative Agent
         and Lenders;

                  (k) with respect to any Permitted Refractive Acquisition where
         the aggregate nonstock consideration is $10,000,000 or less (including,
         without  limitation,  any  financing  of  interests  acquired  by LASIK
         Investors,  L.L.C. and Consolidated  Earn-Out  Indebtedness  reasonably
         estimated by  Administrative  Agent and  Borrower),  the Target Company
         has, at a minimum,  provided company prepared financial  statements for
         the immediately  preceding four fiscal quarters  prepared in accordance
         with the due diligence procedures approved in (j) above;

<PAGE>

               (l) the Target Company or other  business  segment being acquired
          must have positive proforma trailing twelve month EBITDA;

               (m) the capital and  ownership  structure  of the Target  Company
          (after giving effect to the Permitted Refractive Acquisition) shall be
          satisfactory to the Administrative Agent;

                  (n) the absence of action, suit, investigation,  or proceeding
         pending  or  threatened  in any  court  or  before  any  arbitrator  or
         governmental  authority that affects the Target Company or the proposed
         Permitted  Refractive  Acquisition,  which could have  reasonably  been
         expected to have a material adverse effect on the Target Company or the
         Borrower;

                  (o) receipt of all governmental,  shareholder, and third party
         consents and approvals  necessary or desirable in  connection  with the
         acquisition  of the Target  Company and all  transactions  contemplated
         thereby;

                  (p) the Administrative  Agent has received a certificate dated
         on  or   immediately   prior  to  the  date  of  Permitted   Refractive
         Acquisition,  executed by the President or a Vice President of Borrower
         confirming  that all  representations  and  warranties set forth in the
         Loan Documents continue to be true and correct in all material respects
         immediately   prior  to  and  after  giving  effect  to  the  Permitted
         Refractive  Acquisition and the transactions  contemplated thereby, and
         setting  forth  the   calculations   supporting   compliance  with  the
         limitations prescribed herein; and

               (q) Borrower or Prime Refractive, L.L.C. must own at least 51% of
          the equity or membership  interests in and Control the Target  Company
          upon completion of the Permitted Refractive Acquisition.

         "Person"   means   any   individual,   corporation,   business   trust,
association,  company,  partnership,  joint venture,  Governmental Authority, or
other entity.

         "Plan"  means  any  employee  benefit  or  other  plan  established  or
maintained  by Borrower or any ERISA  Affiliate of Borrower and which is covered
by Title IV of ERISA.

         "Pledge  Agreements" means (a) the Pledge Agreements,  each dated as of
the date hereof, executed by Borrower and each Subsidiary of Borrower that owned
general and/or limited partnership interests in the Partnerships in favor of the
Administrative  Agent,  for the  benefit  of the  Lenders,  as the  same  may be
amended,  supplemented or modified from time to time.  "Pledge  Agreement" means
any one of the Pledge Agreements.

         "Pledgors"  means each of the  pledgors  of  partnership  interests  or
Assigned Rights (as defined in the applicable  Pledge  Agreement)  pursuant to a
Pledge Agreement. "Pledgor" means any one of the Pledgors.

               "PMOI"   means  Prime   Medical   Operating,   Inc.,  a  Delaware
          corporation, and its permitted successors and assigns.

               "Prime  Agent"  means Bank of America,  N.A.,  as  Administrative
          Agent  under the  Prime  Facility  and its  permitted  successors  and
          assigns.

         "Prime Companies" shall mean the "Companies" under the Prime Facility.

<PAGE>

         "Prime  Facility" means the $86,000,000  Revolving Credit Loan to Prime
Medical  pursuant to the Fourth Amended and Restated Loan Agreement  dated as of
the date hereof among Prime Medical,  Bank of America,  N.A., as  Administrative
Agent, BankBoston,  N.A., as Documentation Agent, and the lenders named therein,
as amended, modified, renewed, or restated from time to time.

         "Prime Medical" is defined in the Recitals,  and includes its permitted
successors and assigns.

               "Prime RVC" means Prime RVC,  Inc., a Delaware  corporation,  and
          its permitted successors and assigns.

         "Principal  Office"  means  the  office  of the  Administrative  Agent,
presently located at 901 Main Street, 7th Floor, Dallas, Texas 75202.

         "Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System as the same may be amended or  supplemented  from time to
time.

         "Regulatory Change" means, with respect to any Lender, any change after
the date of this Agreement in United States  federal,  state, or foreign laws or
regulations  (including  Regulation D) or the adoption or making after such date
of any  interpretations,  directives,  or requests  applying to a class of banks
including such Lender of or under any United States  federal,  state, or foreign
laws or  regulations  (whether  or not  having the force of law) by any court or
governmental  or  monetary   authority   charged  with  the   interpretation  or
administration thereof.

         "Release"  means,  as to any  Person,  any  release,  spill,  emission,
leaking,  pumping,  injection,  deposit,  disposal,  disbursement,  leaching, or
migration of Hazardous  Materials into the indoor or outdoor environment or into
or out of property  owned by such Person,  including,  without  limitation,  the
movement of Hazardous  Materials  through or in the air,  soil,  surface  water,
ground water, or property.

         "Remedial  Action" means all actions  required to (a) clean up, remove,
treat,  or  otherwise  address  Hazardous  Materials  in the  indoor or  outdoor
environment,  (b)  prevent  the  Release or threat of Release  or  minimize  the
further  Release of Hazardous  Materials so that they do not migrate or endanger
or  threaten  to  endanger  public  health or  welfare  or the indoor or outdoor
environment,   or  (c)  perform  pre-remedial  studies  and  investigations  and
post-remedial monitoring and care.

         "Reportable Event" means any of the events set forth in Section 4043 of
ERISA.

         "Required  Lenders"  means,  as of any date, any combination of Lenders
(other than any Defaulting Lenders) who collectively hold sixty percent (60%) of
the sum of the  Commitments  (other than of any Defaulting  Lenders),  or if the
Commitments  shall have been terminated,  then of the aggregate unpaid principal
amount of the Notes (other than of any Defaulting Lenders).

<PAGE>

         "Reserve  Requirement"  means,  for  any  Eurodollar  Advance  for  any
Interest  Period  therefor,  the average rate at which  reserves  (including any
marginal,  supplemental  or emergency  reserves)  are required to be  maintained
during such Interest Period under  Regulation D by each Lender on its portion of
such  Advance  against  "Eurocurrency  Liabilities"  as  such  term  is  used in
Regulation  D.  Without  limiting  the  effect  of the  foregoing,  the  Reserve
Requirement  shall  reflect any other  reserves  required to be  maintained by a
Lender  by  reason  of  any  Regulatory  Change  against  (i)  any  category  of
liabilities   which  includes  deposits  by  reference  to  which  the  Adjusted
Eurodollar  Rate is to be  determined,  or (ii) any  category of  extensions  of
credit or other assets which include Eurodollar Advances.

         "RICO" means the Racketeer  Influenced and Corrupt  Organization Act of
1970, as amended from time to time.

         "Senior  Debt"  means,  as of any date,  all Total  Funded  Debt of the
Companies which is not Subordinated Debt.

         "Senior Funded Debt" means, as to the Companies,  as of any date, Total
Funded Debt of such Persons, minus Subordinated Debt of such Persons.

         "Senior  Funded Debt to EBITDA Ratio" means,  as of any date, the ratio
of (a) the  aggregate  amount of Senior  Funded Debt of the  Companies  (without
deduction for any minority  interests),  as of such date, to (b) Adjusted EBITDA
of the  Companies,  for the four (4) fiscal quarter period ending on the date of
determination   (including  on  a  pro  forma  basis  any  Permitted  Refractive
Acquisition).

         "Senior  Subordinated  Indenture"  means that certain  Trust  Indenture
dated as of March 24, 1998 between Prime Medical and State Street Bank and Trust
Company, as Trustee, and any trust indenture entered into in connection with the
Exchange Notes.

         "Solvent"  means,  with  respect  to any  Person,  that on the  date of
determination  (a) the fair market value of its assets is greater than the total
amount of liabilities,  including, without limitation, contingent liabilities of
such Person which would be required to be included on the balance  sheet of such
Person or disclosed in the  financial  statements  of such Person in  accordance
with GAAP,  (b) the present fair  salable  value of the assets of such Person is
not less than the amount that will be required to pay the probable  liability of
such Person on its debts as they become  absolute and  matured,  (c) such Person
does not intend to, and does  believe that it will,  incur debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature,  and
(d) such Person is not engaged in business or transactions,  and is not about to
engage in business or  transactions,  for which its assets would  constitute  an
unreasonably small capital.

         "Subordinated  Debt"  means  Debt due and  owing  from  time to time by
Borrower to Prime Medical,  Prime RVC, or PMOI  containing  terms  acceptable to
Administrative  Agent  and  Required  Lenders,  which  is  subordinated  to  the
Obligations in form and substance acceptable to the Administrative Agent and the
Required Lenders,  and which does not exceed  $16,000,000 in aggregate  original
principal amount.

         "Subsidiary"  means,  with  respect  to any  Person,  any  corporation,
partnership,  association,  or other business entity (a) of which  securities or
other  ownership  interests  representing  more than fifty  percent (50%) of the
equity or more than fifty  percent  (50%) of the  ordinary  voting power or more
than fifty  percent  (50%) of the general  partnership  interests or  membership
interests are, at the time any determination is made, owned,  Controlled or held
by such Person, or (b) that is, at the time any determination is made, otherwise
Controlled by one or more  Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.

<PAGE>

         "Target  Company"  means any  Person  that has been or may be  acquired
pursuant to a Permitted Refractive Acquisition permitted hereunder.

         "Termination  Date"  means  1:00 p.m.  Dallas,  Texas time on April 21,
2003,  or such  earlier  date and time on which  the  Commitments  terminate  as
provided in this Agreement.

     "Total Cash Flow"  means as to  Borrower,  for any period,  the sum of: (i)
EBITDA, plus (ii) all minority interest expense attributable to LASIK Investors,
L.L.C., minus (iv) the amount of Capital Expenditures.

         "Total  Funded Debt"  means,  as of any date,  outstanding  Debt of the
Companies (without deduction for minority interests).

         "Total Funded Debt to EBITDA Ratio" means, as of any date, the ratio of
(a) the  aggregate  amount  of Total  Funded  Debt  (without  deduction  for any
minority  interests),  as of such date, to (b) Adjusted EBITDA of the Companies,
for the four (4)  fiscal  quarter  period  ending  on the date of  determination
(including on a pro forma basis any Permitted Refractive Acquisition).

     "Type"  means any type of Advance  (i.e.,  Alternate  Base Rate  Advance or
Eurodollar Advance).

         "UCC"  means the Uniform  Commercial  Code as in effect in the State of
Texas or other applicable jurisdiction, as amended.

         "Wholly-Owned  Subsidiaries"  means,  as of any date, all  Subsidiaries
that are  wholly-owned  by Borrower or a  wholly-owned  Subsidiary  of Borrower.
"Wholly-Owned Subsidiary" means any one of the Wholly-Owned Subsidiaries.

         Section 1.3 Other Definitional Provisions. All definitions contained in
this  Agreement  are equally  applicable to the singular and plural forms of the
terms  defined.  The words  "hereof,"  "herein,"  and  "hereunder"  and words of
similar import  referring to this  Agreement  refer to this Agreement as a whole
and  not to  any  particular  provision  of  this  Agreement.  Unless  otherwise
specified, all Article, Section, Exhibit and Schedule references pertain to this
Agreement.  All  accounting  terms  not  specifically  defined  herein  shall be
construed  in  accordance  with  GAAP.  All  financial   covenants  and  related
definitions  relating to the Companies  shall,  unless otherwise  indicated,  be
determined  after  deduction  of  any  minority  interests,  provided  that  all
references to "Debt" shall  include all Debt without  deduction for any minority
interests.  Terms used  herein  that are  defined in the UCC,  unless  otherwise
defined herein, shall have the meanings specified in the UCC.

                             ARTICLE II -- ADVANCES

         Section 2.1       Commitments.

<PAGE>

         (a) Advancing Term Commitments.  Subject to the terms and conditions of
this Agreement, each Lender hereby severally agrees to make one or more Advances
to Borrower from time to time from the date hereof to the Termination Date in an
aggregate  principal  amount at any time outstanding up to but not exceeding the
amount of such Lender's  Commitment as then in effect.  Subject to the foregoing
limitations, and the other terms and provisions of this Agreement,  Borrower may
borrow,  the  amount  of the  Commitments  by means of  Eurodollar  Advances  or
Alternate Base Rate  Advances.  Advances which are repaid may not be reborrowed.
Advances  requested  hereunder to finance a portion of the  purchase  price of a
Permitted Refractive  Acquisition shall not exceed the lesser of: one-half (1/2)
of the total purchase price of the Permitted  Refractive  Acquisition,  and (ii)
two and one-half  (2.5) times the pro forma EBITDA of the Target Company for the
most recently completed four fiscal quarters.

         (b) Optional  Reduction and Termination of Commitments.  Borrower shall
have the right to terminate in whole or reduce in part the unused portion of the
Commitments  upon at least three (3) Business  Days' prior written notice (which
notice  shall  be  irrevocable)  to  the  Administrative  Agent  specifying  the
effective  date thereof,  whether a termination  or reduction is being made, and
the amount of any partial reduction,  provided that each partial reduction shall
be in the amount of  $1,000,000.00  or a greater  integral  multiple thereof and
Borrower shall  simultaneously  prepay the amount by which the unpaid  principal
amount of the Notes exceeds the Commitments (after giving effect to such notice)
plus accrued and unpaid interest on the principal amount so prepaid.  No portion
of the Commitments may be reinstated after it has been terminated or reduced.

         Section 2.2 Notes.  The obligation of Borrower to repay each Lender for
Advances  made by such Lender  pursuant  to such  Lender's  Commitment,  and all
interest thereon,  shall be evidenced by a Note dated the date hereof,  executed
by Borrower  and payable to the order of such Lender in the  original  principal
amount of such Lender's  Commitment.  Upon receipt of an affidavit of an officer
of any Lender to the loss, theft, destruction or mutilation of any Note, and, in
the case of any such loss, theft,  destruction or mutilation,  upon cancellation
of such Note,  Borrower will issue, in lieu thereof,  a replacement  note in the
same principal amount thereof and otherwise of like tenor.

     Section 2.3  Repayment of Notes.  Borrower  shall repay the Notes and apply
Total Cash Flow in the following order:

(1)  Interest  on the Notes shall be due and payable as set forth in Section 2.4
     below.

(2)  After  making  the  payments  when due set forth in Section  2.3(a)  above,
     Borrower  shall be permitted  to retain an  aggregate  amount of Total Cash
     Flow not exceeding $150,000 in each fiscal year for working capital.

                  (c) Prime  Refractive,  L.L.C.  and its  Partnerships may make
         Distributions  to  their  respective   partners  not  more  often  than
         quarterly,  limited  to an  amount  sufficient  to pay  such  partners'
         federal and state income tax liability  arising from their  partnership
         interest in the applicable Partnerships.

                  (d) Outstanding principal of the Notes will be due and payable
         quarterly on the last day of each January,  April,  July,  and October,
         commencing  January  31,  2000  in an  amount  equal  to the sum of the
         aggregate  amounts  which would be required to be paid on each  Advance
         made  hereunder  to  fully  amortize  each  Advance  in  sixteen  equal
         principal payments, but only to the extent Total Cash Flow is available
         to pay such amounts,  which amounts, if not fully paid on any quarterly
         payment  date  will be due and  payable  on each  succeeding  quarterly
         interest  payment  date,  to the extent Total Cash Flow is available to
         make such payments.

<PAGE>

               (e) Any  remaining  Total  Cash  Flow  may be  paid  as  interest
          payments on the Subordinated Indebtedness, when due and payable.

                  (f) All  remaining  Total Cash Flow,  not applied as set forth
         above,  shall be applied on the last day of each January,  April, July,
         and October, commencing January 31, 2000 to the unpaid principal amount
         of the Loans, pro rata, in the inverse order of maturity.

               (g) All outstanding  unpaid  principal of and accrued interest on
          the Notes shall be due and payable on the Termination Date.

         Section 2.4 Interest. The unpaid principal amount of all Advances shall
bear interest at a varying rate per annum equal from day to day to the lesser of
(a) the Maximum Rate, or (b) the Applicable  Rate. If at any time the Applicable
Rate for any Advance shall exceed the Maximum Rate, thereby causing the interest
accruing on such Advance to be limited to the Maximum Rate,  then any subsequent
reduction in the  Applicable  Rate for such Advance shall not reduce the rate of
interest on such Advance  below the Maximum Rate until the  aggregate  amount of
interest  accrued on such Advance equals the aggregate  amount of interest which
would have accrued on such Advance if the Applicable  Rate had at all times been
in effect.  Accrued and unpaid interest on the Advances shall be due and payable
on each Payment Date and on the Termination Date. Notwithstanding the foregoing,
any outstanding principal of any Advance and (to the fullest extent permitted by
law) any other amount payable by Borrower under this Agreement or any other Loan
Document  that is not paid in full  when due  (whether  at stated  maturity,  by
acceleration,  or  otherwise)  shall bear  interest at the Default  Rate for the
period from and  including  the due date thereof to but  excluding  the date the
same is paid in full. Interest payable at the Default Rate shall be payable from
time to time on demand.

         Section 2.5       Borrowing Procedure.

         (a) Loan. Borrower shall give the Administrative  Agent notice by means
of an Advance  Request  Form of each  requested  Advance  under the  Commitments
hereunder at least three (3)  Business  Days before the  requested  date of each
Eurodollar  Advance (and at least one (1) Business Day before the requested date
of each Alternate Base Rate Advance), specifying: (a) the requested date of such
Advance (which shall be a Business Day); (b) the amount of such Advance; and (c)
the duration of the Interest Period for such Advance (if a Eurodollar  Advance).
The  Administrative  Agent at its  option  may accept  telephonic  requests  for
Advances  under  the  Commitments,  provided  that  such  acceptance  shall  not
constitute  a waiver  of the  Administrative  Agent's  right to  delivery  of an
Advance  Request  Form  in  connection   with  subsequent   Advances  under  the
Commitments.  Any  telephonic  request for an Advance under the  Commitments  by
Borrower  shall be promptly  confirmed  by  submission  of a properly  completed
Advance  Request  Form to the  Administrative  Agent.  Each  Advance  under  the
Commitments  shall be in a minimum  principal amount of $500,000.00 or a greater
integral  multiple  thereof,  provided  that if such  Advance  equals the entire
remaining  unfunded  portion of the Commitments,  it may be for any amount.  The
aggregate  principal  amount of  Eurodollar  Advances  having the same  Interest
Period shall be at least equal to $1,000,000.00.  All notices under this Section
2.5(a) shall be irrevocable and shall be given not later than 11:00 a.m. Dallas,
Texas  time on the day  which  is not less  than the  number  of  Business  Days
specified above for such notice.

<PAGE>

         (b) Generally.  The  Administrative  Agent shall  promptly  notify each
Lender of the contents of each Advance  Request Form.  Not later than 11:00 a.m.
Dallas, Texas time on the date specified for each Advance hereunder, each Lender
will make  available  to the  Administrative  Agent at the  Principal  Office in
immediately available funds, for the account of Borrower,  its pro rata share of
each Advance. After the Administrative Agent's receipt of such funds and subject
to the other terms and conditions of this Agreement,  the  Administrative  Agent
will  make each  Advance  available  to  Borrower  by  depositing  the same,  in
immediately  available funds, in a deposit account of Borrower maintained at the
Documentation Agent.

         Section 2.6       Continuations; Conversions.

         (a) Continuations. Borrower shall have the right to Continue Eurodollar
Advances by giving the Administrative  Agent written notice specifying:  (i) the
Continuation date; (ii) the amount of the Advance to be Continued; and (iii) the
duration of the  Interest  Period  applicable  thereto,  which  notice  shall be
irrevocable  and must be given by  Borrower  not later than  11:00 a.m.  Dallas,
Texas time at least three (3) Business Days before each such  Continuation.  The
Administrative  Agent shall promptly  notify each Lender of the contents of each
such notice. If Borrower shall fail to give the Administrative  Agent the notice
as specified above for Continuation of a Eurodollar  Advance prior to the end of
the  Interest  Period  applicable  thereto,  such  Eurodollar  Advance  shall be
automatically Continued for a one (1) month Interest Period.

         (b) Conversions.  Borrower shall have the right to Convert an Alternate
Base  Rate  Advance  at  any  time  to  a  Eurodollar   Advance  by  giving  the
Administrative  Agent written notice  specifying:  (i) the Conversion Date; (ii)
the  amount of the  Advance  to be  Converted;  and (iii)  the  duration  of the
Interest Period applicable  thereto,  which notice shall be irrevocable and must
be given by Borrower not later than 11:00 a.m. Dallas, Texas time at least three
(3) Business Days before each such Conversion.  The  Administrative  Agent shall
promptly notify each Lender of the contents of each such notice.

     (c) Default.  After the occurrence and during the continuance of a Default,
no  outstanding  Advances may be Converted  into,  or Continued as, a Eurodollar
Advance.

         Section  2.7 Use of  Proceeds.  The  proceeds  of  Advances  under  the
Commitments  shall  be used by  Borrower  (i) to  finance  Permitted  Refractive
Acquisitions and (ii) to finance capital expenditures.

         Section 2.8       Fees.

         (a)   Commitment   Fees.   Borrower   hereby   agrees  to  pay  to  the
Administrative   Agent,  for  the  ratable  account  of  each  Lender  having  a
Commitment, a commitment fee on the daily average unused amount of such Lender's
Commitment  for the period from and including the date of this  Agreement to but
excluding the  Termination  Date, at the per annum rate equal to the  Applicable
Unused  Fee  Percentage  based on a 360-day  year,  as the case may be,  and the
actual  number of days  elapsed.  Accrued  commitment  fees  shall be payable in
arrears on each Payment Date and on the Termination Date.

     (b) Agents' Fees. Borrower hereby agrees to pay to the Agents for their own
respective accounts, the fees agreed to by Borrower and the Agents pursuant to a
side letter agreement with each Agent.

                             ARTICLE III -- PAYMENTS

<PAGE>

         Section 3.1 Method of Payment. All payments of principal, interest, and
other  amounts to be paid by Borrower  under this  Agreement  and the other Loan
Documents shall be paid to the Administrative  Agent at the Principal Office for
the  account  of each  Lender's  Applicable  Lending  Office in  Dollars  and in
immediately  available funds, without setoff,  deduction,  or counterclaim,  not
later than 1:00 p.m. Dallas,  Texas time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding  Business Day).  Borrower shall, at the
time of making each such payment,  specify to the Administrative  Agent the sums
payable by Borrower  under this  Agreement and the other Loan Documents to which
such  payment  is to be  applied  (and in the event  that  Borrower  fails to so
specify,  or if an  Event  of  Default  has  occurred  and  is  continuing,  the
Administrative Agent may apply such payment to the Obligations in such order and
manner as it may elect in its sole  discretion,  subject to Section  3.4).  Each
payment received by the  Administrative  Agent under this Agreement or any other
Loan Document for the account of a Lender shall be paid promptly to such Lender,
in  immediately  available  funds,  for the account of such Lender's  Applicable
Lending  Office.  Whenever  any payment  under this  Agreement or any other Loan
Document  shall be stated to be due on a day that is not a  Business  Day,  such
payment may be made on the next  succeeding  Business Day, and such extension of
time  shall in such  case be  included  in the  computation  of the  payment  of
interest and commitment fee, as the case may be.

         Section 3.2 Optional Prepayment.  Borrower may, upon at least three (3)
Business  Days' prior notice to the  Administrative  Agent,  prepay the Notes in
whole or in part at any time or from time to time without premium or penalty but
with  accrued  interest  to the date of  prepayment  on the  amount so  prepaid,
provided that  Eurodollar  Advances  prepaid on a day other than the last day of
the Interest Period for such Advances shall include the additional compensation,
if any,  required by Section  4.5.  All notices  under this Section 3.2 shall be
irrevocable  and must be given by  Borrower  not later than  11:00 a.m.  Dallas,
Texas  time on the day  which  is not less  than the  number  of  Business  Days
specified above for such notice.  Optional  prepayments  shall be applied as set
forth in Section 3.8.

         Section 3.3 Pro Rata Treatment. Except to the extent otherwise provided
herein:  (a) the making and  Continuation of Advances under the Commitment shall
be made pro rata among the Lenders  according to the amounts of their respective
Commitments;  (b) each termination or reduction of the Commitments under Section
2.1(b) or otherwise shall be applied to the Commitments of the Lenders pro rata,
according  to their  respective  unused  Commitments;  and (c) each  payment and
prepayment of principal of or interest on Advances by Borrower  shall be made to
the Administrative Agent for the account of the applicable Lenders in accordance
with Section 3.9.

         Section 3.4 Non-Receipt of Funds by the  Administrative  Agent.  Unless
the  Administrative  Agent shall have been notified by a Lender or Borrower (the
"Payor")  prior to the date on  which  such  Lender  is to make  payment  to the
Administrative Agent of the proceeds of an Advance to be made by it hereunder or
Borrower is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required  Payment"),  which notice shall be effective  upon  receipt,  that the
Payor does not intend to make the Required Payment to the Administrative  Agent,
the Administrative  Agent may assume that the Required Payment has been made and
may, in reliance upon such  assumption  (but shall not be required to), make the
amount  thereof  available  to the  intended  recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand,  return to the Administrative  Agent
the amount made available to it together with interest thereon in respect of the
period  commencing  on the  date  such  amount  was  so  made  available  by the
Administrative  Agent  until the date the  Administrative  Agent  recovers  such
amount at a rate per annum equal to the Federal Funds Rate for such period.

<PAGE>

         Section 3.5 Withholding Taxes. All payments by Borrower of principal of
and interest on the Advances and of all fees and other amounts payable under any
Loan Document are payable without  deduction for or on account of any present or
future taxes,  duties or other charges levied or imposed by the United States of
America or by the  government of any  jurisdiction  outside the United States of
America or by any political  subdivision or taxing authority of or in any of the
foregoing through withholding or deduction with respect to any such payments. If
any such taxes, duties or other charges are so levied or imposed,  Borrower will
pay additional interest or will make additional payments in such amounts so that
every net payment of  principal of and interest on the Advances and of all other
amounts  payable by any of them under any Loan  Document,  after  withholding or
deduction for or on account of any such present or future taxes, duties or other
charges,  will not be less than the  amount  provided  for  herein  or  therein,
provided that Borrower shall have no obligation to pay such  additional  amounts
to any Lender to the extent that such taxes, duties, or other charges are levied
or imposed by reason of the failure of such Lender to comply with the provisions
of Section 3.6. Borrower shall furnish promptly to the Administrative  Agent for
distribution  to each affected  Lender,  as the case may be,  official  receipts
evidencing any such withholding or reduction.

         Section  3.6  Withholding  Tax  Exemption.  Each  Lender  that  is  not
incorporated  under the laws of the United  States of America or a state thereof
agrees that it will  deliver to Borrower  and the  Administrative  Agent two (2)
duly completed  copies of United States  Internal  Revenue  Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive payments
from Borrower under any Loan Document,  without  deduction or withholding of any
United States federal  income taxes or (b) if such Lender is claiming  exemption
from United States  withholding  tax under Section  871(h) or 881(c) of the Code
with respect to payments of  "portfolio  interest," a Form W-8, or any successor
form prescribed by the Internal Revenue Service, and a certificate  representing
that such Lender is not a bank for  purposes of Section  881(c) of the Code,  is
not a 10-percent  shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower and is not a controlled foreign corporation related to the
Borrower  (within the  meaning of Section  864(d)(4)  of the Code).  Each Lender
which so  delivers a W-8,  Form 1001 or 4224  further  undertakes  to deliver to
Borrower and the Administrative Agent two (2) additional copies of such form (or
a successor form) on or before the date such form expires or becomes obsolete or
after the occurrence of any event  requiring a change in the most recent form so
delivered by it, and such amendments  thereto or extensions or renewals  thereof
as may be reasonably requested by Borrower or the Administrative  Agent, in each
case certifying  that such Lender is entitled to receive  payments from Borrower
under any Loan Document  without  deduction or  withholding of any United States
federal income taxes,  unless an event (including  without limitation any change
in treaty,  law or regulation)  has occurred prior to the date on which any such
delivery would  otherwise be required which renders all such forms  inapplicable
or which would prevent such Lender from duly  completing and delivering any such
form with respect to it and such Lender advises Borrower and the  Administrative
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States federal income tax.

         Section 3.7  Computation of Interest.  Interest on all Advances and all
other amounts payable by Borrower  hereunder shall be computed on the basis of a
year of 360 days, and actual days elapsed.

         Section 3.8       Order of Application.

         (a) No  Default.  Prior to the  occurrence  of an Event of Default  any
payment  (whether  voluntary or  mandatory) of the Notes shall be applied to the
Notes on a pro rata basis based upon the outstanding  principal  balances of the
Notes as of the date of payment. No payment on the Notes may be reborrowed.

<PAGE>

         (b) After Default.  After the occurrence and during the  continuance of
an Event of Default,  any payment or proceeds of Collateral  shall be applied in
the  following  order:  (i) to all fees and expenses for which Agents or Lenders
have not been paid or reimbursed in accordance  with the Loan  Documents (and if
such payment is less than all unpaid or unreimbursed fees and expenses, then the
payment shall be paid against unpaid and  unreimbursed  fees and expenses in the
order of incurrence or due date); (ii) to accrued interest on the Notes on a pro
rata basis, based upon the outstanding principal balances of the Notes as of the
date of payment;  (iii) to the  principal of the Notes and amounts due and owing
under  any  Financial  Hedge on a pro rata  basis,  based  upon the  outstanding
principal  balances of the Notes or obligation due and owing under any Financial
Hedge as of the date of payment; and (iv) to all other Obligations.

         (c) Application to Advances.  Subject to the foregoing,  and so long as
no Event of Default has occurred and is continuing, payments of principal of any
Note shall be applied  to such  outstanding  Alternate  Base Rate  Advances  and
Eurodollar Advances under such Note as Borrower shall select; provided, however,
that Borrower shall select Alternate Base Rate Advances and Eurodollar  Advances
to be repaid in a manner  designated to minimize the funding loss required to be
paid pursuant to Section 4.5, if any, resulting from such payment;  and provided
further that if Borrower  shall fail to select the Alternate  Base Rate Advances
and Eurodollar Advances to which such payments are to be applied, or if an Event
of Default has occurred and is continuing at the time of such payment,  then the
Administrative  Agent shall be entitled to apply the payment to such Advances in
the manner in which it shall deem appropriate in its sole discretion.

                  ARTICLE IV -- YIELD PROTECTION AND ILLEGALITY

         Section 4.1       Additional Costs.

         (a) Borrower  hereby agrees to pay directly to each Lender from time to
time such amounts as such Lender may  determine to be necessary to compensate it
for  any  costs  incurred  by such  Lender  which  such  Lender  determines  are
attributable to its making or maintaining any Eurodollar  Advances  hereunder or
its obligation to make any of such Advances  hereunder,  or any reduction in any
amount  receivable  by such Lender  hereunder in respect of any such Advances or
such obligation  (such  increases in costs and reductions in amounts  receivable
being herein called  "Additional  Costs"),  resulting from any Regulatory Change
which:

                  (i) changes  the basis of  taxation of any amounts  payable to
         such Lender under this Agreement or its Notes in respect of any of such
         Advances  (other  than (1) taxes  imposed on the  overall net income of
         such Lender or its Applicable  Lending Office for any of such Advances,
         (2) franchise or similar taxes of such Lender, and (3) amounts withheld
         pursuant to the last sentence of Section 3.7);

                  (ii) imposes or modifies any reserve, special deposit, minimum
         capital,   capital  ratio,  or  similar  requirement  relating  to  any
         extensions  of credit or other assets of, or any deposits with or other
         liabilities or commitments of, such Lender; or

                  (iii)  imposes  any  other   Additional  Cost  affecting  this
         Agreement  or the  Notes  or any  of  such  extensions,  of  credit  or
         liabilities or commitments.

<PAGE>

Each Lender will notify  Borrower of any event  occurring after the date of this
Agreement  which will  entitle  such  Lender to  compensation  pursuant  to this
Section 4.1(a) as promptly as practicable after it obtains knowledge thereof and
determines  to  request  such  compensation,  and  will  designate  a  different
Applicable  Lending  Office  for the  Advances  affected  by such  event if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not, in the sole  opinion of such  Lender,  violate any law,  rule,  or
regulation or be in any way  disadvantageous to such Lender,  provided that such
Lender shall have no  obligation to so designate an  Applicable  Lending  Office
located outside the United States of America.  Each Lender will furnish Borrower
with a  certificate  setting  forth the basis and the amount of each  request of
such Lender for compensation  under this Section 4.1(a).  If any Lender requests
compensation from Borrower under this Section 4.1(a), Borrower may, by notice to
such Lender (with a copy to the Administrative  Agent) suspend the obligation of
such Lender to make or Continue making Eurodollar  Advances until the Regulatory
Change  giving rise to such  request  ceases to be in effect (in which case such
Lender's  Eurodollar Advances shall be Converted to Alternate Base Rate Advances
in accordance with the provisions of Section 4.4).

         (b) Without  limiting the effect of the  foregoing  provisions  of this
Section 4.1, in the event that, by reason of any Regulatory  Change,  any Lender
either (i) incurs  Additional  Costs based on or measured by the excess  above a
specified level of the amount of a category of deposits or other  liabilities of
such Lender which  includes  deposits by reference to which the interest rate on
Eurodollar Advances is determined as provided in this Agreement or a category of
extensions  of credit or other assets of such Lender which  includes  Eurodollar
Advances  or (ii)  becomes  subject  to  restrictions  on the  amount  of such a
category of  liabilities  or assets which it may hold,  then,  if such Lender so
elects by notice to  Borrower  (with a copy to the  Administrative  Agent),  the
obligation  of such  Lender  to  make or  Continue  making  Eurodollar  Advances
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case such Lender's Eurodollar Advances shall be Converted to Alternate
Base Rate Advances in accordance with the provisions of Section 4.4).

         (c)  Determinations  and allocations by any Lender for purposes of this
Section 4.1 of the effect of any  Regulatory  Change on its costs of maintaining
its  obligations  to make  Advances or of making or  maintaining  Advances or on
amounts  receivable by it in respect of Advances,  and of the additional amounts
required to compensate such Lender in respect of any Additional Costs,  shall be
conclusive,  absent  manifest  error and provided that such  determinations  and
allocations are made on a reasonable basis.

     Section 4.2  Limitation  on  Eurodollar  Advances.  Anything  herein to the
contrary  notwithstanding,  if with  respect to any  Eurodollar  Advance for any
Interest Period therefor:

         (a) The Administrative  Agent determines (which  determination shall be
conclusive  absent  manifest  error) that  quotations of interest  rates for the
relevant  deposits referred to in the definition of "Eurodollar Rate" in Section
1.1  are  not  being  provided  in the  relative  amounts  or for  the  relative
maturities for purposes of determining the rate of interest for such Advances as
provided in this Agreement; or

         (b) The  Required  Lenders  determine  (which  determination  shall  be
conclusive absent manifest error) and notify the  Administrative  Agent that the
rate of interest  referred to in the definition of "Eurodollar  Rate" in Section
1.1 on the  basis  of which  the rate of  interest  for such  Advances  for such
Interest  Period is to be determined do not  accurately  reflect the cost to the
Lenders of making or maintaining such Advances for such Interest Period;

then  the  Administrative  Agent  shall  give  Borrower  prompt  notice  thereof
specifying  the  relevant  amounts  or  periods,  and so long as such  condition
remains in effect,  the Lenders shall be under no obligation to make or Continue
additional  Eurodollar  Advances and Borrower  shall,  on the last day(s) of the
then-current Interest Period(s) for the outstanding Eurodollar Advances,  prepay
such  Eurodollar  Advances or Convert  them to Alternate  Base Rate  Advances in
accordance with Section 4.4.

<PAGE>

         Section 4.3  Illegality.  Notwithstanding  any other  provision of this
Agreement,  in the  event  that  it  becomes  unlawful  for  any  Lender  or its
Applicable  Lending  Office  to (a)  honor  its  obligation  to make  Eurodollar
Advances hereunder,  or (b) maintain  Eurodollar  Advances hereunder,  then such
Lender shall promptly notify Borrower (with a copy to the Administrative  Agent)
thereof and such  Lender's  obligation to make or maintain  Eurodollar  Advances
shall be  suspended  until such time as such Lender may again make and  maintain
Eurodollar  Advances (in which case such Lender's  Eurodollar  Advances shall be
Converted to Alternate  Base Rate Advances in accordance  with the provisions of
Section 4.4).

         Section  4.4  Treatment  of  Eurodollar  Advances.  If  the  Eurodollar
Advances of any Lender are to be Converted  pursuant to Section 4.1, 4.2 or 4.3,
such  Lender's  Eurodollar  Advances  shall  be  automatically   Converted  into
Alternate  Base Rate  Advances on the last day(s) of the then  current  Interest
Period(s) for the Eurodollar  Advances (or, in the case of a Conversion required
by Section 4.1(b) or 4.3(b),  on such earlier date as such Lender may specify to
Borrower  with a copy to the  Administrative  Agent) and,  unless and until such
Lender  gives  notice as  provided  below that the  circumstances  specified  in
Section 4.1, 4.2 or 4.3 which gave rise to such Conversion no longer exist:

         (a) To the extent that such Lender's  Eurodollar  Advances have been so
Converted,  all payments and  prepayments of principal  which would otherwise be
applied to such Lender's  Eurodollar  Advances  shall be applied  instead to its
Alternate Base Rate Advances; and

         (b) All  Advances  which would  otherwise  be made or Continued by such
Lender as Eurodollar  Advances shall be made as or Converted into Alternate Base
Rate Advances.

If such  Lender  gives  notice to  Borrower  (with a copy to the  Administrative
Agent) that the circumstances specified in Section 4.1, 4.2 or Section 4.3 which
gave rise to the  Conversion of such Lender's  Eurodollar  Advances  pursuant to
this Section 4.4 no longer exist (which such Lender  agrees to do promptly  upon
such  circumstances  ceasing to exist) at a time when Advances are  outstanding,
such Lender's Alternate Base Rate Advances shall be automatically  Converted, on
the first day(s) of the next succeeding  Interest Period(s) for such outstanding
Eurodollar  Advances  to the  extent  necessary  so that,  after  giving  effect
thereto,  all Eurodollar  Advances held by the Lenders holding the same are held
pro rata (as to principal amounts and Interest Periods) in accordance with their
respective Commitments.

         Section  4.5  Compensation.  Borrower  shall pay to the  Administrative
Agent,  for the account of each Lender,  upon the request of such Lender through
the Administrative  Agent, such amount or amounts as shall be sufficient (in the
reasonable  opinion of such  Lender) to  compensate  it for any loss,  cost,  or
expense incurred by it as a result of:

         (a) Any payment,  prepayment or Conversion of a Eurodollar  Advance for
any reason (including,  without limitation,  the acceleration of the outstanding
Advances  pursuant  to  Section  11.2) on a date  other  than the last day of an
Interest Period for such Advance; or

         (b)  Any  failure  by  Borrower  for  any  reason  (including,  without
limitation,  the failure of any conditions  precedent specified in Article VI to
be  satisfied)  to borrow or prepay a  Eurodollar  Advance  on the date for such
borrowing  or  prepayment,  specified  in the  relevant  notice of  borrowing or
prepayment under this Agreement.

<PAGE>

Such  compensation  shall not exceed the  excess,  if any,  of (i) the amount of
interest which otherwise  would have accrued on the principal  amount so paid or
not  borrowed  for the period from the date of such payment or failure to borrow
to the last day of the  Interest  Period for such  Advance (or, in the case of a
failure  to  borrow,  the  Interest  Period for such  Advance  which  would have
commenced on the date specified for such  borrowing) at the  applicable  rate of
interest for such Advance  provided for herein over (ii) the interest  component
of the amount  such  Lender  would have bid in the London  interbank  market for
Dollar deposits of leading banks and amounts comparable to such principal amount
and with maturities comparable to such period.

         Section  4.6 Capital  Adequacy.  If after the date  hereof,  any Lender
shall have determined that the adoption or implementation of any applicable law,
rule, or regulation regarding capital adequacy  (including,  without limitation,
any law,  rule,  or regulation  implementing  the Basle  Accord),  or any change
therein,  or any change in the  interpretation or administration  thereof by any
central bank or other Governmental  Authority charged with the interpretation or
administration  thereof,  or  compliance by such Lender (or its parent) with any
guideline,  request,  or directive  regarding  capital adequacy  (whether or not
having the force of law) of any  central  bank or other  Governmental  Authority
(including,  without limitation, any guideline or other requirement implementing
the Basle  Accord),  has or would have the effect of reducing the rate of return
on such Lender's (or its parent's)  capital as a consequence of its  obligations
hereunder or the  transactions  contemplated  hereby to a level below that which
such  Lender  (or  its  parent)  could  have  achieved  but for  such  adoption,
implementation,  change or compliance  (taking into  consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material,  then from time to time, within ten (10) Business Days after demand
by such Lender (with a copy to the Administrative  Agent), which demand shall be
delivered  by such Lender to Borrower  as  promptly  as  practicable  after such
Lender obtains knowledge of such reduction in its rate of return, Borrower shall
pay to such Lender such  additional  amount or amounts as will  compensate  such
Lender (or its parent) for such reduction. A certificate of such Lender claiming
compensation  under this  Section and  setting  forth the  additional  amount or
amounts to be paid to it hereunder  shall be conclusive,  absent  manifest error
and provided that the  determination  thereof is made on a reasonable  basis. In
determining such amount or amounts, such Lender may use any reasonable averaging
and attribution methods.

                              ARTICLE V -- SECURITY

         Section 5.1  Collateral.  To secure the full and  complete  payment and
performance of the  Obligations,  Borrower shall execute and deliver or cause to
be executed and delivered the documents  described  below  covering the property
and collateral  described  therein (which,  together with any other property and
collateral  which  may now or  hereafter  secure  the  Obligations  or any  part
thereof, is sometimes herein called the "Collateral"):

     (a) Borrower Security Agreement.  Borrower shall execute and deliver to the
Administrative  Agent,  for the benefit of the Lenders,  the  Borrower  Security
Agreement.

     (b) Guarantor Security Agreement.  The Guarantors shall execute and deliver
to the Administrative Agent, for the benefit of the Lenders,  Guarantor Security
Agreements.

     (c)  Pledge   Agreement.   Pledgors   shall  execute  and  deliver  to  the
Administrative Agent, for the benefit of the Lenders, the Pledge Agreements.

<PAGE>

         (d) Further Assurances. Borrower shall execute and cause to be executed
such further documents and instruments,  including without  limitation,  Uniform
Commercial  Code  financing  statements,  as the  Administrative  Agent  and the
Documentation  Agent, in their sole  discretion,  deem necessary or desirable to
evidence and perfect the Administrative  Agent's liens and security interests in
the Collateral.

     (e) Description of Collateral. Collateral includes, without limitation, the
following assets of Borrower and Guarantors:

                  (i) All present and future accounts,  contract rights, general
         intangibles,   chattel  paper,   documents,   instruments,   investment
         property, inventory,  equipment, and other goods, wherever located, now
         owned or hereafter acquired.

                  (ii) All present and future issued and  outstanding  shares of
         capital stock of, or partnership and membership interests, now owned or
         hereafter  acquired by Borrower or any  Guarantor,  including,  without
         limitation,  all  capital  stock  of,  or  partnership  and  membership
         interests in, the Guarantors.

                  (iii) To the  extent  allowed  by the  respective  partnership
         agreements,  certain  partnership  interests  or economic  interests in
         partnership interests owned by Borrower and Guarantors.

                  (iv)  All  present  and  future  automobiles,   trucks,  truck
         tractors, trailers,  semi-trailers,  or other motor vehicles or rolling
         stock now owned or  hereafter  acquired by  Borrower  or any  Guarantor
         (collectively, the "Vehicles").

                  (v) All present and future  rights,  awards,  and judgments to
         which  Borrower or any Guarantor is entitled  under any  litigation now
         existing or hereafter arising.

                  (vi) All present and future rights,  titles,  and interests of
         Borrower or any Guarantor in and to all patents,  patent  applications,
         patent right,  service marks,  trademarks,  tradenames,  trade secrets,
         intellectual property, registrations, goodwill, copyrights, franchises,
         licenses,  permits,  proprietary information,  customer lists, designs,
         and inventions.

                  (vii) All  present and future  books,  records,  data,  plans,
         manuals,  computer  software  and  computer  programs of  Borrower  and
         Guarantors.

               (viii) All  proceeds and  products of the  Collateral  heretofore
          described.

     Provided  that  the  Collateral  owned by the  Guarantor  under  the  Prime
Facility  shall be subject  to a first  lien in favor of the agents and  lenders
under the Prime Facility.

         Collateral shall also include LASIK Investors, LLC's interests in Prime
Refractive,  LLC,,  now owned or hereafter  acquired and all assets  financed by
Prime Refractive, LLC.

<PAGE>

         Section 5.2 Future Liens.  Promptly, and in any event within twenty-one
(21) days after (a) the acquisition of any assets (real, personal,  tangible, or
intangible)  by Borrower or any  Guarantor or (b) the removal,  termination,  or
expiration  of any  prohibition  upon the granting of a lien in any asset (real,
personal,  tangible, or intangible) of any Borrower or any Guarantor (including,
without limitation, the granting of liens in all general and limited partnership
interests  in  which  Borrower  and  Guarantors  own  100%  of  the  partnership
interests) (the "Additional Assets"),  Borrower shall (or shall cause such other
Guarantor  to)  execute  and  deliver  to   Administrative   Agent  all  further
instruments  and documents  (including,  without  limitation,  certificates  and
instruments  representing  shares  of stock or  evidencing  Debt and any  realty
appraisals  as  Administrative  Agent  may  require  with  respect  to any  such
Additional Assets), and shall take all such further action that may be necessary
or desirable,  or that  Administrative  Agent may reasonably  request, to grant,
perfect,  and protect liens in favor of Administrative  Agent for the benefit of
Lenders in such Additional  Assets,  as security for the  Obligations;  it being
expressly  understood  that the  granting of such  additional  security  for the
Obligations  is a material  inducement  to the  execution  and  delivery of this
Agreement by each Lender.  Upon satisfying the terms and conditions hereof, such
Additional  Assets shall be included in the  "Collateral" for all purposes under
the Loan Documents, and all references to the "Collateral" in the Loan Documents
shall include the Additional Assets.

         Section  5.3  Release  of  Collateral.  Upon  any  sale,  transfer,  or
disposition  of  Collateral  which is expressly  permitted  pursuant to the Loan
Documents  (or is otherwise  authorized by Required  Lenders or Lenders,  as the
case may be), and upon ten (10) Business Days' prior written request by Borrower
(which  request  must be  accompanied  by true  and  correct  copies  of (a) all
documents of transfer or  disposition,  including  any  contract of sale,  (b) a
preliminary closing statement and instructions to the title company, if any, and
(c) all requested release instruments, Administrative Agent shall (and is hereby
irrevocably  authorized  by the  Lenders to) execute  such  documents  as may be
necessary to evidence the release of liens granted to  Administrative  Agent for
the benefit of lenders pursuant hereto in such Collateral; provided that, (x) no
such  release of Lien shall be  granted if any  Default or Event of Default  has
occurred and is continuing,  including,  without limitation, the failure to make
certain mandatory prepayments in accordance with Section 2.3 in conjunction with
the sale and transfer of such Collateral;  (y) Administrative Agent shall not be
required to execute any such document on terms which, in Administrative  Agent's
opinion, would expose Administrative Agent to liability or create any obligation
or entail any consequence, other than the release of such Liens without recourse
or warranty; and (z) such release shall not in any manner discharge,  affect, or
impair  the  Obligations,  or  liens  upon or  obligations  of  Borrower  or any
Guarantor in respect of all interests  retained by the Borrower and  Guarantors,
including,  without  limitation,  the  proceeds of any sale,  all of which shall
continue to constitute Collateral.

         Section 5.4 Setoff.  If an Event of Default  shall have occurred and is
continuing,  each Lender is hereby authorized at any time and from time to time,
without  notice to Borrower  (any such notice being hereby  expressly  waived by
Borrower),  to set off and apply any and all deposits (general or special,  time
or demand,  provisional or final) at any time held and other indebtedness at any
time  owing by such  Lender to or for the  credit  or the  account  of  Borrower
against any and all of the  obligations  of Borrower now or  hereafter  existing
under  this  Agreement,  such  Lender's  Notes,  or  any  other  Loan  Document,
irrespective  of whether or not the  Administrative  Agent or such Lender  shall
have made any demand under this  Agreement or such Lender's  Notes or such other
Loan Document and although such obligations may be unmatured. Each Lender agrees
promptly to notify Borrower (with a copy to the Administrative  Agent) after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application.  The rights and remedies
of  each  Lender  hereunder  are  in  addition  to  other  rights  and  remedies
(including,  without  limitation,  other rights of setoff) which such Lender may
have.

<PAGE>

                       ARTICLE VI -- CONDITIONS PRECEDENT

         Section 6.1 Initial Advance.  The obligation of each Lender to make its
initial  Advance is subject to the condition  precedent that the  Administrative
Agent  shall  have  received  on or before  the day of such  Advance  all of the
following,  each dated (unless otherwise indicated) the date hereof, in form and
substance satisfactory to the Administrative Agent:

         (a) Resolutions. Resolutions of the Boards of Directors of Borrower and
each Guarantor  certified by the Secretary or an Assistant  Secretary of each of
them which authorize the execution, delivery, and performance by such Company of
this Agreement and/or the other Loan Documents to which such Company is or is to
be a party;

         (b) Incumbency  Certificate.  A certificate of incumbency  certified by
the  Secretary  or  an  Assistant  Secretary  of  Borrower  and  each  Guarantor
certifying  the names of the officers of each such  Company,  authorized to sign
this  Agreement and each of the other Loan  Documents to which each such Company
is or is to be a party (including the certificates contemplated herein) together
with specimen signatures of such officers;

     (c) Articles of  Incorporation.  The articles of  incorporation of Borrower
and each Guarantor certified by the appropriate governmental office;

     (d) Bylaws.  The bylaws of Borrower  and each  Guarantor  certified  by the
Secretary or an Assistant Secretary of each such Company;

     (e) Governmental  Certificates.  Certificates of the appropriate government
officials  of the  state  of  incorporation  of  Borrower  and  Litho  as to the
existence and good standing of each of them;

         (f)      Notes.  The Notes executed by Borrower;

     (g) Borrower Security  Agreement.  Borrower Security  Agreement executed by
Borrower;

         (h)      Guaranties.  The Guaranty Agreements executed by Guarantors;

     (i)  Guarantor  Security  Agreement.   The  Guarantor  Security  Agreements
executed by the Guarantors;

     (j) Pledge Agreements.  The Pledge and Security  Agreements executed by the
Pledgors;

     (k) Financing  Statements.  Uniform  Commercial  Code financing  statements
executed  by  Borrower  and each  Guarantor  and  covering  the  Collateral,  as
requested by Administrative Agent;

     (l) Stock  Certificates.  Stock  certificates  evidencing all stock pledged
pursuant  to  the  Borrower  Security  Agreement  and  each  Guarantor  Security
Agreement, as applicable, together with stock powers duly executed in blank, and
acknowledgements  by the  Prime  Agent,  of the  second  liens in stock  created
thereunder;

<PAGE>

     (m) Certificates of Title.  Original  certificates of title,  together with
executed  applications  for title,  for all vehicles used in connection with the
transportation  of  lithotripters  pledged  pursuant  to the  Borrower  Security
Agreement and the Guarantor Security Agreements;

     (n)  Insurance  Policies.  Copies of all  insurance  policies  required  by
Section  8.5,   together   with  loss  payee   endorsements   in  favor  of  the
Administrative  Agent,  for the  benefit  of the  Lenders,  with  respect to all
insurance policies covering Collateral;

         (o) UCC and Tax and  Judgment  Lien  Searches.  The  results of Uniform
Commercial Code searches showing all financing statements and other documents or
instruments,  and tax and judgment  lien  searches  showing all tax and judgment
liens,  on file against  Borrower and  Guarantors in such  jurisdictions  as the
Administrative  Agent shall  require,  such  searches to be as of a date no more
than twenty (20) days prior to the date of the initial Advance;

     (p) Perfection Certificate. A Perfection Certificate,  in substantially the
form of Exhibit D hereto,  properly  completed and signed by the Chief Executive
or  Chief  Financial  Officer  or Vice  President-Finance  of  Borrower  and the
Guarantors;

     (q) Opinion of Counsel.  Favorable  opinions as to the matters set forth in
Exhibit E hereto of Akin,  Gump,  Strauss,  Hauer & Feld,  L.L.P.,  Texas  legal
counsel to Borrower and the Guarantors.

     (r)  Closing  of Prime  Facility.  Evidence  that the  closing of the Prime
Facility  has  occurred  and  contains  terms  and   conditions   acceptable  to
Administrative Agent.

     (s)  Attorneys'  Fees and  Expenses.  Evidence  that the costs and expenses
(including attorneys' fees) referred to in Section 13.1, to the extent incurred,
shall have been paid in full by Borrower;

         (t)  Fees.  Borrower  shall  have  paid  to the  Administrative  Agent,
Lenders,  and Lead  Arranger  the fees owed by  Borrower  to the  Administrative
Agent,  Lenders,  and Lead Arranger  pursuant to the letter  agreements  between
Borrower and Administrative Agent;

     (t) Federal Reserve Board Form U-1. For the Administrative Agent a properly
completed  Federal Reserve Board Form U-1 duly executed by each Company pledging
stock of another Company; and

         (u) No Material  Adverse Change.  No material adverse change shall have
occurred  since  September  30,  1999  in  the  business,   assets,  operations,
conditions  (financial  or  otherwise)  or  prospects  of Prime  Medical and its
Subsidiaries  or of the Companies or in the facts and  information  delivered to
Lenders on or prior to the date of the initial Advance.

     Section 6.2 All Advances. The obligation of each Lender to make any Advance
(including  the  initial  Advance)  is  subject  to  the  following   additional
conditions precedent:

     (a) Advance Request Form. The Administrative Agent shall have received,  in
accordance  with Section 2.5, an Advance  Request Form executed by an authorized
officer of Borrower;

<PAGE>

     (b) No Default. No Default shall have occurred and be continuing,  or would
result from such Advance;

         (c)  Representations  and Warranties.  All of the  representations  and
warranties  contained  in  Article  VII  hereof  and in each of the  other  Loan
Documents  shall be true and correct on and as of the date of such  Advance with
the same force and effect as if such  representations  and  warranties  had been
made on and as of such date, except to the extent that such  representations and
warranties  speak to a specific date or the facts on which such  representations
and warranties are based have been changed by  transactions  contemplated by the
Loan Documents;

     (d) Permitted Refractive Acquisitions.  The amount of any Advance hereunder
to  finance  a  portion  of  the  purchase  price  of any  Permitted  Refractive
Acquisition  shall not exceed the lesser of: (a) one-half of the total  purchase
price,  or (b) 2.5 times the pro forma EBITDA of the Target Company for the most
recently completed four fiscal quarters; and

     (e) Additional Documentation.  The Administrative Agent shall have received
such additional  approvals,  opinions, or documents as are required by the terms
and provisions of this Agreement or any other Loan Document.

                  ARTICLE VII -- REPRESENTATIONS AND WARRANTIES

         To induce  the Agents  and the  Lenders  to enter into this  Agreement,
Borrower hereby represents and warrants to the Agents and the Lenders that:

         Section 7.1       Existence.

         (a)  Corporate  Existence.  Each  of  the  Companies  (other  than  the
Partnerships and the Guarantors):  (a) is a corporation duly organized,  validly
existing,  and in  good  standing  under  the  laws of the  jurisdiction  of its
incorporation;  (b) has all requisite  corporate  power and authority to own its
assets and carry on its  business as now being or as  proposed to be  conducted;
and (c) is qualified to do business in all  jurisdictions in which the nature of
its business makes such qualification  necessary and where failure to so qualify
would have a material  adverse effect on the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower,  or any Guarantor.  Each Company has the corporate power and authority
to execute,  deliver,  and perform its obligations  under this Agreement and the
other Loan Documents to which it is or may become a party.

         (b) Partnership  Existence.  Each of the Partnerships  (and each of the
Partnerships as defined in the Prime  Facility):  (a) is a general  partnership,
limited  partnership  or  limited  liability  company,   as  appropriate,   duly
organized,  validly  existing,  and in  good  standing  under  the  laws  of the
jurisdiction  of its  formation;  (b) has all  requisite  partnership  power and
authority or company power and authority, as appropriate,  to own its assets and
carry on its  business as now being or as proposed to be  conducted;  and (c) is
qualified  to do  business  in all  jurisdictions  in which  the  nature  of its
business  makes such  qualification  necessary  and where  failure to so qualify
would have a material  adverse effect on the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower, or any Guarantor.

<PAGE>

         Section  7.2  Financial  Statements.  Borrower  has  delivered  to  the
Administrative Agent audited consolidated  financial statements of Prime Medical
as  of  and  for  the  fiscal  year  ended  December  31,  1998,  and  unaudited
consolidated financial statements of Prime Medical for the nine (9) month period
ended  September  30, 1999.  Such  financial  statements  have been  prepared in
accordance with GAAP, and fairly present, on a consolidated basis, the financial
condition of Prime  Medical and its  Subsidiaries,  as of the  respective  dates
indicated  therein  and the results of  operations  for the  respective  periods
indicated  therein.  There has been no material  adverse change in the business,
condition (financial or otherwise),  operations,  or properties of the Companies
(as defined in the Prime  Facility)  taken as a whole or Prime Medical since the
effective  date of the most  recent  financial  statements  referred  to in this
Section.

         Section 7.3 Corporate Action: No Breach. The execution,  delivery,  and
performance  by each Company and each  Guarantor of this Agreement and the other
Loan  Documents  to which such Company or Guarantor is or may become a party and
compliance  with the terms and  provisions  hereof  and  thereof  have been duly
authorized by all requisite  corporate  action (or, if such Company or Guarantor
is a  partnership,  then  partnership  action)  on the part of such  Company  or
Guarantor  and do not and will not (a) violate or conflict  with, or result in a
breach of, or require any consent  under (i) the  articles of  incorporation  or
bylaws of such  Company or  Guarantor  (or, if such  Company or  Guarantor  is a
partnership,  then the partnership agreement of such Company or Guarantor), (ii)
any material  applicable law, rule, or regulation or any material  order,  writ,
injunction,  or decree of any Governmental Authority or arbitrator, or (iii) any
material  agreement or  instrument to which such Company or Guarantor is a party
or by which such Company or Guarantor or any of its property is bound or subject
(other than agreements and  instruments  relating to Debt which will be paid off
with the proceeds of the initial Advance),  or (b) constitute a material default
under any such agreement or instrument  (other than  agreements and  instruments
relating  to Debt  which  will be paid  off  with the  proceeds  of the  initial
Advance),  or  result in the  creation  or  imposition  of any Lien  (except  as
provided  in  Article  V)  upon  any of the  revenues  or  assets  of any of the
Companies or any Guarantor.

         Section 7.4  Operation  of  Business.  Each of the  Companies  and each
Guarantor  possesses all licenses,  permits,  franchises,  patents,  copyrights,
trademarks,  and  tradenames,  or rights  thereto,  necessary  to conduct  their
respective  businesses  substantially as now conducted and as presently proposed
to be  conducted.  None of the  Companies or  Guarantors  is in violation of any
valid rights of others with respect to any of the  foregoing  (except  where the
failure  to do so would not have a  material  adverse  effect  on the  business,
condition  (financial or  otherwise),  operations or properties of the Companies
taken as a whole, Borrower, or any Guarantor.)

         Section 7.5 Litigation and Judgments.  As of the date hereof, except as
disclosed on Schedule 7.5 hereto,  there is no action, suit,  investigation,  or
proceeding before or by any Governmental  Authority or arbitrator pending, or to
the knowledge of Borrower,  threatened against or affecting any of the Companies
or any Guarantor,  that would, if adversely determined,  have a material adverse
effect on the  business,  condition  (financial  or  otherwise),  operations  or
properties of the Companies taken as a whole or Borrower,  or any Guarantor,  or
the  ability  of  Borrower  to pay and  perform  the  Obligations.  There are no
outstanding judgments against any Company.

         Section 7.6 Rights in Properties; Liens. Each of the Companies and each
Guarantor has good and  indefeasible  title to or valid  leasehold  interests in
their respective material  properties and assets,  real and personal,  including
the  properties,  assets,  and  leasehold  interests  reflected in the financial
statements  described  in Section 7.2, and none of the  properties,  assets,  or
leasehold  interests of any Company is subject to any Lien,  except as permitted
by Section 9.2.

<PAGE>

         Section 7.7 Enforceability.  This Agreement constitutes,  and the other
Loan Documents to which Borrower is a party,  when delivered,  shall  constitute
the legal,  valid,  and binding  obligations  of Borrower,  enforceable  against
Borrower  in  accordance  with  their  respective  terms,  except as  limited by
bankruptcy,  insolvency,  or other laws of general  application  relating to the
enforcement of creditors'  rights. The Loan Documents to which each Guarantor is
a party,  when  delivered,  shall  constitute  the  legal,  valid,  and  binding
obligations of such Guarantor,  enforceable against such Guarantor in accordance
with their respective  terms,  except as limited by bankruptcy,  insolvency,  or
other laws of general  application  relating to the  enforcement  of  creditors'
rights.

         Section 7.8 Approvals.  No authorization,  approval, or consent of, and
no filing or registration with, any Governmental  Authority or third party is or
will be necessary for the execution, delivery, or performance by Borrower or any
Guarantor of this  Agreement and the other Loan  Documents to which  Borrower or
any  Guarantor  is or may become a party or for the  validity or  enforceability
thereof.

     Section 7.9 Debt. As of the date hereof,  the Companies and the  Guarantors
have no Debt, except as disclosed on Schedule 7.9.

         Section 7.10 Taxes.  The  Companies  and the  Guarantors  have filed or
extended  all tax  returns  (federal,  state,  and local)  required to be filed,
including all income,  franchise,  employment,  property, and sales tax returns,
and have  paid all of  their  respective  liabilities  for  taxes,  assessments,
governmental  charges,  and other  levies  that are due and  payable  other than
certain  state tax returns  required  to be filed on or before the date  hereof.
Except as  previously  disclosed  to the  Administrative  Agent in  writing,  no
Company nor any Guarantor knows of any pending  investigation  of any of them by
any taxing  authority or of any pending but  unassessed  tax liability of any of
them.

         Section 7.11 Use of  Proceeds;  Margin  Securities.  No Company nor any
Guarantor is engaged principally,  or as one of its important activities, in the
business of extending  credit for the purpose of purchasing  or carrying  margin
stock (within the meaning of Regulations T, U, or X of the Board of Governors of
the Federal Reserve System),  and no part of the proceeds of any Advance will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose  of  purchasing  or  carrying  margin  stock,  except for  purchases  of
Borrower's capital stock permitted by Section 9.4 hereof.

         Section 7.12 ERISA.  The Companies and the Guarantors are in compliance
in all material  respects with all  applicable  provisions  of ERISA.  Neither a
Reportable  Event nor a Prohibited  Transaction  has occurred and is  continuing
with  respect  to any Plan.  No notice  of intent to  terminate  a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute  proceedings to terminate,  or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings.
None of the  Companies,  Guarantors  nor any ERISA  Affiliate has  completely or
partially  withdrawn from a Multi-employer  Plan. The Companies,  Guarantors and
each ERISA  Affiliate have met their minimum  funding  requirements  under ERISA
with respect to all of their Plans, and the present value of all vested benefits
under  each  Plan  does not  exceed  the fair  market  value of all Plan  assets
allocable to such benefits, as determined on the most recent valuation,  date of
the  Plan  and in  accordance  with  ERISA.  None  of  the  Companies,  nor  any
Guarantors, nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA.

<PAGE>

         Section 7.13  Disclosure.  All factual  information  (taken as a whole)
furnished  by or on behalf of Borrower or any  Guarantor in writing to any Agent
or any Lender (including,  without limitation, all factual information contained
in the Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents or any transaction  contemplated  herein or therein is, and
all other such factual  information (taken as a whole) hereafter furnished by or
on behalf of Borrower or any  Guarantor in writing will be, true and accurate in
all material respects on the date as of which such factual  information is dated
or  certified  and is not  (and  such  factual  information  (taken  as a whole)
hereafter  furnished  will not be)  incomplete  by  omitting  to state any facts
necessary to make such factual  information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
factual information was provided.

         Section 7.14  Subsidiaries;  Partnerships.  The Partnerships  listed on
Schedule 3, constitute all of the Subsidiaries of Prime Medical or Borrower,  as
the case may be. Schedule  7.14.1,  as the same may be amended from time to time
to reflect transactions permitted by this Agreement,  sets forth the outstanding
shares of  capital  stock (or other  ownership  interests)  and the name of each
shareholder  of each of the  Subsidiaries  of Prime Medical or Borrower,  as the
case may be. All of the  outstanding  capital  stock of Borrower and each of its
Subsidiaries  and Prime  Medical and each of its  Subsidiaries  has been validly
issued, is fully paid, and is nonassessable. Schedule 7.14.2, as the same may be
amended from time to time to reflect  transactions  permitted by this Agreement,
sets forth the outstanding  partnership  interests of the Partnerships  owned by
each of the Companies and Guarantors.

         Section 7.15 Agreements. None of the Companies or Guarantors is a party
to any indenture,  loan, or credit agreement, or to any lease or other agreement
or instrument,  or subject to any charter or corporate  restriction  which could
reasonably  be  expected  to have a  material  adverse  effect on the  business,
condition  (financial or  otherwise),  operations or properties of the Companies
taken as a whole,  Borrower or any  Guarantor  or the ability of Borrower or any
Guarantor to pay and perform its  obligations  under the Loan Documents to which
it is a party. None of the Companies or Guarantors is in default in any material
respect  in  the  performance,   observance,   or  fulfillment  of  any  of  the
obligations,  covenants,  or conditions contained in any agreement or instrument
to which it is a party,  which  default,  in the  aggregate  with all such other
defaults,  would  have a  material  adverse  affect on the  business,  condition
(financial or otherwise),  operations or properties of the Companies  taken as a
whole, Borrower, or any Guarantor.

     Section   7.16   Compliance   with   Legal    Requirements;    Governmental
Authorizations.

         (a)  Except as set  forth in  Schedule  7.16.1:  (i) each  Company  and
Guarantor is in compliance in all material  respects with each Legal Requirement
that is or was  applicable  to it or to the conduct or operation of its business
or the  ownership or use of any of its assets;  and (ii) no Company or Guarantor
has received any notice or other  communication from any Governmental  Authority
or other Person of any event or circumstance  which could constitute a violation
of, or failure to comply with, any Legal Requirement.

<PAGE>

         (b)  Except  as set  forth  in  Schedule  7.16:  (i) each  Company  and
Guarantor is in material  compliance  with all of the terms and  requirements of
each  Governmental  Authorization  held by such  Company or  Guarantor;  (ii) no
Company or Guarantor  has received  any notice or other  communication  from any
Governmental Authority or other Person of, any event or circumstance which could
constitute a violation of, or failure to comply with, any term or requirement of
any  Governmental  Authorization,  or of any  actual  or  potential  revocation,
withdrawal,  cancellation  or termination of, or material  modification  to, any
Governmental  Authorization;  (iii) all applications required to have been filed
for the renewal of any required Governmental Authorizations have been duly filed
on a timely basis with the appropriate Governmental  Authorities,  and all other
filings   required  to  have  been  made  with  respect  to  such   Governmental
Authorizations  have  been  duly  made on a timely  basis  with the  appropriate
Governmental Authorities;  (iv) all Governmental Authorizations of the Companies
and  Guarantors  are  transferable  to the  Companies and  Guarantors;  (v) upon
consummation  of  the  transactions   contemplated  hereby,  the  Companies  and
Guarantors  will lawfully hold all such  Governmental  Authorizations;  and (vi)
none of such Governmental Authorizations will terminate upon consummation of the
transactions  contemplated hereby. Except as set forth on Schedule 7.16, each of
the Companies and Guarantors possesses the necessary Governmental Authorizations
(i)  necessary  to permit each  Company and  Guarantor  to lawfully  conduct and
operate its respective business in the manner it currently conducts and operates
such  business and to permit such Company or Guarantor to own and use its assets
in the  manner  in  which it  currently  owns and  uses  such  assets,  and (ii)
necessary to permit each Company and  Guarantor,  upon the  consummation  of the
transactions  contemplated  hereby, to lawfully conduct and operate its business
and to permit each Company and  Guarantor  to own and use its assets,  where the
failure to have such  Governmental  Authorization  would have a material adverse
effect on the  business,  condition  (financial  or  otherwise),  operations  or
properties of the Companies taken as a whole, Borrower, or any Guarantor.

     Section  7.17  Investment  Company  Act.  No  Company  or  Guarantor  is an
"investment  company" within the meaning of the Investment  Company Act of 1940,
as amended.

         Section  7.18  Public  Utility  Holding  Company  Act.  No  Company  or
Guarantor  is a  "holding  company"  or a  "subsidiary  company"  of a  "holding
company" or an "affiliate" of a "holding  company" or a "public  utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     Section 7.19 Environmental  Matters.  Except as disclosed on Schedule 7.19,
as the same may be amended from time to time, hereto:

         (a)  Each  of the  Companies  and  each  Guarantor  and  all  of  their
respective properties,  assets, and operations are in compliance in all material
respects with all  Environmental  Laws. No Company or Guarantor is aware of, nor
have any of them received notice of, any past,  present,  or future  conditions,
events, activities,  practices, or incidents which may interfere with or prevent
the material  compliance  or  continued  material  compliance  of any Company or
Guarantor with all material Environmental Laws; and

         (b) The Companies and  Guarantors  have obtained all material  permits,
licenses and  authorizations  that are required under  applicable  Environmental
Laws,  and all such  permits  are in good  standing  and each  Company  and each
Guarantor is in  compliance  is all material  respects with all of the terms and
conditions of such permits.

         Section 7.20 Year 2000 Compliance. Borrower represents that it is aware
of the possible impact of the year 2000 problem (that is, the risk that computer
applications may not be able to properly perform date-sensitive  functions after
December  31,  1999)  upon its  computer  applications  and  on-going  business.
Borrower  represents that any corrective action necessary will be taken and that
the year 2000  problem  will not  result  in a  material  adverse  change in the
Companies'  and  Guarantors'   business  condition   (financial  or  otherwise),
operations, properties or prospects, or ability to repay the Obligations.

<PAGE>

                       ARTICLE VIII -- POSITIVE COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe each of the following positive covenants:

     Section  8.1   Reporting   Requirements.   Borrower  will  furnish  to  the
Administrative Agent and each Lender:

         (a) Annual Financial Statements. As soon as available, and in any event
within ninety-five (95) days after the end of each fiscal year of Prime Medical,
beginning  with the fiscal year ending  December  31, 1999, a copy of the annual
audit  report of the Prime  Companies  for such  fiscal  year  containing,  on a
consolidated basis, balance sheets and statements of income,  retained earnings,
and cash flow as at the end of such  fiscal  year and for the twelve  (12)-month
period then ended,  in each case setting forth in  comparative  form the figures
for  the  preceding  fiscal  year,  audited  by  independent   certified  public
accountants  of  recognized  standing,  and  accompanied  by an  opinion of such
independent  certified  public  accountants  stating  that such  report has been
prepared in accordance with GAAP;

         (b) Monthly  Financial  Statements.  As soon as  available,  and in any
event  within forty (40) days after the end of each month of each fiscal year of
Borrower, a copy of an unaudited financial report of the Companies and the Prime
Companies  as of the end of such month and for the  portion  of the fiscal  year
then ended,  containing,  on a consolidated basis, balance sheets and statements
of income and retained earnings,  in each case setting forth in comparative form
the figures for the corresponding period of the preceding fiscal year, certified
by the chief  financial  officer of Borrower to have been prepared in accordance
with GAAP and to fairly  and  accurately  present  (subject  to  year-end  audit
adjustments) the financial condition and results of operations of the Companies,
on a consolidated basis, at the date and for the periods indicated therein;

         (c) Quarterly Financial  Statements.  As soon as available,  and in any
event within  forty-five  (45) days after the end of each quarter of each fiscal
year of Borrower,  a copy of an unaudited  financial report of the Companies and
the Prime  Companies  and of Prime RVC as of the end of such quarter and for the
portion of the fiscal  year then ended,  containing,  on a  consolidated  basis,
balance sheets and statements of income,  retained  earnings,  and cash flow, in
each case setting forth in  comparative  form the figures for the  corresponding
period of the preceding fiscal year, certified by the chief financial officer or
treasurer  of Borrower  to have been  prepared  in  accordance  with GAAP and to
fairly and  accurately  present  (subject to  year-end  audit  adjustments)  the
financial  condition  and results of  operations  of the Companies and the Prime
Companies  and  Prime  RVC and  its  Subsidiaries,  as the  case  may  be,  on a
consolidated  basis, at the date and for the periods  indicated  therein,  and a
copy of an  unaudited  financial  report of the  Companies as of the end of such
quarter  beginning  with the fiscal  quarter  ending  March 31, 2000 and for the
portion  of the  fiscal  year then  ended,  containing,  on a  consolidated  and
consolidating basis, balance sheets and statements of income, retained earnings,
and cash flow,  in each case setting forth in  comparative  form the figures for
the  corresponding  period of the preceding fiscal year,  certified by the chief
financial  officer of Borrower to have been prepared in accordance with GAAP and
to fairly and accurately  present  (subject to year-end audit  adjustments)  the
financial condition and results of operations of the Companies,  as the case may
be, on a consolidated and  consolidating  basis, at the date and for the periods
indicated therein;

<PAGE>

         (d) Compliance  Certificate.  Concurrently with the delivery of each of
the financial  statements  referred to in Section  8.1(a) and within  forty-five
(45) days after the end of each of the first  three (3) fiscal  quarters of each
fiscal year of Borrower, a certificate of the chief executive or chief financial
officer or treasurer of Borrower,  in  substantially  the form of Exhibit F, (i)
stating  that to such  officer's  knowledge,  no  Default  has  occurred  and is
continuing,  or if a Default has occurred and is  continuing,  a statement as to
the nature  thereof and the action  that is  proposed  to be taken with  respect
thereto,  and (ii) showing in reasonable  detail the calculations  demonstrating
compliance with Article X;

         (e) Accounts  Receivable Aging Report.  As soon as available and in any
event within forty (40) days after the end of each month, an aged listing of the
accounts  receivable  of each of  Borrower  and its  Subsidiaries  and of  Prime
Medical  and  each of its  Subsidiaries  as of the end of such  month  in a form
reasonably satisfactory to the Administrative Agent;

         (f) Business Plan and Budget.  As soon as available and in any event by
January 15 of the then current  year,  a copy of the annual  budget and business
plan of  Borrower  and its  Subsidiaries  and of Prime  Medical  and each of its
Subsidiaries  for  the  upcoming  fiscal  year,  together  with  details  of the
assumptions, if any, underlying such budget and business plan;

     (g)  Management  Letters.  Promptly  upon  receipt  thereof,  a copy of any
management letter or written report submitted to any Company or any Guarantor by
independent certified public accountants with respect to the business, condition
(financial or otherwise), operations, or properties of any Company;

         (h) Notice of  Litigation.  Promptly  after the  commencement  thereof,
notice of all actions,  suits, and proceedings before any Governmental Authority
or arbitrator  affecting Borrower or any of its Subsidiaries or any of the Prime
Companies  which,  if  determined  adversely to Borrower,  Guarantor or any such
Subsidiary,  could have a material  adverse  effect on the  business,  condition
(financial or otherwise),  options,  or properties of Borrower,  any Subsidiary,
the Companies, or the Prime Companies (taken as a whole);

         (i) Notice of Default. As soon as possible and in any event within five
(5) days after  Borrower  knows of the  occurrence  of each  Default,  a written
notice  setting  forth the details of such Default and the action that  Borrower
has taken and proposes to take with respect thereto;

         (j) ERISA Reports. Promptly after the filing or receipt thereof, copies
of all reports, including annual reports, and notices which any Company or Prime
Company  files with or receives  from the PBGC or the U.S.  Department  of Labor
under ERISA; and as soon as possible and in any event within five (5) days after
any  Company or Prime  Company  knows or has reason to know that any  Reportable
Event or  Prohibited  Transaction  has occurred with respect to any Plan or that
the PBGC,  or any Company or Prime  Company  has  instituted  or will  institute
proceedings  under Title IV of ERISA to terminate any Plan, a certificate of the
chief  financial  officer  of  Borrower  setting  forth the  details  as to such
Reportable  Event or Prohibited  Transaction or Plan  termination and the action
that Borrower proposes to take with respect thereto;

         (k) Reports to Other Creditors.  Promptly after the furnishing thereof,
copies  of  any  statement  or  report  furnished  by  Borrower  or  any  of its
Subsidiaries  or any Guarantor to any other creditor to which any Company or any
Guarantor  owes  $250,000.00  or  more  or  to  the  trustee  under  the  Senior
Subordinated Indenture (as defined in the Prime Facility), pursuant to the terms
of any  indenture,  loan,  or  credit or  similar  agreement  and not  otherwise
required to be furnished to the Administrative Agent and the Lenders pursuant to
any other clause of this Section;

<PAGE>

         (l) Proxy Statements,  Etc. As soon as available,  one (1) copy of each
financial statement,  report, notice or proxy statement sent by Prime Medical to
its stockholders generally and one (1) copy of each regular, periodic or special
report,  registration  statement,  or prospectus filed by Prime Medical with any
securities  exchange or the Securities and Exchange  Commission or any successor
agency including, without limitation, all Forms 10-K, 10-Q and 8-K and all other
periodic reports required to be filed under the Securities  Exchange Act of 1934
and the rules and regulations promulgated thereunder;

         (m)  Partnership  Lists.  As soon as  available,  and in any  event (a)
within thirty (30) days after the Administrative Agent requests such information
from  Borrower,  a list of the names and  addresses of each partner or member of
each of the  Partnerships  and  percentage  ownership  by each  Company  of each
Partnership;

         (n) Governmental Authorizations. Upon the request of the Administrative
Agent, but not more often than one (1) time during each fiscal year of Borrower,
a complete and accurate list of each Governmental  Authorization held by each of
Companies or Prime Companies or that otherwise  relate to the business of, or to
any of the assets owned or used by, each of the  Companies and each of the Prime
Companies;

         (o) Dilution  Reports.  Promptly upon the  occurrence of any Restricted
Transfer (as  hereinafter  defined),  a report  setting forth the  occurrence of
Restricted Transfer, including the name of the Partnership, purchasers, purchase
price,   and  EBITDA  for  the   immediately   preceding  four  fiscal  quarters
attributable  thereto, and also of the contribution of any Partnership assets to
any  other  Partnership,   including  the  names  of  the  Partnerships,  assets
transferred, value thereof and consideration received;

         (p) Partnership Actions.  Promptly after the incurrence thereof, notice
of any Partnership's (i) incurrence of Debt, (ii) change in accounting treatment
or reporting practices (which change shall not affect any reporting requirements
set  forth  herein  or the Loan  Documents),  except  as  permitted  by GAAP and
disclosed to the Administrative  Agent, (iii) change in tax reporting treatment,
except  as  permitted  by law,  (iv)  amendment  of any  partnership  agreement,
regulations,  or management  agreement  between such Partnership and any Company
and copies of any such  amendment  certified  by an officer of Borrower as being
true and correct, and (v) change in its insurance; and

     (q)  General  Information.  Promptly,  such  other  information  concerning
Borrower or any of its  Subsidiaries as the  Administrative  Agent or any Lender
may from time to time reasonably request.

         Section 8.2  Maintenance  of Existence;  Conduct of Business.  Borrower
will  preserve  and  maintain  its  corporate  existence  and all of its leases,
privileges, licenses, permits, franchises,  qualifications,  and rights that are
necessary or desirable in the ordinary  conduct of its  business.  Borrower will
cause  each  of its  Subsidiaries,  to  preserve  and  maintain  its  corporate,
partnership  or  other  similar  existence  and all of its  leases,  privileges,
licenses, permits,  franchises,  qualifications and rights that are necessary or
desirable in the ordinary conduct of its business,  except,  in each case, where
failure  to do so would not have a  material  adverse  effect  on the  business,
condition  (financial or  otherwise),  operations or properties of the Companies
taken as a whole,  Borrower,  or any Guarantor.  Borrower will conduct, and will
cause each of its  Subsidiaries  to  conduct,  its  business  in an orderly  and
efficient manner in accordance with good business practices.

<PAGE>

         Section 8.3  Maintenance of Properties.  Borrower will maintain,  keep,
and  preserve,  and  cause  each of its  Subsidiaries  to  maintain,  keep,  and
preserve, all of its properties (tangible and intangible) necessary or useful in
the proper conduct of its business in good working order and condition,  except,
in each case,  as  permitted by Section 9.8 or 9.9 or where the failure to do so
would not have a material adverse effect on the business,  condition  (financial
or  otherwise),  operations or  properties  of the  Companies  taken as a whole,
Borrower, or any Guarantor.

         Section 8.4 Taxes and Claims. Borrower will pay or discharge,  and will
cause each of its Subsidiaries other than the Excepted  Subsidiaries,  to pay or
discharge,  at or before maturity or before becoming delinquent (a) all material
taxes, levies, assessments, and governmental charges imposed on it or its income
or profits or any of its material  property,  and (b) all material lawful claims
for labor,  material,  and supplies,  which, if unpaid, might become a Lien upon
any of its property; provided, however, that no Company shall be required to pay
or discharge any tax, levy,  assessment,  or governmental  charge which is being
contested in good faith by appropriate  proceedings  diligently pursued, and for
which adequate reserves have been established.

         Section 8.5 Insurance.  Borrower will maintain,  and will cause each of
its Subsidiaries to maintain (except in the case of the  Partnerships,  in which
case Borrower shall maintain for the  Partnerships),  insurance with financially
sound and reputable  insurance companies in such amounts and covering such risks
as is usually carried by corporations  engaged in similar  businesses and owning
similar  properties in the same general  areas in which the  Companies  operate,
consistent  with past practices of the Companies and to the extent  available on
commercially reasonable terms, provided that in any event Borrower will maintain
and cause each of its Subsidiaries  (except in the case of the Partnerships,  in
which case Borrower shall maintain for the  Partnerships) to maintain  workmen's
compensation  insurance,  property  insurance,  comprehensive  general liability
insurance, professional liability insurance, and business interruption insurance
reasonably   satisfactory  to  the  Lenders.   Each  insurance  policy  covering
Collateral shall name the Administrative Agent as loss payee, for the benefit of
the Lenders, as its interests may appear and shall provide that such policy will
not be canceled or reduced without thirty (30) days' prior written notice to the
Administrative  Agent.  Borrower will annually provide the Administrative  Agent
with all  certificates  of  insurance  evidencing  all  policies of insurance of
Borrower and its Subsidiaries.

         Section 8.6 Inspection  Rights. At any reasonable time and from time to
time after reasonable notice to Borrower,  Borrower will permit,  and will cause
each of its Subsidiaries to permit,  representatives of the Administrative Agent
and each Lender to examine,  copy, and make extracts from its books and records,
to visit and inspect its  properties,  and to discuss its business,  operations,
and financial  condition with its officers,  and  independent  certified  public
accountants.  Prior to removing  any such  copies or  extracts  from a Company's
premises,  such  Company's   representatives  shall  be  provided  a  reasonable
opportunity to review such information and mark or identify it as "confidential"
or "confidential information" as reasonably deemed appropriate by such Company.

         Section 8.7 Keeping Books and Records. Borrower will maintain, and will
cause each of its  Subsidiaries to maintain,  proper books of record and account
in which full,  true, and correct  entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.

         Section 8.8 Compliance with Laws.  Borrower will comply, and will cause
each of its Subsidiaries to comply,  in all material  respects with all material
applicable laws,  rules,  regulations,  orders,  and decrees of any Governmental
Authority or arbitrator.

<PAGE>

         Section 8.9 Compliance with Agreements.  Borrower will comply, and will
cause each of its  Subsidiaries  to comply,  in all material  respects  with all
agreements, contracts, and instruments binding on it or affecting its properties
or business, except where the failure to do so would not have a material adverse
effect on the  business,  condition  (financial  or  otherwise),  operations  or
properties of the Companies taken as a whole, Borrower, or any Guarantor.

         Section 8.10 Further Assurances. Borrower will (a), and will cause each
of its Subsidiaries  (other than the  Partnerships) to, execute and deliver such
further  agreements  and  instruments  and take  such  further  action as may be
reasonably requested by the Administrative Agent to carry out the provisions and
purposes of this  Agreement and the other Loan Documents and, (b) and will cause
each of its Subsidiaries (including the Partnerships) to, create,  preserve, and
perfect the Liens of the  Administrative  Agent, for the benefit of the Lenders,
in the Collateral.

         Section 8.11 ERISA.  Borrower  will comply,  and will cause each of its
Subsidiaries  to comply,  with all minimum funding  requirements,  and all other
material  requirements,  of ERISA, if applicable,  so as not to give rise to any
liability thereunder.

         Section 8.12 Information  Relating to Proposed  Acquisitions.  Borrower
will use its best  efforts  to keep the  Administrative  Agent  and the  Lenders
informed  of the  relevant  information  and  status of and will  share with the
Administrative  Agent and the Lenders and provide copies to the extent possible,
of all material due diligence  information  relating to any proposed Acquisition
with respect to which Borrower or any Subsidiary  enters into a letter of intent
or acquisition agreement, during the term of this Agreement.

         Section  8.13  After-Acquired   Subsidiaries.   Concurrently  upon  the
formation  or  Acquisition  by Borrower  or any  Guarantor  of any  Wholly-Owned
Subsidiary  after  the date  hereof  (pursuant  to a  Permitted  Acquisition  or
otherwise)   (an   "After-Acquired   Subsidiary"),   Borrower  shall  cause  the
After-Acquired  Subsidiary to deliver  articles of  incorporation,  bylaws,  and
resolutions (or other corresponding  constituent documents) and such opinions as
the  Administrative  Agent shall  require  and to execute a Guaranty,  Guarantor
Security Agreement,  and Pledge Agreement (if applicable),  as shall be required
by the  Administrative  Agent to  create  first  priority  Liens in favor of the
Administrative  Agent,  for the benefit of the Lenders,  in such  After-Acquired
Subsidiary's assets, to secure the Obligations.

         Section 8.14 Syndication  Cooperation.  Borrower  acknowledges that the
Agents intend  promptly to commence to syndicate the  Commitments of the Lenders
in accordance  with the provisions of Section 13.6.  Borrower agrees to actively
assist  Agents  and  their   Affiliates  in  achieving  a  syndication  that  is
satisfactory  to Agents and Borrower and in preparing  information  requested by
Agents in connection  with arranging and  syndication of the  Commitments of the
Lenders  and to take  such  other  action  deemed  necessary  by Agents or their
Affiliates,  including  the  holding  of a formal  presentation  to  prospective
Lenders to achieve a successful  syndication of the  Commitments by Agents.  The
syndication  efforts will be accomplished  by a variety of means,  including the
preparation  of  a  confidential  information  memorandum  and  other  marketing
materials,  direct contact  during the  syndication  between  senior  management
(including, but not limited to, the chief executive officer, the chief financial
officer and treasurer of Borrower)  and advisors and  Affiliates of Borrower and
the proposed syndicate Lenders.

<PAGE>

                        ARTICLE IX -- NEGATIVE COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe the following negative covenants:

         Section 9.1 Debt. Borrower will not incur, create, assume, or permit to
exist,  nor permit any of its  Subsidiaries  (other  than the  Partnerships)  to
incur, create, assume, or permit to exist, any Debt, except:

     (a) Debt owed to the Agents and the Lenders pursuant to the Loan Documents;

(b) Existing Debt described on Schedule 7.9 hereto;

         (c)      Debt owed to Borrower or to any Wholly-Owned Subsidiary;

     (d) Debt in an aggregate  principal  amount not to exceed  $4,000,000.00 at
any time outstanding the proceeds of which are used by the Companies to purchase
equipment;

     (e) Any Company's  obligations as general  partner of a Partnership for the
Debt of such Partnership;

     (f) Any Company's Guarantee of Debt of any Partnership,  if such Company is
a general partner of such Partnership;

         (g)      Subordinated Debt; and

         (h)      Any Financial Hedge.

         Section  9.2  Limitation  on Liens.  Borrower  will not incur,  create,
assume,  or permit to exist, nor permit any of its Subsidiaries  (other than the
Partnerships) to incur, create, assume, or permit to exist, any Lien upon any of
their respective properties, assets, or revenues, whether now owned or hereafter
acquired, except:

         (a)      Liens disclosed on Schedule 9.2;

         (b)      Liens securing Debt permitted by Section 9.1(d);

     (c) Liens in favor of the  Administrative  Agent,  for the  benefit  of the
Lenders or the counter-party under any Financial Hedge;

     (d) Liens securing Debt permitted by Section 9.1(g), which are subordinated
to the Liens described in Section 9.2(c);

     (e) Liens securing the Prime Facility,  which are subordinated to the Liens
described in Section 9.2(c);

<PAGE>

         (f) Encumbrances consisting of minor easements, zoning restrictions, or
other  restrictions on the use of real property that do not  (individually or in
the aggregate)  materially affect the value of the assets encumbered  thereby or
materially impair the ability of Borrower or any of its Subsidiaries to use such
assets in their  respective  businesses,  and none of which is  violated  in any
material respect by existing or proposed structures or land use;

         (g) Liens for taxes,  assessments,  or other governmental charges which
are not  delinquent  or which are being  contested  in good  faith and for which
adequate reserves have been established;

     (h)  Liens of  mechanics,  materialmen,  warehousemen,  carriers,  or other
similar  statutory  Liens  securing  obligations  that  are  not yet due and are
incurred in the ordinary course of business; and

         (i) Liens  resulting  from good faith  deposits  to secure  payments of
workmen's  compensation  or other  social  security  programs  or to secure  the
performance of tenders,  statutory  obligations,  surety and appeal bonds, bids,
contracts  (other  than for  payment of Debt),  or leases  made in the  ordinary
course of business.

         Section 9.3 Mergers,  Etc. Except upon the prior written consent of the
Required  Lenders,  neither  Borrower nor any Guarantor will become a party to a
merger or  consolidation,  except in connection  with any  Permitted  Refractive
Acquisition so long as Borrower or a Guarantor is the surviving entity. Borrower
will  not,  and  will  not  permit  any  of its  Subsidiaries  (other  than  the
Partnerships)  to, wind-up,  dissolve or liquidate  itself,  except as permitted
above. Except as otherwise  permitted by this Agreement,  Borrower will not, and
will not permit any of its Subsidiaries to, form,  incorporate,  acquire or make
any investment in any Subsidiary, except (a) the Subsidiaries listed on Schedule
7.14.1,  (b)  Subsidiaries  acquired or formed  through a  Permitted  Refractive
Acquisition, and (c) Wholly-Owned Subsidiaries formed in accordance with Section
8.13.

         Section 9.4 Restricted  Payments.  Borrower will not declare or pay any
dividends or make any other payment or distribution  (whether in cash, property,
or obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or permit any of its Subsidiaries to
purchase or otherwise  acquire any capital  stock of Borrower,  or set apart any
money  for a  sinking  or  other  analogous  fund  for  any  dividend  or  other
distribution on its capital stock or for any redemption,  purchase,  retirement,
or other  acquisition of any of its capital stock.  Borrower shall not permit to
exist any  arrangement,  agreement,  or corporate  governance  agreement,  which
directly or indirectly  prohibits or restricts any Subsidiary  from declaring or
paying  any  dividend  or  distribution,   on  account  of  its  capital  stock,
partnership,  limited liability company, or other ownership interests;  provided
that to the  extent  permitted  by Section  2.3(c),  the  Partnerships  may make
Distributions to their respective partners not more often than quarterly limited
to an amount  sufficient  to pay such  partners'  federal  and state  income tax
liability   arising  from  their   partnership   interests  in  the   applicable
Partnerships.

         Section 9.5 Investments.  Borrower will not make, nor permit any of its
Subsidiaries  to make,  any  advance,  loan,  extension  of  credit,  or capital
contribution  to or  investment  in, or  purchase  or own,  or permit any of its
Subsidiaries to purchase or own, any stock, bonds, notes,  debentures,  or other
securities of, any Person, except:

<PAGE>

         (a) The Companies,  or any of them, may purchase (i) readily marketable
direct  obligations  of the United States of America or any agency  thereof with
maturities of one year or less from the date of acquisition,  (ii) fully insured
certificates  of deposit  with  maturities  of one year or less from the date of
acquisition  issued by any  commercial  bank  operating in the United  States of
America  having  capital  and  surplus  in excess of  $1,000,000,000,  and (iii)
commercial  paper of a domestic  issuer if at the time of purchase such paper is
rated in one (1) of the two (2) highest rating categories of Standard and Poor's
Rating  Group,  a division of McGraw  Hill,  Inc.,  a New York  corporation,  or
Moody's Investors Service, Inc.;

         (b) The Borrower and Guarantors may create new Subsidiaries, hold stock
in Subsidiaries  and  themselves,  and engage in the  transactions  permitted by
Section 9.3 hereof, provided that Borrower complies with Section 8.13;

         (c)      Permitted Refractive Acquisitions;

         (d)      Any Financial Hedge; and

     (e) Loans from Borrower to Prime Refractive,  L.L.C. in connection with any
Permitted  Refractive  Acquisition,  so long as such loans secure payment of the
Obligations and the "Obligations" under the Prime Facility.

         Section 9.6 Limitation on Issuance of Capital Stock.  Borrower will not
permit any of its Subsidiaries to at any time issue,  sell, assign, or otherwise
dispose of (a) any of its capital stock or other  ownership  interests,  (b) any
securities  exchangeable  for or  convertible  into or  carrying  any  rights to
acquire  any of its  capital  stock or  other  ownership  interests,  or (c) any
option,  warrant,  or other right to acquire  any of its capital  stock or other
ownership  interests;  provided,  however,  that any  Subsidiary of Borrower may
issue, sell, assign or otherwise dispose of its capital stock or other ownership
interests,  or securities  exchangeable for its capital stock or other ownership
interests, to Borrower or any other Wholly-Owned Subsidiary.

         Section 9.7 Transactions With Affiliates. Borrower will not enter into,
and will not permit any of its  Subsidiaries  to enter  into,  any  transaction,
including,  without limitation,  the purchase,  sale, or exchange of property or
the rendering of any service,  with any Affiliate of Borrower or any  Subsidiary
of Borrower,  except in the ordinary  course of Borrower's or such  Subsidiary's
business  and upon fair and  reasonable  terms no less  favorable to Borrower or
such Subsidiary than would be obtained in a comparable arm's-length  transaction
with a Person not an Affiliate of Borrower or such Subsidiary.  No Company shall
make any loan,  advance,  investment,  or  transfer  any assets to any  Excepted
Subsidiary,  so long as such Excepted  Subsidiary is not in good standing  where
incorporated.

<PAGE>

         Section  9.8  Disposition  of Assets.  Borrower  will not sell,  lease,
assign,  transfer,  or otherwise dispose of any of its assets, nor permit any of
its  Subsidiaries  (other  than  the  Partnerships)  to do so with  any of their
respective  assets,  except  (subject to the mandatory  prepayments  required by
Section 2.3) (a)  inter-Company  transfers  between  Borrower and a Wholly-Owned
Subsidiary  or  between  Wholly-Owned  Subsidiaries,  (b)  dispositions  of  any
tangible  assets that are worn or obsolete,  provided that such tangible  assets
are replaced by assets of similar  character where the replacement of such asset
is necessary or appropriate for the continued conduct of such Company's business
as presently  conducted,  and (g) transfers by Borrower or by any  Subsidiary of
interests in  Partnerships,  so long as the  aggregate  EBITDA  Transfer for all
Restricted  Transfers  does not exceed the lesser of : (a) ten percent  (10%) of
Borrower's  EBITDA for the most  recently  ended four fiscal  quarters,  and (b)
$2,000,000.  "EBITDA Transfer" with respect to any Partnership  interests in any
Partnership  transferred by Borrower or by any Subsidiary shall equal the EBITDA
generated by such Partnership  interests for the last four fiscal quarters prior
to the date of such  transfer of each such  Partnership  interest.  A Restricted
Transfer  shall be any transfer or series of related  transfers  of  Partnership
interests in any one  Partnership  by Borrower or any  Subsidiary  in any 90 day
period, in which the EBITDA Transfer equals or exceeds $250,000.  In the case of
any transfers  pursuant to paragraph (g), after giving effect to such transfers,
a Company must own at least 51% of the equity  interests in such Partnership and
Control such  Partnership.  Administrative  Agent is  authorized  to release any
liens on such Partnership interests transferred pursuant to this Section 9.8, as
further set forth in Section 5.3.

         Section  9.9 Sale and  Leaseback.  Borrower  will not enter  into,  nor
permit any of its Subsidiaries  (other than the Partnerships) to enter into, any
arrangement  with any Person (other than another  Company)  pursuant to which it
leases from such Person equipment used in refractive  vision operations that has
been or is to be sold or  transferred,  directly  or  indirectly,  by it to such
Person.

     Section 9.10 Prepayment of Debt.  Borrower will not prepay,  nor permit any
of its Subsidiaries to prepay, any Debt except the Obligations.

         Section 9.11 Nature of Business. Borrower will not, and will not permit
any of its Subsidiaries (other than the Partnerships) to, engage in any business
other  than  correcting  refractive  error of the eye or  businesses  which  are
reasonably related thereto.

         Section 9.12 Environmental Protection.  Borrower will not, and will not
permit any of its  Subsidiaries  to,  conduct  any  activity or use any of their
respective  properties or assets in any manner that could reasonably be expected
to violate any  Environmental  Law or create any  Environmental  Liabilities for
which Borrower or any of its Subsidiaries would be responsible.

         Section 9.13 Accounting.  Borrower will not, and will not permit any of
its  Subsidiaries  (other than the  Partnerships)  to, change its fiscal year or
make any change (a) in accounting  treatment or reporting  practices,  except as
permitted  by GAAP and  disclosed  to the  Administrative  Agent,  or (b) in tax
reporting treatment, except as permitted by law.

         Section  9.14  Amendment  of  Partnership  and  Management  Agreements.
Borrower  will not,  and will not permit any of its  Subsidiaries  to, amend any
partnership agreements,  regulations,  or articles of any of the Partnerships or
any management  agreements  between any Company and any of the Partnerships,  if
such amendment could reasonably be expected to have a material adverse effect on
the business,  condition (financial or otherwise),  operations, or properties of
the Companies taken as a whole, Borrower, or any Guarantor.

         Section 9.15      Financial Hedges.

         (a) To the extent any Lender or its Affiliate  issues a Financial Hedge
to any  Company,  such Lender or its  Affiliate is afforded the benefits of (and
Borrower [or any Company by execution of Collateral Documents] hereby confirms a
grant  of)  Liens  in and to  the  Collateral  as  evidenced  by the  Collateral
Documents  to the  extent  of such  Lender's  (or  Affiliate  thereof's)  credit
exposure  under  such  Financial  Hedge;  such Lien is pari  passu  with that of
Administrative Agent on behalf of the Lenders.

<PAGE>

         (b)  Financial  Hedges  held  by any  Company  permitted  by  the  Loan
Documents,  shall be subject  to the  following:  (i) each such  Lender or other
institution  issuing a Financial  Hedge shall calculate its credit exposure in a
reasonable and customary manner; (ii) all documentation for such Financial Hedge
shall conform to ISDA standards and must be acceptable to  Administrative  Agent
with  respect  to  intercreditor  issues;  (iii) if issued by any  Lender or any
Affiliate  of a Lender to Borrower,  the credit  exposure  under such  Financial
Hedge shall be secured by Liens in and to the  Collateral  as  evidenced  by the
Collateral  Documents  on a pari passu  basis  with the Liens of  Administrative
Agent (held for the benefit of Lenders),  and such Lender or Affiliate issuing a
Financial  Hedge  shall,  by  acceptance  of the  benefits  of such Liens in the
Collateral  agree to the  provisions  of Section 12.6;  and (iv) such  Financial
Hedge shall be incurred in the ordinary  course of business and consistent  with
prior business practices of the Companies and not for speculative purposes.

         Section  9.16  Capital  Expenditures.  Borrower  shall not make Capital
Expenditures in any fiscal year exceeding $500,000. Such limitation set forth in
this Section shall not apply to any of Borrower's Subsidiaries or Partnerships.

         Section  9.17  Operating  Expenses.  Borrower  shall  not  incur or pay
operating expenses in any fiscal year in excess of $200,000. Such limitation set
forth in this  Section  shall not  apply to any of  Borrower's  Subsidiaries  or
Partnerships.

     Section 9.18 Control of Prime Refractive,  L.L.C. Borrower shall own 51% of
the membership interests in and Control Prime Refractive, L.L.C.

                                          ARTICLE X  --  FINANCIAL COVENANTS

         Borrower  hereby  covenants and agrees that, as long as the Obligations
or any part thereof are outstanding or any Lender has any Commitment  hereunder,
Borrower will perform and observe the following financial covenants:

         Section  10.1 Senior  Funded Debt To EBITDA  Ratio.  Borrower  will not
permit  the Senior  Net Debt to EBITDA  Ratio as of the last day of each  fiscal
quarter of Borrower to exceed the ratio set forth opposite such dates below:

            Period                                            Ratio

Date hereof through December 31, 2000                      2.50 to 1.0

January 1, 2002 and thereafter                             2.00 to 1.0

         Section 10.2 Debt Service Coverage Ratio.  Borrower will not permit the
Debt  Service  Coverage  Ratio  as of the  last day of each  fiscal  quarter  of
Borrower to be less than the ratio set forth opposite such dates below:

             Period                                            Ratio

Date hereof through December 31, 2000                      1.50 to 1.0

January 1, 2002 and thereafter                             1.75 to 1.0

<PAGE>

                              ARTICLE XI -- DEFAULT

Section 11.1 Events of Default.  Each of the following shall be deemed an "Event
of Default":

     (a) Borrower  shall fail to pay when due any amount of principal  under any
Note.

         (b)  Borrower  shall  fail to pay to the  Administrative  Agent  or any
Lender (through the  Administrative  Agent),  any interest on the Advances,  any
fees due  hereunder or under any other Loan  Document,  or any other part of the
Obligations  which  does not  constitute  principal  under the  Notes,  and such
failure  shall  continue for three (3) Business  Days after such payment  became
due.

         (c) Any  representation  or warranty made or deemed made by Borrower or
any Obligated Party (or any of their  respective  officers) in any Loan Document
or in any certificate,  report,  notice, or financial statement furnished at any
time in connection with this Agreement shall be false, misleading,  or erroneous
in any  material  respect  when made or deemed to have been made and the  effect
thereof  shall not have been cured  within ten (10)  Business  Days after notice
thereof to  Borrower  by the  Administrative  Agent or any Lender  (through  the
Administrative Agent).

         (d)  Borrower  shall  fail to  perform,  observe,  or  comply  with any
covenant,  agreement,  or  term  contained  in  Article  X; or  Borrower  or any
Obligated  Party shall fail to perform,  observe,  or comply with any  covenant,
agreement or term  contained in Section 8.1 (a),  (b), (c) or (d), or Article IX
and such failure  shall  continue for a period of three (3) Business  Days after
notice thereof to Borrower by the  Administrative  Agent or any Lender  (through
the  Administrative  Agent);  or Borrower or any  Obligated  Party shall fail to
perform, observe or comply with any other covenant, agreement, or term contained
in this  Agreement or any other Loan Document  (other than  covenants to pay the
Obligations)  and such failure shall  continue for a period of ten (10) Business
Days after notice thereof to Borrower by the Administrative  Agent or any Lender
(through the Administrative Agent).

         (e)  Any  Company  shall  commence  a  voluntary   proceeding   seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any  bankruptcy,  insolvency,  or other  similar law now or  hereafter  in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian,
or other similar  official of it or a substantial  part of its property or shall
consent to any such relief or to the appointment of or taking  possession by any
such official in an involuntary case or other proceeding commenced against it or
shall make a general  assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any  corporate  action to
authorize any of the foregoing.

         (f) An involuntary  proceeding  shall be commenced  against any Company
seeking liquidation,  reorganization,  or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,  custodian
or other  similar  official for it or a substantial  part of its  property,  and
either such involuntary  proceeding shall remain  undismissed and unstayed for a
period of forty-five (45) days or an order for relief is entered.

         (g) Any Company  shall fail to discharge  within a period of forty-five
(45) days after the  commencement  thereof  any  attachment,  sequestration,  or
similar  proceeding or proceedings,  including  without  limitation any order of
forfeiture,  seizure or divestiture  (whether under RICO or otherwise) involving
an  aggregate  amount in excess of Five  Hundred  Thousand  and  00/100  Dollars
($500,000.00) against any of its assets or properties.

<PAGE>

         (h) A final judgment or judgments for the payment of money in excess of
Five Hundred Thousand and 00/100 Dollars ($500,000.00) in the aggregate shall be
rendered  by a court or courts  against  any  Company  and the same shall not be
discharged  (or provision  shall not be made for such  discharge),  or a stay of
execution  thereof shall not be procured,  within  forty-five (45) days from the
date of entry  thereof  and such  Company  shall  not,  within  said  period  of
forty-five  (45) days, or such longer period during which  execution of the same
shall have been stayed,  appeal therefrom and cause the execution  thereof to be
stayed during such appeal.

         (i) Any Company shall fail to pay when due any principal of or interest
on the Subordinated  Debt or on any other Debt in an aggregate  principal amount
of Five Hundred  Thousand and 00/100 Dollars  ($500,000.00)  or more (other than
the Obligations  and the Prime  Facility),  or the maturity of the  Subordinated
Debt  or any  such  Debt  (other  than  the  Prime  Facility)  shall  have  been
accelerated,  or the  Subordinated  Debt or any such Debt  (other than the Prime
Facility)  shall have been required to be prepaid  prior to the stated  maturity
thereof,  or any event shall have  occurred that permits (or, with the giving of
notice or the lapse of time or both,  would permit) any holder or holders of the
Subordinated  Debt or such Debt  (other than the Prime  Facility)  or any Person
acting on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment.

         (j) This Agreement or any other Loan Document shall cease to be in full
force  and  effect  or  shall be  declared  null  and  void or the  validity  or
enforceability  thereof  shall be  contested  or  challenged  by  Borrower,  any
Subsidiary  of  Borrower,  any  Obligated  Party  or  any  of  their  respective
shareholders,  or  Borrower  or any  Obligated  Party shall deny that it has any
further liability or obligation under any of the Loan Documents,  or any Lien or
security interest created by the Loan Documents shall for any reason cease to be
a valid,  first priority perfected security interest in and Lien upon any of the
Collateral purported to be covered thereby.

         (k) Any of the  following  events  shall occur or exist with respect to
Borrower,  any Guarantor or any ERISA Affiliate:  (i) any Prohibited Transaction
involving any Plan;  (ii) any Reportable  Event with respect to any Plan;  (iii)
the filing under  Section  4041 of ERISA of a notice of intent to terminate  any
Plan or the termination of any Plan;  (iv) any event or circumstance  that might
constitute  grounds  entitling the PBGC to institute  proceedings  under Section
4042 of ERISA for the  termination  of, or for the  appointment  of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings; or
(v) complete or partial  withdrawal  under  Section 4201 or 4204 of ERISA from a
Multi-employer  Plan or the  reorganization,  insolvency,  or termination of any
Multi-employer  Plan; and in each case above, such event or condition,  together
with all other  events or  conditions,  if any,  have  subjected or could in the
reasonable  opinion of the  Required  Lenders  subject  Borrower,  or any of its
Subsidiaries,  or any Guarantor,  to any tax,  penalty,  or other liability to a
Plan, a Multi-employer Plan, the PBGC, or otherwise (or any combination thereof)
which in the  aggregate  exceed or could  reasonably  be expected to exceed Five
Hundred Thousand and 00/100 Dollars ($500,000.00).

         (l)      Any Change in Control shall occur.

         Section  11.2  Remedies.  If any Event of  Default  shall  occur and be
continuing,  the  Administrative  Agent  may (and if  directed  by the  Required
Lenders, shall) do any one or more of the following:

<PAGE>

                  (a)  Acceleration.  Declare all  outstanding  principal of and
         accrued and unpaid  interest on the Notes and all other  obligations of
         Borrower under the Loan Documents  immediately due and payable, and the
         same  shall  thereupon  become  immediately  due and  payable,  without
         notice,   demand,   presentment,   notice   of   dishonor,   notice  of
         acceleration,  notice  of  intent  to  accelerate,  protest,  or  other
         formalities  of any kind, all of which are hereby  expressly  waived by
         Borrower;

     (b) Termination of Commitments. Terminate the Commitments without notice to
Borrower;
                  (c)      Judgment.  Reduce any claim to judgment;

     (d)  Foreclosure.  Foreclose or  otherwise  enforce any Lien granted to the
Administrative Agent for the benefit of itself and the Lenders to secure payment
and  performance  of the  Obligations  in accordance  with the terms of the Loan
Documents; and

     (e) Rights.  Exercise any and all rights and remedies  afforded by the laws
of the State of Texas or any other  jurisdiction,  by any of the Loan Documents,
by equity, or otherwise;

provided,  however,  that  upon the  occurrence  of an Event  of  Default  under
subsection  (e) or (f) of Section 11.1,  the  Commitments  of all of the Lenders
shall automatically  terminate, and the outstanding principal of and accrued and
unpaid  interest on the Notes and all other  obligations  of Borrower  under the
Loan  Documents  shall  thereupon  become  immediately  due and payable  without
notice, demand, presentment, notice of dishonor, notice of acceleration,  notice
of intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by Borrower.

         Section 11.3 Performance by the Administrative Agent. If Borrower shall
fail to perform any covenant or agreement  in  accordance  with the terms of the
Loan Documents,  the Administrative  Agent may, at the direction of the Required
Lenders,  perform or attempt to perform such  covenant or agreement on behalf of
Borrower.  In such event,  Borrower shall, at the request of the  Administrative
Agent,  promptly  pay any amount  expended  by the  Administrative  Agent or the
Lenders in connection  with such  performance  or attempted  performance  to the
Administrative Agent at the Principal Office,  together with interest thereon at
the  Default  Rate  from  and  including  the  date of such  expenditure  to but
excluding  the  date  such  expenditure  is paid in  full.  Notwithstanding  the
foregoing,  it is expressly agreed that neither the Administrative Agent nor any
Lender shall have any liability or  responsibility  for the  performance  of any
obligation of Borrower under this Agreement or any of the other Loan Documents.

                     ARTICLE XII -- THE ADMINISTRATIVE AGENT

         Section 12.1 Appointment,  Powers and Immunities.  In order to expedite
the various  transactions  contemplated  by this  agreement,  the Lenders hereby
irrevocably appoint and authorize Bank of America to act as their Administrative
Agent  hereunder  and under  each of the other Loan  Documents.  Bank of America
consents  to  such   appointment  and  agrees  to  perform  the  duties  of  the
Administrative  Agent as specified herein.  The Lenders authorize and direct the
Administrative Agent to take such action in their name and on their behalf under
the terms and  provisions of the Loan  Documents and to exercise such rights and
powers  thereunder  as  are  specifically   delegated  to  or  required  of  the
Administrative  Agent for the Lenders,  together  with such rights and powers as
are reasonably  incidental thereto. The Administrative Agent is hereby expressly
authorized to act as the Administrative  Agent on behalf of itself and the other
Lenders:

<PAGE>

                  (a) To receive on behalf of each of the Lenders any payment of
         principal,  interest,  fees or  other  amounts  paid  pursuant  to this
         Agreement  and the Notes and to  distribute to each Lender its pro rata
         share of all payments so received as provided in this Agreement;

               (b) To receive all documents and items to be furnished  under the
          Loan Documents; (c) To act as nominee for and on behalf of the Lenders
          in and under the Loan Documents;

               (d) To arrange for the means whereby the funds of the Lenders are
          to be made available to Borrower;

                  (e)  To  distribute  to  the  Lenders  information,  requests,
         notices, payments, prepayments, documents and other items received from
         Borrower, the other Obligated Parties, and other Persons;

                  (f) To execute and deliver to  Borrower,  the other  Obligated
         Parties, and other Persons, all requests, demands, approvals,  notices,
         and consents received from the Lenders;

               (g) To the extent permitted by the Loan Documents, to exercise on
          behalf of each Lender all rights and  remedies of the Lenders upon the
          occurrence of any Event of Default;

                  (h) To accept,  execute,  and  deliver the  Borrower  Security
         Agreement,  the Guarantor Security  Agreements,  the Pledge Agreements,
         and any other security documents as the secured party; and

               (i) To  take  such  other  actions  as may  be  requested  by the
          Required Lenders.

<PAGE>

         Neither the Administrative  Agent nor any of its Affiliates,  officers,
directors, employees, attorneys, or agents shall be liable to any Lender for any
action  taken or omitted to be taken by any of them  hereunder  or  otherwise in
connection with this Agreement or any of the other Loan Documents (INCLUDING ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH PARTIES NEGLIGENTLY),  but excluding
such actions or omissions  arising from such  parties' own gross  negligence  or
willful  misconduct.  Without limiting the generality of the preceding sentence,
the  Administrative  Agent:  (i) may treat  the payee of any Note as the  holder
thereof until the Administrative Agent receives written notice of the assignment
or  transfer  thereof  signed  by such  payee  and in form  satisfactory  to the
Administrative Agent; (ii) shall have no duties or responsibilities except those
expressly set forth in this  Agreement and the other Loan  Documents,  and shall
not by reason of this  Agreement  or any other  Loan  Document  be a trustee  or
fiduciary for any Lender; (iii) shall not be required to initiate any litigation
or collection  proceedings  hereunder or under any other Loan Document except to
the extent requested by the Required  Lenders;  (iv) shall not be responsible to
the  Lenders  for  any  recitals,  statements,   representations  or  warranties
contained in this  Agreement or any other Loan Document,  or any  certificate or
other document referred to or provided for in, or received by any of them under,
this  Agreement  or any  other  Loan  Document,  or  for  the  value,  validity,
effectiveness,  enforceability,  or  sufficiency  of this Agreement or any other
Loan  Document  or any other  document  referred  to or  provided  for herein or
therein  or for any  failure by any  Person to  perform  any of its  obligations
hereunder or thereunder;  (v) may consult with legal counsel  (including counsel
for Borrower),  independent public accountants, and other experts selected by it
and shall not be liable  for any  action  taken or  omitted  to be taken in good
faith by it in  accordance  with the  advice of such  counsel,  accountants,  or
experts;  and (vi)  shall  incur no  liability  under or in  respect of any Loan
Document by acting upon any notice, consent, certificate, or other instrument or
writing  believed by it to be genuine and signed or sent by the proper  party or
parties.  As to any matters not expressly  provided for by this  Agreement,  the
Administrative  Agent  shall in all cases be fully  protected  in acting,  or in
refraining from acting, here under in accordance with instructions signed by the
Required  Lenders,  and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders;
provided,  however,  that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or which
is contrary to this Agreement or any other Loan Document or applicable law.

         Section 12.2 Rights of Administrative  Agent as a Lender.  With respect
to its  Commitment,  the Advances  made by it and the Note issued to it, Bank of
America in its  capacity  as a Lender  hereunder  shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the  Administrative  Agent,  and the term  "Lender"  or  "Lenders"
shall, unless the context otherwise indicates,  include the Administrative Agent
in its  individual  capacity.  The  Administrative  Agent and its Affiliates may
(without  having to account  therefor to any Lender) accept  deposits from, lend
money to, act as trustee under  indentures of, provide merchant banking services
to, and generally  engage in any kind of business with Borrower,  any Subsidiary
of Borrower, any other Obligated Party, and any other Person who may do business
with or own securities of Borrower or any other  Obligated  Party,  all as if it
were not  acting as the  Administrative  Agent and  without  any duty to account
therefor to the Lenders.

         Section 12.3  Sharing of Payments,  Etc. If any Lender shall obtain any
payment of any  principal  of or interest  on any Advance  made by it under this
Agreement or payment of any other  obligation under the Loan Documents then owed
by Borrower or any other  Obligated  Party to such  Lender,  whether  voluntary,
involuntary,  through  the  exercise  of any  right of  setoff,  lender's  lien,
counterclaim  or similar right,  or otherwise,  in excess of its pro rata share,
such Lender shall promptly purchase from the other Lenders participations in the
Advances held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of the other Lenders in accordance with its
pro rata portion thereof. To such end, all of the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess  payment is  thereafter  rescinded  or must
otherwise be restored. Borrower agrees, to the fullest extent it may effectively
do so under applicable law, that any Lender so purchasing a participation in the
Advances made by the other  Lenders may exercise all rights of setoff,  lender's
lien,  counterclaim,  or similar  rights with respect to such  participation  as
fully as if such  Lender  were a direct  holder of  Advances  to Borrower in the
amount of such participation.  Nothing contained herein shall require any Lender
to exercise  any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising,  any such right with respect to any other
indebtedness or obligation of Borrower.

<PAGE>

         Section 12.4 Indemnification. THE LENDERS HEREBY AGREE TO INDEMNIFY THE
AGENTS FROM AND HOLD THE AGENTS  HARMLESS  AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT  LIMITING THE  OBLIGATIONS OF BORROWER
UNDER  SECTIONS  13.1 AND 13.2),  RATABLY IN  ACCORDANCE  WITH THEIR  RESPECTIVE
COMMITMENTS, ANY AND ALL LIABILITIES,  OBLIGATIONS,  LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), AND  DISBURSEMENTS OF ANY KIND OR NATURE  WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST ANY AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF ANY OF THE LOAN  DOCUMENTS  OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY
ANY AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS INCLUDING ANY PORTION
OF THE  FOREGOING TO THE EXTENT  CAUSED BY THE ANY AGENT'S SOLE OR  CONTRIBUTORY
NEGLIGENCE; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT  CAUSED BY ANY AGENT'S  GROSS  NEGLIGENCE OR WILLFUL
MISCONDUCT.  WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE  LENDERS  THAT THE  AGENTS  SHALL  BE  INDEMNIFIED  HEREUNDER  FROM AND HELD
HARMLESS  AGAINST  ALL  OF  SUCH  LIABILITIES,   OBLIGATIONS,  LOSSES,  DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY
ARISING OUT OF OR  RESULTING  FROM THE SOLE OR  CONTRIBUTORY  NEGLIGENCE  OF THE
AGENTS. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH LENDER AGREES
TO REIMBURSE EACH AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE  (CALCULATED
ON THE  BASIS  OF  THE  COMMITMENTS)  OF  ANY  AND  ALL  OUT-OF-POCKET  EXPENSES
(INCLUDING  ATTORNEYS'  FEES)  INCURRED  BY THE  AGENTS IN  CONNECTION  WITH THE
PREPARATION,  EXECUTION, DELIVERY,  ADMINISTRATION,  MODIFICATION,  AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS,  LEGAL PROCEEDINGS, OR OTHERWISE) OF,
OR LEGAL  ADVICE  IN  RESPECT  OF  RIGHTS OR  RESPONSIBILITIES  UNDER,  THE LOAN
DOCUMENTS,  TO THE EXTENT THAT SUCH AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
BORROWER.

         Section 12.5 Independent  Credit Decisions.  Each Lender agrees that it
has  independently  and without  reliance on any Agent or any other Lender,  and
based on such documents and information as it has deemed  appropriate,  made its
own credit  analysis of Borrower and decision to enter into this  Agreement  and
that it will,  independently  and without  reliance  upon any Agent or any other
Lender,  and  based  upon  such  documents  and  information  as it  shall  deem
appropriate  at the time,  continue to make its own  analysis  and  decisions in
taking or not  taking  action  under  this  Agreement  or any of the other  Loan
Documents.  The  Administrative  Agent  shall  not be  required  to keep  itself
informed as to the  performance or observance by Borrower or any Obligated Party
of this  Agreement or any other Loan  Document or to inspect the  properties  or
books of Borrower or any Obligated Party. Except for notices,  reports and other
documents and information  expressly  required to be furnished to the Lenders by
the  Administrative  Agent  hereunder  or under the other  Loan  Documents,  the
Administrative  Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other  financial  information  concerning the affairs,
financial  condition or business of Borrower or any  Obligated  Party (or any of
their Affiliates) which may come into the possession of the Administrative Agent
or any of its Affiliates.

         Section 12.6 Several Commitments. The Commitments and other obligations
of the Lenders under this  Agreement  are several.  The default by any Lender in
making an Advance in accordance with its Commitment  shall not relieve the other
Lenders of their obligations  under this Agreement.  In the event of any default
by any  Lender  in  making  any  Advance,  each  nondefaulting  Lender  shall be
obligated  to make its Advance but shall not be  obligated to advance the amount
which the defaulting Lender was required to advance hereunder. In no event shall
any  Lender be  required  to advance  an amount or  amounts  which  shall in the
aggregate  exceed such Lender's  Commitment.  No Lender shall be responsible for
any act or omission of any other Lender.

<PAGE>

         Section 12.7 Successor Administrative Agent. Subject to the appointment
and  acceptance  of a  successor  Administrative  Agent as provided  below,  the
Administrative  Agent may  resign at any time by giving  notice  thereof  to the
Lenders and  Borrower  and the  Administrative  Agent may be removed at any time
with or without  cause by the Required  Lenders.  Upon any such  resignation  or
removal,  the  Required  Lenders  will  have the right to  appoint  a  successor
Administrative   Agent  from  among  the  remaining  Lenders.  If  no  successor
Administrative  Agent shall have been so appointed  by the Required  Lenders and
shall have accepted such appointment  within thirty (30) days after the retiring
Administrative  Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring  Administrative Agent, then the retiring  Administrative
Agent may, on behalf of the Lenders,  appoint a successor  Administrative Agent,
which shall be a commercial  bank organized  under the laws of the United States
of America or any State  thereof and having  combined  capital and surplus of at
least  One  Billion  Dollars  ($1,000,000,000).   Upon  the  acceptance  of  its
appointment as successor  Administrative  Agent,  such successor  Administrative
Agent shall  thereupon  succeed to and become  vested  with all rights,  powers,
privileges,  immunities,  and duties of the resigning or removed  Administrative
Agent,  and the  resigning or removed  Administrative  Agent shall be discharged
from its  duties  and  obligations  under  this  Agreement  and the  other  Loan
Documents.   After  any  Administrative   Agent's   resignation  or  removal  as
Administrative  Agent,  the  provisions  of this  Article XII shall  continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was the Administrative Agent.

         Section 12.8      Independent Contractor.

         (a) The relationship between each Agent and each of the Lenders is that
of an  independent  contractor.  The use of the term "Agent" is for  convenience
only  and  is  used  to  describe,  as a form  of  convention,  the  independent
contractual  relationship  between each Agent and each of the  Lenders.  Nothing
contained in this  Agreement or the other Loan  Documents  shall be construed to
create an agency,  trust or other fiduciary  relationship  between any Agent and
any of the Lenders.

         (b) As an independent  contractor  empowered by the Lenders to exercise
certain  rights and perform  certain duties and  responsibilities  hereunder and
under the other Loan  Documents,  the  Administrative  Agent is  nevertheless  a
"representative"  of the  Lenders,  as that term is  defined in Article 1 of the
Uniform  Commercial Code, for purposes of actions for the benefit of the Lenders
and the  Administrative  Agent  with  respect  to all  collateral  security  and
guaranties  contemplated  by  the  Loan  Documents.  Such  actions  include  the
designation of the Administration  Agent as "secured party,"  "mortgagee" or the
like on all financing  statements and other documents and  instruments,  whether
recorded or  otherwise,  relating  to the  attachment,  perfection,  priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security   intended  to  secure  the  payment  or  performance  of  any  of  the
Obligations, all for the benefit of the Lenders and the Administrative Agent.

                          ARTICLE XIII -- MISCELLANEOUS

<PAGE>

         Section 13.1 Expenses. Borrower hereby agrees to pay on demand: (a) all
reasonable  costs and expenses of the Agents in connection with the preparation,
negotiation,  syndication,  execution,  and delivery of this  Agreement  and the
other  Loan  Documents  including,   without  limitation,  the  legal  fees  and
reasonable  expenses of legal counsel for the Agents;  (b) all reasonable  costs
and  expenses  of  the  Agents  in  connection  with  any  and  all  amendments,
modifications,   renewals,  extensions  and  supplements  of  any  of  the  Loan
Documents;  (c) all reasonable  costs and expenses of the Agents and the Lenders
in connection with any Default, including any work-outs,  amendments to any Loan
Documents,  or  negotiations  related  thereto,  and  the  enforcement  of  this
Agreement or any other Loan Document,  including,  without limitation,  the fees
and expenses of legal counsel and  professional  advisors for the Agents and the
Lenders;  (d)  all  transfer,  stamp,  documentary,   or  other  similar  taxes,
assessments,  or charges levied by any Governmental Authority in respect of this
Agreement  or any  of  the  other  Loan  Documents;  (e)  all  costs,  expenses,
assessments,   and  other  charges  incurred  in  connection  with  any  filing,
registration,  recording,  or  perfection  of  any  security  interest  or  Lien
contemplated  by this  Agreement or any other Loan  Document;  and (f) all other
reasonable  costs and expenses  incurred by the Agents in  connection  with this
Agreement or any other Loan Document,  including, without limitation, all costs,
expenses,  and other charges incurred in connection with obtaining any mortgagee
title insurance policy,  survey, audit,  appraisal in respect of the Collateral,
and other out-of-pocket costs and expenses.

         Section 13.2  Indemnification.  BORROWER SHALL INDEMNIFY THE AGENTS AND
EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES,  ATTORNEYS,  AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY  AND  ALL  LOSSES,  LIABILITIES,   CLAIMS,  DAMAGES,  PENALTIES,  JUDGMENTS,
DISBURSEMENTS,  COSTS, AND EXPENSES  (INCLUDING  REASONABLE  ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY  ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR  ENFORCEMENT  OF ANY OF  THE  LOAN  DOCUMENTS,  (B)  ANY OF THE  TRANSACTIONS
CONTEMPLATED  BY  THE  LOAN  DOCUMENTS,  (C)  ANY  BREACH  BY  BORROWER  OF  ANY
REPRESENTATION,  WARRANTY,  COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN  DOCUMENTS,  (D)  THE  PRESENCE,  RELEASE,  THREATENED  RELEASE,  DISPOSAL,
REMOVAL,  OR CLEANUP OF ANY HAZARDOUS  MATERIAL  LOCATED ON, ABOUT,  WITHIN,  OR
AFFECTING  ANY OF THE  PROPERTIES  OR ASSETS OF  BORROWER OR ANY  SUBSIDIARY  OF
BORROWER, OR (E) ANY INVESTIGATION,  LITIGATION, OR OTHER PROCEEDING, INCLUDING,
WITHOUT  LIMITATION,   ANY  THREATENED   INVESTIGATION,   LITIGATION,  OR  OTHER
PROCEEDING  RELATING TO ANY OF THE  FOREGOING.  WITHOUT  LIMITING THE FOREGOING,
THIS INDEMNITY SHALL APPLY TO ANY LOSS, LIABILITY,  OBLIGATION, DAMAGE, PENALTY,
JUDGMENT,  CLAIM,  DEFICIENCY  OR EXPENSE  ARISING OUT OF THE SOLE OR CONCURRENT
NEGLIGENCE  OF ANY AGENT OR ANY  LENDER,  BUT AS TO ANY  AGENT OR  LENDER  SHALL
EXCLUDE ANY LOSS,  LIABILITY,  OBLIGATION,  DAMAGE,  PENALTY,  JUDGMENT,  CLAIM,
DEFICIENCY  OR  EXPENSE  ARISING  BY REASON OF THE GROSS  NEGLIGENCE  OR WILLFUL
MISCONDUCT OF SUCH AGENT OR LENDER.

         Section 13.3 No Duty. All attorneys, accountants, appraisers, and other
professional  Persons  and  consultants  retained  by the Agents and the Lenders
shall have the right to act  exclusively  in the  interest of the Agents and the
Lenders and shall have no duty of disclosure,  duty of loyalty, duty of care, or
other duty or  obligation  of any type or nature  whatsoever  to  Borrower,  any
shareholder or Subsidiary of Borrower or any other Person.

         Section  13.4  No  Fiduciary  Relationship.  The  relationship  between
Borrower and each Lender is solely that of debtor and creditor,  and none of the
Agents nor any of the Lenders has any  fiduciary or other  special  relationship
with Borrower,  and no term or condition of any of the Loan  Documents  shall be
construed so as to deem the  relationship  between Borrower and any Lender to be
other than that of debtor and creditor.

<PAGE>

         Section 13.5 No Waiver;  Cumulative Remedies. No failure on the part of
the Agents or any Lender to exercise and no delay in  exercising,  and no course
of dealing with respect to, any right,  power, or privilege under this Agreement
shall operate as a waiver thereof,  nor shall any single or partial  exercise of
any right,  power,  or  privilege  under this  Agreement  preclude  any other or
further  exercise  thereof  or  the  exercise  of any  other  right,  power,  or
privilege.  The rights and remedies provided for in this Agreement and the other
Loan  Documents  are  cumulative  and not  exclusive  of any rights and remedies
provided by law.

         Section 13.6      Successors and Assigns.

         (a) This  Agreement  shall be binding  upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Borrower may not
assign or transfer any of its rights or obligations  hereunder without the prior
written consent of the Administrative  Agent and all of the Lenders.  Any Lender
may sell  participations to one or more banks or other institutions in or to all
or a portion of its rights and  obligations  under this  Agreement and the other
Loan  Documents  (including,  without  limitation,  all  or  a  portion  of  its
Commitments  and the Advances  owing to it);  provided,  however,  that (i) such
Lender's   obligations  under  this  Agreement  and  the  other  Loan  Documents
(including,  without limitation,  its Commitments) shall remain unchanged,  (ii)
such Lender shall remain solely  responsible to Borrower for the  performance of
such obligations, (iii) such Lender shall remain the holder of its Notes for all
purposes of this  Agreement,  (iv)  Borrower  shall  continue to deal solely and
directly  with  such  Lender  in  connection   with  such  Lender's  rights  and
obligations  under this  Agreement  and the other Loan  Documents,  and (v) such
Lender shall not sell a participation  that conveys to the participant the right
to vote or give or  withhold  consents  under this  Agreement  or any other Loan
Document,  other than the right to vote upon or consent to (A) any  increase  of
such Lender's  Commitments,  (B) any  reduction of the  principal  amount of, or
interest to be paid on, the  Advances of such Lender,  (C) any  reduction of any
commitment  fee or other amount  payable to such Lender under any Loan Document,
or (D) any  postponement  of any date for the  payment of any amount  payable in
respect of the Advances of such Lender.

         (b)  Borrower  and  each of the  Lenders  agree  that  any  Lender  (an
"Assigning  Lender")  may at any time assign to one or more  Eligible  Assignees
all, or a portion of all, of its rights and obligations under this Agreement and
the other Loan  Documents  (including,  without  limitation,  its Commitment and
Advances) (each an "Assignee");  provided,  however, that (i) except in the case
of an  assignment  of  all of a  Lender's  rights  and  obligations  under  this
Agreement and the other Loan Documents,  or as otherwise  acceptable to Borrower
and the  Administrative  Agent the amount of the  Commitments  of the  assigning
Lender being assigned pursuant to each assignment  (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than  $____________,  and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent for its acceptance and recording
in the Register (as defined below), an Assignment and Acceptance,  together with
the Note subject to such  assignment,  and a processing and  recordation  fee of
$3,500.00. Upon such execution,  delivery,  acceptance,  and recording, from and
after the effective date  specified in each  Assignment  and  Acceptance,  which
effective  date shall be at least  five (5)  Business  Days after the  execution
thereof,  or, if so specified in such  Assignment  and  Acceptance,  the date of
acceptance  thereof by the  Administrative  Agent,  (x) the assignee  thereunder
shall be a party  hereto as a  "Lender"  and,  to the  extent  that  rights  and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and obligations of a Lender hereunder and under the
Loan Documents and (y) the Lender that is an assignor  thereunder  shall, to the
extent that rights and  obligations  hereunder have been assigned by it pursuant
to such  Assignment and  Acceptance,  relinquish its rights and be released from
its  obligations  under this Agreement and the other Loan Documents (and, in the
case of an Assignment and Acceptance  covering all or the remaining portion of a
Lender's  rights and  obligations  under the Loan  Documents,  such Lender shall
cease to be a party  thereto).  The  provisions  of Article IV and Section  13.2
shall continue with respect to such Assigning Lender.

<PAGE>

         (c) By executing  and  delivering  an Assignment  and  Acceptance,  the
Assigning  Lender and its Assignee  confirm to and agree with each other and the
other parties hereto as follows:  (i) other than as provided in such  Assignment
and Acceptance,  such Assigning Lender makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to any  statements,  warranties,  or
representations  made  in or in  connection  with  the  Loan  Documents  or  the
execution, legality, validity, and enforceability,  genuineness, sufficiency, or
value of the Loan  Documents  or any  other  instrument  or  document  furnished
pursuant thereto; (ii) such Assigning Lender makes no representation or warranty
and  assumes no  responsibility  with  respect  to the  financial  condition  of
Borrower or any Obligated  Party or the performance or observance by Borrower or
any  Obligated  Party of its  obligations  under the Loan  Documents;  (iii) the
Assignee  confirms that it has received copies of the Loan  Documents,  together
with  copies of the  financial  statements  referred  to in Section 7.2 and such
other  documents and  information  as it has deemed  appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;  (iv)
the Assignee will,  independently  and without reliance upon the  Administrative
Agent or such assignor and based on such  documents and  information as it shall
deem  appropriate  at the time,  continue  to make its own credit  decisions  in
taking or not taking action under this  Agreement and the other Loan  Documents;
(v) the Assignee  confirms  that it is an Eligible  Assignee;  (vi) the Assignee
appoints  and  authorizes  the  Administrative  Agent  to take  such  action  as
Administrative  Agent on its  behalf and  exercise  such  powers  under the Loan
Documents as are  delegated to the  Administrative  Agent by the terms  thereof,
together with such powers as are reasonably  incidental  thereto;  and (vii) the
Assignee  agrees that it will perform in accordance  with their terms all of the
obligations  which  by the  terms  of the  Loan  Documents  are  required  to be
performed by it as a Lender.

         (d) The  Administrative  Agent shall maintain at its Principal Office a
copy of each  Assignment  and  Acceptance  delivered to and accepted by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment  of, and principal  amount of the Advances owing to, each Lender from
time to time (the  "Register").  The entries in the Register shall be conclusive
and  binding  for  all  purposes,  absent  manifest  error,  and  Borrower,  the
Administrative  Agent,  and the  Lenders  may treat  each  Person  whose name is
recorded in the Register as a Lender  hereunder for all purposes  under the Loan
Documents.  The Register  shall be available  for  inspection by Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

         (e) Upon its receipt of an  Assignment  and  Acceptance  executed by an
assigning Lender and Assignee  representing  that it is an Eligible Assignee (or
other  assignee  permitted  hereunder),  together  with any Note subject to such
assignment,  the  Administrative  Agent shall, if such Assignment and Acceptance
has been  completed  and is in  substantially  the form of Exhibit B, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register,  and (iii) give prompt written notice thereof to Borrower.  Within
five (5)  Business  Days after its  receipt  of such  notice,  Borrower,  at its
expense,  shall execute and deliver to the Administrative  Agent in exchange for
the surrendered Note a new Note to the order of such Eligible Assignee (or other
assignee  permitted  hereunder)  in an  amount  equal  to  the  portion  of  the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
Assigning  Lender has retained a portion of the  Commitments,  a new Note to the
order  of  the  Assigning  Lender  in an  amount  equal  to the  portion  of the
Commitments retained by it hereunder (each such promissory note shall constitute
a "Note" for  purposes  of the Loan  Documents).  Such new Notes  shall be in an
aggregate principal amount of the surrendered Note, shall be dated the effective
date of such Assignment and Acceptance,  and shall otherwise be in substantially
the form of Exhibit C.

<PAGE>

         (f) Any Lender may, in connection with any assignment or  participation
or proposed  assignment or participation  pursuant to this Section,  disclose to
the Assignee or participant or proposed Assignee or participant, any information
relating to Borrower or any Subsidiary of Borrower  furnished to such, Lender by
or on behalf of Borrower or any of its Subsidiaries.

         (g)  Notwithstanding  any other term of this Agreement to the contrary,
any Lender may  (without  requesting  the  consent of either the  Administrative
Agent or  Borrower)  pledge  its Notes to a Federal  Reserve  Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.

         (h)  Notwithstanding  any other term of this Agreement to the contrary,
any Lender may assign all,  or a portion of all,  of its rights and  obligations
under  this  Agreement  and  the  other  Loan  Documents   (including,   without
limitation,  its  Commitment and Advances) to an Affiliate of such Lender or any
other Lender provided that:

                  (i) such assignor  Lender has obtained the written  consent of
         the  Administrative  Agent  (which  consent  shall not be  unreasonably
         delayed or withheld)  if the effect of such  assignment  or  delegation
         shall entitle such Affiliate or other Lender to claim compensation from
         Borrower pursuant to Article IV; and

                  (ii) in every other case,  such assignor  Lender has furnished
         notice to, but not obtained the consent of, the Administrative Agent.

         Section 13.7 Survival.  All representations and warranties made in this
Agreement  or  any  other  Loan  Document  or in  any  document,  statement,  or
certificate  furnished  in  connection  with this  Agreement  shall  survive the
execution and delivery of this Agreement and the other Loan Documents  until the
Obligations  have been paid and performed in full, and no  investigation  by the
Administrative   Agent  or  any  Lender  or  any   closing   shall   affect  the
representations  and warranties or the right of the Administrative  Agent or any
Lender  to rely  upon  them.  Without  prejudice  to the  survival  of any other
obligation of Borrower  hereunder,  the obligations of Borrower under Article IV
and Sections 13.1 and 13.2 shall survive  repayment of the Notes and termination
of the Commitments.  The obligations of the Administrative Agent and the Lenders
under Section 13.18 shall survive  repayment of the Notes and termination of the
Commitments.

         Section 13.8 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE OTHER
LOAN DOCUMENTS  REFERRED TO HEREIN EMBODY THE FINAL,  ENTIRE AGREEMENT AMONG THE
PARTIES  HERETO  AND  SUPERSEDE  ANY  AND  ALL  PRIOR  COMMITMENTS,  AGREEMENTS,
REPRESENTATIONS,  AND  UNDERSTANDINGS,  WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT  MATTER  HEREOF AND MAY NOT BE  CONTRADICTED  OR VARIED BY  EVIDENCE  OF
PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT  ORAL  AGREEMENTS OR  DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.

<PAGE>

         Section 13.9  Amendments,  Etc. No amendment or waiver of any provision
of this Agreement,  the Notes, or any other Loan Document to which Borrower is a
party,  nor any consent to any  departure  by Borrower  therefrom,  shall in any
event be  effective  unless  the same  shall be  agreed or  consented  to by the
Required  Lenders  and  Borrower,  and each  such  waiver  or  consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given; provided, that no amendment,  waiver, or consent shall, unless in writing
and signed by all of the  Lenders and  Borrower,  do any of the  following:  (a)
increase  Commitments  of the Lenders or subject  the Lenders to any  additional
obligations;  (b) reduce the principal of, or interest on, the Notes or any fees
or other  amounts  payable to the Lenders,  (but not the  Administrative  Agent)
hereunder; (c) alter the allocation among Lenders of, or postpone any date fixed
for any payment or  prepayment  (whether or not  mandatory)  of principal of, or
interest  on,  the  Notes  or  any  fees  or  other   amounts   payable  to  the
Administrative Agent or the Lenders hereunder;  (d) change the percentage of the
Commitments  or of the  aggregate  unpaid  principal  amount of the Notes or the
number of Lenders which shall be required for the Lenders or any of them to take
any action  under this  Agreement;  (e) change any  provision  contained in this
Section 13.9; or (f) release any material  Guarantor or any material  portion of
the   Collateral,   except  in  accordance  with  the  relevant  Loan  Document.
Notwithstanding   anything  to  the  contrary  contained  in  this  Section,  no
amendment,  waiver, or consent shall be made with respect to Article XII without
the prior written consent of the Administrative Agent.

         Section  13.10  Maximum  Interest  Rate.  Regardless  of any  provision
contained  in any Loan  Document,  neither  Administrative  Agent nor any Lender
shall ever be entitled to contract  for,  charge,  take,  reserve,  receive,  or
apply, as interest on all or any part of the  Obligations,  any amount in excess
of the  Maximum  Rate,  and, if Lenders  ever do so,  then such excess  shall be
deemed a partial  prepayment of principal and treated  hereunder as such and any
remaining  excess shall be refunded to Borrower.  In determining if the interest
paid or payable  exceeds the Maximum Rate,  Borrower and Lenders  shall,  to the
maximum extent  permitted under  applicable Law, (a) treat all Advances as but a
single extension of credit (and Lenders and Borrower agree that such is the case
and that provision  herein for multiple  Advances is for convenience  only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather than
as interest,  (c) exclude voluntary prepayments and the effects thereof, and (d)
amortize,  prorate, allocate, and spread the total amount of interest throughout
the entire contemplated term of the Obligations. However, if the Obligations are
paid  and  performed  in full  prior to the end of the  full  contemplated  term
thereof, and if the interest received for the actual period of existence thereof
exceeds the Maximum  Amount,  Lenders  shall  refund such  excess,  and, in such
event,  Lenders  shall not,  to the extent  permitted  by Law, be subject to any
penalties provided by any laws for contracting for, charging, taking, reserving,
or receiving interest in excess of the Maximum Amount. The "Maximum Rate" or the
"Maximum  Amount,"  mean the "weekly  ceiling" from time to time in effect under
Texas Finance Code ss. 303.305, as amended.

         Section 13.11 Notices.  All notices and other  communications  provided
for in this  Agreement and the other Loan Documents to which Borrower is a party
shall be given or made by  telecopy  or in  writing  and  telecopied,  mailed by
certified mail return receipt requested,  or delivered to the intended recipient
at the "Address for Notices"  specified  below its name on the  signature  pages
hereof, or, as to any party at such other address as shall be designated by such
party in a notice to each other party  given in  accordance  with this  Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have  been  duly  given  when  transmitted  by  telecopy,  subject  to
telephone  confirmation of receipt, or when personally delivered or, in the case
of a mailed  notice,  when duly  deposited  in the mails,  in each case given or
addressed as aforesaid;  provided,  however, notices to the Administrative Agent
pursuant  to  Article  II  shall  not  be  effective   until   received  by  the
Administrative Agent.

         Section 13.12  Governing Law. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF TEXAS AND THE  APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.

         Section 13.13  Counterparts.  This  Agreement may be executed in one or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute one and the same instrument.

<PAGE>

         Section 13.14  Severability.  Any provision of this Agreement held by a
court of competent  jurisdiction to be invalid or unenforceable shall not impair
or invalidate  the remainder of this  Agreement and the effect  thereof shall be
confined to the provision held to be invalid or illegal.

     Section 13.15 Headings.  The headings,  captions,  and arrangements used in
this Agreement are for convenience only and shall not affect the  interpretation
of this Agreement.

         Section 13.16  Construction.  Borrower,  the Administrative  Agent, and
each Lender  acknowledges that each of them has had the benefit of legal counsel
of its own choice and has been afforded an  opportunity to review this Agreement
and the other Loan Documents with its legal counsel.

         Section 13.17 Independence of Covenants.  All covenants hereunder shall
be given  independent  effect so that if a particular action or condition is not
permitted  by any of such  covenants,  the fact that it would be permitted by an
exception to, or be otherwise  within the limitations of, another covenant shall
not avoid the  occurrence of a Default if such action is taken or such condition
exists.

         Section 13.18     Confidentiality.

         (a) The Agents and each Lender (each, a "Lending Party") agrees to keep
confidential  any Confidential  Information;  provided that nothing herein shall
prevent any Lending  Party from  disclosing  such  information  (a) to any other
Lending Party or any Affiliate of any Lending Party,  or any officer,  director,
employee, agent, or advisor of any Lending Party or any Affiliate of any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit  facility  provided  herein,  (c) as  required by any law,  rule,  or
regulation,  (d) upon the order of any court or administrative  agency, (e) upon
the request or demand of any regulatory  agency or authority,  (f) in connection
with any  litigation  to which  such  Lending  Party may be a party,  (g) to the
extent  necessary  in  connection  with the  exercise  of any remedy  under this
Agreement  or  any  other  Loan   Document,   and  (h)  subject  to   provisions
substantially  similar  to those  contained  in this  Section,  to any actual or
proposed   participant  or  Assignee.   Furthermore,   and  notwithstanding  the
foregoing,  no Lending Party shall provide any  Confidential  Information to any
officer,  director,  employee,  agent or advisor of any  Affiliate  of a Lending
Party if such officer, director,  employee, agent or advisor's position involves
the ability to transact  trades in, or solicit or accept orders for the purchase
or sale of, the common stock of Borrower.

         (b) The  Lending  Parties are aware that the United  States  securities
laws prohibit any Person who has received material,  non-public information such
as is the  subject of this  Section  13.18  from an issuer  from  purchasing  or
selling the securities of such issuer or from  communicating such information to
any other Person under circumstances in which it is reasonably  foreseeable that
such Person is likely to purchase or sell such securities.

         (c) The Companies and the Lending  Parties agree that monetary  damages
would not be a  sufficient  remedy for any breach of this  Section  13.18 by the
Lending Parties and that, in addition to all other remedies, the Companies shall
be entitled to specific  performance and injunction or other equitable relief as
a remedy for any such breach.

         (d) The  restrictions  and  obligations  of this  Section  13.18  shall
survive the repayment of the  Obligations and shall continue to bind the Lending
Parties.

<PAGE>

         Section 13.19 Waiver of Jury Trial. TO THE FULLEST EXTENT  PERMITTED BY
APPLICABLE LAW, BORROWER HEREBY  IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION,  PROCEEDING,  OR  COUNTERCLAIM  (WHETHER BASED UPON
CONTRACT,  TORT,  OR  OTHERWISE)  ARISING  OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS  CONTEMPLATED  THEREBY OR THE ACTIONS OF ANY AGENT
OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.

         Section  13.20  Choice of Forum;  Consent to  Service  of  Process  and
Jurisdiction.  Any suit,  action or proceeding  against Borrower with respect to
this Agreement or the Loan  Documents,  or any judgment  entered by any court in
respect  thereof,  may be brought  in the  courts of the State of Texas,  Travis
County,  or in the United  States courts  located in the State of Texas,  as the
Administrative  Agent shall,  at the direction of the Required  Lenders elect in
their sole discretion,  and Borrower  irrevocably  submits to the  non-exclusive
jurisdiction  of such courts for the purpose of any suit,  action or proceeding.
Borrower  irrevocably  consents to the service of process in any suit, action or
proceeding in said court by the mailing thereof by the  Administrative  Agent by
registered  or certified  mail,  postage  prepaid to  Borrower's  address  shown
opposite its name on the signature pages hereof. Nothing herein or in any of the
other Loan Documents shall affect the right of the Administrative Agent to serve
process in any other  manner  permitted  by law or shall  limit the right of the
Administrative  Agent to bring any action or proceeding against Borrower or with
respect  to any of its  property  in  courts  in other  jurisdictions.  Borrower
irrevocably  waives any objections  which it may now or hereafter have to laying
of venue of any suit,  action or  proceeding  arising out of or relating to this
Agreement or the other Loan Documents brought in the courts located in the State
of Texas,  Dallas County,  and hereby further  irrevocably waives any claim that
any such suit,  action or proceeding  brought in any such court has been brought
in any  inconvenient  forum.  Any action or proceeding  by Borrower  against the
Administrative  Agent or any Lender shall be brought only in a court  located in
Travis County, Texas.

         Section  13.21  Chapter 346.  Borrower  agrees that Chapter 346, of the
Texas Finance Code, as amended (which  regulates  certain  revolving credit loan
documents and revolving tri-party accounts) does not apply to the Obligations.

                     REMAINDER OF PAGE INTENTIONALLY BLANK.

                             SIGNATURE PAGES FOLLOW.

<PAGE>

                                                   Loan Agreement
                                                   Signature Page

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

                                             BORROWER:

                                             PRIME REFRACTIVE MANAGEMENT, L.L.C.

                                                 By: /s/ Teena E. Belcik
                                                 Name: Teena E. Belcik
                                                 Title: Vice President-Treasurer

                                                  Address for Notices:

                                                  1301 Capital of Texas Highway
                                                  Suite C-300
                                                  Austin, Texas 78746
                                                  Attention: Treasurer

                                                   Fax No.: (512) 328-8510
                                                   Telephone No.: (512) 314-4554

<PAGE>

                                            BANK OF AMERICA:

                                            BANK OF AMERICA, N.A.
                                            as Administrative Agent and a Lender

                                            By: /s/ Daneil H. Penkar
                                            Name: Daniel H. Penkar
                                            Title: Senior Vice President

                                            Address for Notices:
                                            515 Congress Avenue, 11th Floor
                                            Post Office Box 908
                                            Austin, Texas 78701-0908

                                            Attention: Wade Morgan

                                            Fax No.: (512) 397-2052
                                            Telephone No.: (512) 397-2241

                                          Lending Office for Base Rate Advances:
                                          515 Congress Avenue, 11th Floor
                                          Post Office Box 908
                                          Austin, TX  78701-0908

                                         Lending Office for Eurodollar Advances:
                                         515 Congress Avenue, 11th Floor
                                         Post Office Box 908
                                         Austin, TX  78701-0908

<PAGE>

                                         BANKBOSTON:

                                         BANKBOSTON, N.A.,

                                         as Documentation Agent, and  a Lender

                                         By: /s/ Walter J. Marullo
                                         Name:    Walter J. Marullo
                                         Title:  Vice President

                                         Address for Notices:

                                         100 Federal Street, MS 01-08-05
                                         P.O. Box 2016
                                         Boston, Massachusetts 02106

                                   Attention: Walter J. Marullo, Vice President

                                   Fax No.: (617) 434-2472

                                   Telephone No.: (617) 434-2308

                                   Lending Office for Base Rate Advances:
                                            100 Federal Street
                                            P. 0. Box 2016
                                            Boston, MA  02106

                                     Lending Office for Eurodollar Advances:
                                                    100 Federal Street
                                                    P.O. Box 2016
                                                    Boston, MA  02106

<PAGE>

                                      BANK ONE, TEXAS, N.A.,
                                      as Lender

                                      By: /s/ Edward W. Lick, Jr.
                                      Name:   Edward W. Lick, Jr.
                                      Title:  Vice President

                                      Address for Notices:
                                      221 West 6th Street, Suite 200
                                      Austin, Texas 78701
                                      Attention: Ed Lick

                                      Fax No.: (512) 479-5720
                                      Telephone No.: (512) 479-5730

                                      Lending Office for Base Rate Advances:
                                         Bank One, Austin
                                         221 West 6th Street, Suite 200
                                         Austin, TX  78701

                                      Lending Office for Eurodollar Advances:
                                         Bank One, Austin
                                         221 West 6th Street, Suite 200
                                         Austin, TX  78701

<PAGE>

                                      FLEET NATIONAL BANK,
                                        as Lender

                                       By: /s/ Walter J. Marullo
                                       Name:    Walter J. Marullo
                                       Title:  Vice President

                                       Address for Notices:
                                       100 Federal Street, MS 01-08-05
                                       P.O. Box 2016
                                       Boston, Massachusetts 02106

                                    Attention: Walter J. Marullo, Vice President
                                    Fax No.: (617) 434-2472
                                    Telephone No.: (617) 434-2308

                                    Lending Office for Base Rate Advances:
                                    Fleet National Bank
                                    One Federal Street
                                    Mail Stop: MA OF D07B
                                    Boston, MA  02110

                                    Lending Office for Eurodollar Advances:
                                    Fleet National Bank
                                    One Federal Street
                                    Mail Stop:  MA OF D07B
                                    Boston, MA  02110

<PAGE>

                                     LASALLE BANK, NATIONAL ASSOCIATION,
                                        as Lender

                                      By: /s/ Dana Friedman
                                      Name: Dana Friedman
                                      Title: Lending Officer

                                      Address for Notices:
                                      135 South LaSalle Street

                                      Chicago, Illinois 60603

                                      Attention: Dana Friedman

                                     Fax No.: (312) 904-6457
                                     Telephone No.: (312) 904-5416

                                     Lending Office for Base Rate Advances:
                                     LaSalle Bank, National Association

                                     135 South LaSalle Street
                                     Chicago, IL  60603

                                     Lending Office for Eurodollar Advances:
                                     LaSalle Bank, National Association
                                     135 South LaSalle Street
                                     Chicago, IL  60603

<PAGE>

GUARANTY FEDERAL BANK, F.S.B.

By: /s/ Chris Harkrider
       Name:  Chris Harkrider
       Title:  Vice President

Addresses for Notices:

301 Congress Avenue
Suite 300
Austin, TX  78701
Attention: Chris Harkrider

Fax No.:     (512) 320-1041
Telephone No.:  (512) 320-1205

Lending Office for Base Rate Advances:

Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, TX 75225

Lending Office for Eurodollar Advances:

Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, TX 75225

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00005-of-00352.parquet"}]]