Document:

MUTUAL NON-COMPETITION AGREEMENT

     This Mutual Non-Competition Agreement (this "Agreement") is entered into as
of the close of business December 31, 2000 (the "Effective Date"), between Prime
Medical Services, Inc., a Delaware corporation ("PMSI"), Prostatherapies,  Inc.,
a Delaware  corporation  ("Prostatherapies"),  Innovative Medical  Technologies,
Inc.,  an exempted  company  incorporated  in the Cayman  Islands  with  limited
liability ("IMT"), and Ronald Sorensen, M.D. ("Sorensen").

                             Preliminary Statements

         Concurrently  with the execution and delivery of this  Agreement,  PMSI
and IMP are  consummating  that certain Stock Purchase  Agreement (the "Purchase
Agreement"), dated effective as of the close of business December 31, 2000.

         The parties to this Agreement  (each, a "Party")  acknowledge and agree
that  this  Agreement  is  ancillary  to the  Purchase  Agreement  and all other
Transaction Documents (as defined in the Purchase Agreement).

         Each Party will receive material,  valuable benefits as a result of the
consummation of the transactions contemplated by the Transaction Documents.

         Each Party acknowledges and agrees that the other unaffiliated  Parties
would not enter into, or consent to their applicable subsidiaries and affiliates
entering into, any of the Transaction  Documents  unless such Party entered into
this Agreement.

         In  order  to  induce  each of the  other  Parties  to  consummate  the
transactions  contemplated by the Purchase  Agreement,  each Party has agreed to
certain  restrictions on the activities of it and its Affiliates (as hereinafter
defined), which restrictions each Party deems reasonable and appropriate.

                             Statement of Agreement

         NOW THEREFORE,  in  consideration  of the premises and mutual covenants
contained  herein and for other good,  valuable and binding  consideration,  the
receipt and sufficiency of which are hereby acknowledged, the Parties, intending
to be legally bound hereby, agree as follows:

         1.  Non-Competition  Agreement  of PMSI.  As a material  inducement  to
Prostatherapies,  IMT and  Sorensen  agreeing  to  enter  into  the  Transaction
Documents, PMSI hereby agrees that, until the expiration of five (5) years after
the Effective  Date,  PMSI will not directly or  indirectly,  either through any
kind of ownership  (other than ownership of securities of a publicly held entity
of which  it owns  less  than  five  percent  (5%) of any  class of  outstanding
securities),  or  as  a  principal,   shareholder,   agent,  employer,  advisor,
consultant, co-partner or in any individual or representative capacity whatever,
either for its own benefit or for the benefit of any other  person,  corporation
or other entity,  without the prior written  consent of Sorensen,  commit any of
the following acts,  which acts shall be considered  violations of this covenant
not to compete:

                  (a) Directly or indirectly,  anywhere within the United States
         of  America,  engage in or  provide,  any  services  related to (i) the
         operating  of centers or  facilities  that provide  minimally  invasive
         thermotherapy treatment of benign prostatic hyperplasia through thermal
         ablation ("Prostatherapy"),  or (ii) providing any management services,
         training  or  consulting  services  related  to any  of the  activities
         described in (i);

                  (b) Directly or indirectly provide, anywhere within the United
         States  of  America,   (i)  facilities,   equipment  and  non-physician
         personnel for the performance by physicians of Prostatherapy,  (ii) the
         marketing, scheduling and management of Prostatherapy procedures, (iii)
         the credentialing and scheduling of physicians to perform Prostatherapy
         procedures  and (iv) the billing,  collecting or accounting for the use
         of any such facilities, equipment or non-physician personnel;

                  (c) Directly or indirectly request or advise any person, firm,
         physician,  corporation or other entity having a business  relationship
         with Prostatherapies,  IMT, Sorensen,  or any affiliate,  subsidiary or
         related entity of any of the foregoing, to withdraw, curtail, or cancel
         its business with such person or entity; or

                  (d)   Directly   or   indirectly    hire   any   employee   of
         Prostatherapies, IMT, Sorensen, or any affiliate, subsidiary or related
         entity of any of the  foregoing,  or induce or attempt to influence any
         employee of  Prostatherapies,  IMT,  Sorensen,  or any such  affiliate,
         subsidiary  or related  entity to terminate  its  employment  with such
         person or entity.

         Furthermore,  to the extent  legally  permissible,  PMSI  agrees  that,
during  the  term  of  this   Agreement,   PMSI  will  (a)  refer  requests  for
Prostatherapy   procedures  only  to  Prostatherapies  for  performance  at  the
facilities  of,  and  using the  equipment  of,  Prostatherapies;  and (b) refer
inquiries from those  interested in the development of and/or  participation  in
Prostatherapy services to Prostatherapies.

         2. Non-Competition Agreement of Prostatherapies, IMT and Sorensen. As a
material  inducement to PMSI agreeing to enter into the  Transaction  Documents,
each  of  Prostatherapies,  IMT and  Sorensen  hereby  agrees  that,  until  the
expiration  of five (5) years  after the  Effective  Date,  such  Party will not
directly  or  indirectly,  either  through  any kind of  ownership  (other  than
ownership  of  securities  of a publicly  held entity of which it owns less than
five percent (5%) of any class of  outstanding  securities),  or as a principal,
shareholder,  agent,  employer,  advisor,  consultant,   co-partner  or  in  any
individual or representative  capacity  whatever,  either for its own benefit or
for the benefit of any other person,  corporation  or other entity,  without the
prior  written  consent of PMSI,  commit any of the following  acts,  which acts
shall be considered violations of this covenant not to compete:

                  (a) Directly or indirectly,  anywhere within the United States
         of  America,  engage in or  provide,  any  services  related to (i) the
         operating of centers or facilities that provide  treatments for urinary
         tract  stones  ("Lithotripsy"),   (ii)  the  manufacture,  maintenance,
         refurbishing,  repair,  sale, or leasing of any equipment related to or
         necessary  for the  operating  of centers or  facilities  that  provide
         Lithotripsy,  or (iii) providing any management  services,  training or
         consulting  services related to any of the activities  described in (i)
         or (ii);

                  (b) Directly or indirectly provide, anywhere within the United
         States  of  America,   (i)  facilities,   equipment  and  non-physician
         personnel for the  performance by physicians of  Lithotripsy,  (ii) the
         marketing,  scheduling and management of Lithotripsy procedures,  (iii)
         the credentialing  and scheduling of physicians to perform  Lithotripsy
         procedures  and (iv) the billing,  collecting or accounting for the use
         of any such facilities, equipment or non-physician personnel;

                  (c) Directly or indirectly request or advise any person, firm,
         physician,  corporation or other entity having a business  relationship
         with PMSI, or any  affiliate,  subsidiary or related entity of PMSI, to
         withdraw,  curtail,  or cancel its business with such person or entity;
         or

                  (d) Directly or  indirectly  hire any employee of PMSI, or any
         affiliate,  subsidiary or related  entity of PMSI, or induce or attempt
         to influence any employee of PMSI, or any such affiliate, subsidiary or
         related entity to terminate its employment with such person or entity.

         As partial  consideration  for the  covenants of PMSI set forth in this
Agreement,  Sorensen and/or IMT agrees to deliver to PMSI, concurrently with the
execution  and delivery of this  Agreement,  a promissory  note in the amount of
$150,000, in the form attached hereto as Exhibit A.

         3.  Agreement.  Each Party has reviewed and  carefully  considered  the
provisions  of Sections 1 and 2 of this  Agreement  and,  having done so, agrees
that the  restrictions  applicable  to it as set forth  therein (a) are fair and
reasonable with respect to time,  geographic area and scope,  (b) are not unduly
burdensome  to it, and (c) are  reasonably  required for the  protection  of the
interests of the other Parties for whose benefit such  restrictions  were agreed
upon.

         4.  Remedies.  Each Party  agrees that a  violation  on its part of any
applicable  covenant  contained in Sections 1 or 2 of this  Agreement will cause
the other  Parties,  for whose  benefit  such  restrictions  were  agreed  upon,
irreparable  damage for which remedies at law may be insufficient,  and for that
reason, it agrees that any of the other Parties shall be entitled as a matter of
right to equitable  remedies,  including  specific  performance  and  injunctive
relief,  therefor. The right to specific performance and injunctive relief shall
be cumulative and in addition to whatever other  remedies,  at law or in equity,
that the other Parties may have, including, specifically, recovery of additional
damages.

         5.  Affiliates.  For purposes of this  Agreement,  an  "Affiliate" of a
Party  means any person  married  to, or any minor  child of, such Party and any
corporation, partnership or other entity that, at the date hereof or at any time
during the term hereof,  is controlled  by, or under common  control with,  such
Party.  "Control" (and its derivatives),  in this context,  means the possession
of,  directly or  indirectly,  the power to direct or cause the direction of the
management of the  applicable  corporation,  partnership  or other entity either
through the  ownership  of voting  securities  (or other equity  interests),  by
contract,  or by ownership of a membership  of a nonstock  corporation  or other
entity  enabling a Party to elect one or more members of the governing  board of
that nonstock corporation or other entity.

     6. Control of Affiliates'  Actions.  Each Party will timely exercise all of
its rights and powers to cause each of its  Affiliates  to comply with the terms
of this Agreement.

     7.  Indemnity.  Each Party agrees to indemnify,  defend and hold each other
Party  harmless  from and  against  any and all loss,  damage,  cost and expense
(including attorneys' fees) that may result from any breach or threatened breach
of this Agreement by it or any of its Affiliates.

         8.       Miscellaneous.

     (a)  Amendments.  This  Agreement  may be  modified  or amended  only by an
instrument in writing executed by all Parties.

     (b) Headings.  The headings  contained in this  Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.

     (c)  Governing  Law.  This  Agreement  shall be  construed  and enforced in
accordance  with the internal laws of the State of Texas,  and not the conflicts
of law provisions thereof.

                  (d) Parties Bound. This Agreement shall be binding upon and be
         enforceable against each Party and each Party's  Affiliates,  and their
         respective  successors and representatives.  This Agreement shall inure
         to the benefit of each Party and such  Party's  respective  successors,
         representatives and assigns.

                  (e) Invalid  Provisions.  If any  provision of this  Agreement
         (including,   without   limitation,   any  provision  relating  to  the
         activities  covered by, or time period of, the  covenants  contained in
         Section  1 or  Section  2 of this  Agreement)  is  held to be  illegal,
         invalid or unenforceable  under present or future laws effective during
         the  term  hereof,  such  provision  shall  be  fully  severable;  this
         Agreement  shall be construed and enforced as if such illegal,  invalid
         or unenforceable  provision had never comprised a part hereof;  and the
         remaining  provisions  shall  remain in full force and effect and shall
         not be affected by the illegal,  invalid or unenforceable  provision or
         by its  severance  herefrom.  Furthermore,  in lieu  of  such  illegal,
         invalid or unenforceable provision,  there shall be added automatically
         as a part of this  Agreement  a  provision  as similar in terms to such
         illegal,  invalid or unenforceable  provision as may be possible and be
         legal, valid and enforceable.

                  (f)  Construction.  This Agreement shall be construed  without
         regard to the identity of the person who drafted the various provisions
         of this Agreement.  Each and every provision of this Agreement shall be
         construed  as though  all of the  Parties  participated  equally in the
         drafting of this Agreement.  Consequently,  each Party acknowledges and
         agrees that any rule of construction that a document is to be construed
         against the drafting party shall not be applicable to this Agreement.

                  (g) Other  Agreements.  Each Party  agrees  that any  material
         breach  by it of  any of  the  terms  and  provisions  of the  Purchase
         Agreement,  or any other  Transaction  Document to which it is a party,
         shall  also be  deemed  to have  been a  material  breach by it of this
         Agreement, for all purposes.

     (h) Defined  Terms.  Any  capitalized  terms not otherwise  defined in this
Agreement shall have the same meaning as set forth in the Purchase Agreement.

                            [Signature page follows]

<PAGE>

S-1

                                SIGNATURE PAGE TO

                        MUTUAL NON-COMPETITION AGREEMENT

         EXECUTED to be effective as of the date first above written.

PMSI:                       Prime Medical Services, Inc.

                            By:

                                 Cheryl Williams, Senior Vice President and
                                        Chief Financial Officer

Prostatherapies:            Prostatherapies, Inc.

                            By:

                                Ronald Sorensen, M.D., President

IMT:                        Innovative Medical Technologies, Inc.

                            By:

                                Ronald Sorensen, M.D., President

SORENSEN:

                                Ronald Sorensen, M.D.

<PAGE>

A-1

                                    EXHIBIT A

                             FORM OF PROMISSORY NOTEASSIGNMENT AND SECURITY AGREEMENT

         THIS ASSIGNMENT AND SECURITY  AGREEMENT  (this  "Agreement") is entered
into  effective as of the close of business  December  31, 2000,  by and between
Prime Medical Services,  Inc., a Delaware corporation (the "Secured Party"), and
Innovative Medical  Technologies,  Inc., an exempted company incorporated in the
Cayman Islands with limited liability (the "Debtor").

                                    RECITALS:

         A. Debtor executed and delivered those certain  Promissory  Notes dated
December 31, 2000  (collectively,  as amended,  supplemented,  or modified,  and
including any replacements thereof or substitutions  therefore,  the "Notes") in
the original principal amounts of Nine Hundred Fifty Thousand Dollars ($950,000)
and One  Hundred  Fifty  Thousand  Dollars  ($150,000)  payable  to the order of
Secured Party.

     B. One of the Notes was issued pursuant to a Stock Purchase  Agreement (the
"Stock  Purchase  Agreement"),  between  Debtor and  Secured  Party  under which
Secured Party acquired all of the outstanding  capital stock of Prostatherapies,
Inc., a Delaware corporation ("Prostatherapies").

         C. The other of the  Notes  was  issued  pursuant  to a certain  Mutual
Non-Competition  Agreement (the "Non-Compete  Agreement") by and between Debtor,
Prostatherapies, Secured Party and Ronald Sorensen, M.D.

         D. Debtor and Prostatherapies each have received,  and will continue to
receive, valuable consideration as a result of the transactions evidenced by, or
related to, the Stock Purchase Agreement,  the Notes, the Non-Compete  Agreement
and  this  Agreement  (all  of  which  are  collectively   referred  to  as  the
"Transaction Documents").

         E. Debtor has agreed to pledge the  Collateral  (as  defined  below) to
secure certain  obligations and liabilities,  including  without  limitation (i)
Debtor's  obligations  under  the  Notes,  (ii)  Debtor's  and  Prostatherapies'
performance  of the  covenants  and  agreements  set  forth  in the  Non-Compete
Agreement,  (iii) Debtor's performance of the covenants and agreements set forth
in the Stock Purchase Agreement,  and (iv) Debtor's performance of the covenants
more fully set forth herein.

                                   Agreement:

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

                                    Article I

                       Collateral and Secured Obligations

         1.1 Grant of Security Interest.  Debtor hereby assigns,  transfers, and
pledges to Secured Party, and Debtor hereby grants to Secured Party a continuing
first priority security interest in and lien (the "Security Interest") upon, the
following described  collateral,  whether now owned or hereafter  acquired,  and
wherever located (collectively, the "Collateral"):

                  (a) Shares of  Prostatherapies.  All  issued  and  outstanding
shares of capital stock (of all classes) of  Prostatherapies,  including without
limitation  those shares  evidenced by any stock  certificates  described in the
Stock Purchase Agreement, and any replacements,  substitutions,  or exchanges of
such certificates; and any additional shares of capital stock of Prostatherapies
subsequently  delivered  or issued  to  Debtor  (the  above  described  stock is
sometimes  collectively  referred to as the "Prostatherapies  Shares");  and any
options, rescission rights, registration rights, conversion rights, subscription
rights,  contractual or quasi-contractual  rights, warrants,  redemption rights,
redemption proceeds,  calls, preemptive rights and all other rights and benefits
pertaining to the Prostatherapies Shares;

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

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

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

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

     (a)  All   covenants,   obligations,   and   liabilities   of  Debtor   and
Prostatherapies under each of the Transaction Documents;

                  (b) All principal, interest, fees and other amounts payable to
the  Secured  Party  pursuant  to the  Notes,  including  all  future  advances,
extensions, renewals, modifications, increases, or substitutions thereof whether
or not provided for in the Transaction Documents;

                  (c) All liabilities and obligations of Debtor to Secured Party
under and  pursuant to this  Agreement  and/or any other  contract or  agreement
between Secured Party and Debtor; and

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

         1.3  Voting  Rights.  As long as no Event of  Default  (as  hereinafter
defined) shall have occurred hereunder,  any voting rights incident to any stock
or other securities pledged as Collateral may be exercised by Debtor;  provided,
however,  that  Debtor will not  exercise,  or cause to be  exercised,  any such
voting rights, without the prior written consent of Secured Party, if the direct
or indirect effect of such vote will result in an Event of Default hereunder.

                                   ARTICLE II

       DEBTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL

         Debtor hereby represents and warrants to Secured Party as follows:

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

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

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

         2.4 Solvency of Debtor and the Subsidiaries. As of the date hereof, and
after giving effect to the Notes and the other  Transaction  Documents,  and the
completion of all other transactions  contemplated by Debtor and Prostatherapies
at the time of the closing of the  transaction  contemplated  by the Transaction
Documents,  (i) Debtor and Prostatherapies is and will be solvent, (ii) the fair
saleable value of Debtor's  assets exceeds and will continue to exceed  Debtor's
liabilities  (both  fixed and  contingent),  and (iii)  Debtor has and will have
sufficient  capital to carry on Debtor's  businesses and all businesses in which
Debtor is about to engage.

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

     2.6 Ownership of Prostatherapies  Shares. Debtor is, as of the date hereof,
the legal and beneficial owner of the Prostatherapies Shares.

                                   ARTICLE III

                  DEBTOR'S OTHER REPRESENTATIONS AND WARRANTIES

         3.1 Good Standing - Debtor.  Debtor is a duly formed corporation,  duly
organized and in good standing under the laws of the Cayman  Islands,  qualified
to do  business  in and in good  standing in each state or country in which such
qualification is necessary for the conduct of its business, and has the power to
own its  property  and to carry on its  business in each  jurisdiction  in which
Debtor operates.

         3.2  Authority and  Compliance.  Debtor has full power and authority to
enter into this  Agreement and to enter into and perform its  obligations  under
the Notes, this Agreement and the other Transaction Documents, all of which have
been duly authorized by all proper and necessary corporate action.  Debtor is in
compliance with all applicable laws, ordinances,  statutes, orders, regulations,
judgments,  writs, or decrees of any Governmental Entity ("Laws") to which it is
subject.   "Governmental   Entity"  means  any   government  (or  any  political
subdivision  or  jurisdiction   thereof),   court,  bureau,   agency,  or  other
governmental  authority having jurisdiction over Debtor, any subsidiary,  or any
of its or their respective businesses, operations, assets, or properties.

         3.3  Binding  Agreement.  The  Notes,  this  Agreement,  and the  other
Transaction  Documents,  constitute  valid and legally  binding  obligations  of
Debtor,  in accordance with their terms,  subject to the applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  and similar laws affecting creditors'
rights generally.

         3.4 No  Conflicting  Agreements.  There are no charter,  bylaw or stock
provisions  of Debtor and no  provisions  of any existing  agreement,  mortgage,
indenture or contract  binding on Debtor or affecting its property,  which would
conflict with or in any way prevent the execution,  delivery, or carrying out of
the terms of the Notes, this Agreement, or the other Transaction Documents.

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

                                   ARTICLE IV

                  DEBTOR'S COVENANTS WITH RESPECT TO COLLATERAL

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

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

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

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

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

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

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

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

         4.8 Dilution of  Ownership.  Except for issuance of shares  pursuant to
incentive  stock option grants made by an issuer pursuant to its incentive stock
option plan (not to exceed 20% in the  aggregate  of such  issuer's  outstanding
capital stock on a fully diluted  basis),  Debtor will not, as to any securities
pledged as Collateral, consent to or approve of, and will prohibit, the issuance
of (i) any additional shares of any class of securities of such issuer, (ii) any
instrument  convertible  voluntarily by the holder thereof or automatically upon
the occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such  securities,  or (iii) any warrants,  options,  contracts or other
commitments  entitling any third party to purchase or otherwise acquire any such
securities.

         4.9  Restrictions  on  Securities.  Debtor  will  not  enter  into  any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer,  voting or control of any  securities  pledged as Collateral,
except as consented to in writing by Secured Party. As to any securities pledged
as collateral, Debtor will not consent to or approve of any stock split, reverse
stock  split,  stock  dividend,  reclassification,   or  other  similar  act  or
transaction regarding such capital stock unless all other shares of such capital
stock  which  constitute  Collateral  hereunder  are  included  in  such  act or
transaction  and effected  thereby in all respects the same as any other shares,
or class of shares, of such capital stock.

         4.10 Transfer of  Prostatherapies  Assets.  Debtor covenants and agrees
not to create any new subsidiary by transfer of, or otherwise convey or transfer
to any subsidiary,  or to itself, any assets,  rights or properties belonging to
Prostatherapies. For purposes of this Agreement, the term "subsidiary" means any
corporation,  limited  liability  company,  partnership  or other  entity  that,
directly or indirectly,  is owned or controlled by Debtor; it being agreed that,
without  limitation,  Debtor  shall  conclusively  be deemed to have control for
purposes of this definition if it, directly or indirectly, owns or has the right
to vote twenty percent (20%) or more of the voting ownership interests,  however
designated, of any corporation,  limited liability company, partnership or other
entity.

                                    ARTICLE V

                         DEBTOR'S AFFIRMATIVE COVENANTS

         Until payment and performance of all Obligations,  Debtor covenants and
agrees as follows:

         5.1 Existence and Compliance. Debtor and each subsidiary shall maintain
its corporate  existence in good standing and comply with all Laws applicable to
it or to any of its property,  business operations and transactions.  Debtor and
each  subsidiary  shall qualify as a foreign  corporation  in all  jurisdictions
wherein any  property  now or  hereafter  owned or any business now or hereafter
transacted by Debtor or such subsidiary makes such qualifications necessary.

         5.2 Adverse  Conditions or Events.  Debtor and the  subsidiaries  shall
promptly advise Secured Party in writing of any litigation  filed against Debtor
or any  subsidiary  and of any  condition,  event  or  act  which  comes  to its
attention that would or might have a material  adverse effect on Debtor's or any
subsidiary's   financial  condition  or  on  Debtor's  ability  to  perform  the
Obligations or any subsidiary's  ability to perform under its guaranty agreement
executed in favor of Secured Party with respect to the Obligations.

         5.3  Dividend  Rights.  Secured  Party  shall  have the  sole  right to
receive,  hold and apply as Collateral any dividends or other distributions with
respect to the Collateral, or any part thereof, in cash or in kind. All dividend
and other  distributions which are received by Debtor contrary to the provisions
the  preceding  sentence  shall be  received in trust for the benefit of Secured
Party,  shall be segregated  from other funds of Debtor,  and shall be forthwith
paid over to Secured  Party in the exact form  received  (properly  endorsed  or
assigned  if  requested  by  Secured  Party),  to be held by  Secured  Party  as
Collateral,  or, in Secured  Party's  sole  discretion,  to be  applied  against
payment of any Obligation.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

         Until payment and performance of all principal,  interest and any other
amounts due under the Notes,  or any renewals,  replacements,  or  modifications
thereof,  Debtor  covenants and agrees that Debtor and each of its  subsidiaries
will not, without the prior written consent of Secured Party:

         6.1  Transfer  of Assets.  Enter into any merger or  consolidation,  or
sell,  lease,  assign,  or otherwise  dispose of or transfer any assets having a
book value or fair market value of greater than Ten Thousand  Dollars  ($10,000)
except in the normal course of its business.

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

         6.3 Liens.  Knowingly  grant,  suffer,  or permit  liens on or security
interests in Prostatherapies' assets, or fail to promptly pay all lawful claims,
whether for labor, materials,  or otherwise,  except for purchase money security
interests arising in the ordinary course of business.

         6.4 Dividends.  Declare any dividends on any shares of any class of its
capital  stock,  or  apply  any of  its  property  or  assets  to the  purchase,
redemption or other retirement of any shares of any class of capital stock or in
any way amend its capital structure.

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

                                   ARTICLE VII

                              DEFAULT AND REMEDIES

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

                  (a) The failure of Debtor to pay any Obligation within fifteen
(15) calendar  days after such payment is due,  including,  without  limitation,
principal and/or interest payments on the Notes;

                  (b)  Excluding   payment   defaults  which  are  addressed  in
subsection  (a)  above,  any  breach by  Debtor,  Prostatherapies  or any of the
affiliates of Debtor who are parties thereto, of any covenant, term or condition
in this Agreement or any other  Transaction  Documents,  or any other failure to
perform any of their respective  obligations under this Agreement,  or any other
Transaction  Documents;  provided  that  Debtor  shall first have  fifteen  days
following delivery of written notice by Secured Party describing the breach with
reasonable  specificity,  within which period Debtor may cure such breach to the
reasonable satisfaction of Secured Party;

                  (c) If Debtor or  Prostatherapies:  (i) becomes insolvent,  or
makes a transfer in fraud of creditors,  or makes an assignment  for the benefit
of creditors, or admits in writing its inability to pay its debts as they become
due; (ii) generally is not paying its debts as such debts become due and Secured
Party,  in good faith,  determines  that such event or condition could lead to a
material  impairment of the  Collateral,  or any part  thereof,  or of any other
payment  security for any of the Obligations;  (iii) has a receiver,  trustee or
custodian  appointed for, or take possession of, all or any substantial  portion
of the assets of such  party or any of the  Collateral,  either in a  proceeding
brought by such party or in a  proceeding  brought  against  such party and such
appointment is not discharged or such possession is not terminated within thirty
(30) days  after  the  effective  date  thereof  or such  party  consents  to or
acquiesces in such  appointment or possession;  (iv) files a petition for relief
under the United States  Bankruptcy  Code or any other present or future federal
or  state  insolvency,   bankruptcy  or  similar  laws  (all  of  the  foregoing
hereinafter  collectively called "Applicable  Bankruptcy Law") or an involuntary
petition for relief is filed against such party under any Applicable  Bankruptcy
Law and such involuntary petition is not dismissed within thirty (30) days after
the filing  thereof,  or an order for relief  naming such party is entered under
any Applicable  Bankruptcy Law, or any  composition,  rearrangement,  extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by such party;  (v) fails to have discharged  within a period of
ten (10) days any  attachment,  sequestration  or similar writ levied upon,  any
claim  against or  affecting,  any property of such party;  or (vi) fails to pay
within ninety (90) days any final money judgment against such party; or

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

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

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

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

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

                  (d) If, in the opinion of Secured Party, there is any question
that a public sale or  distribution  of any Collateral will violate any state or
federal  securities  law,  Secured  Party  (i) may  offer  and  sell  securities
privately to purchasers who will agree to take them for investment  purposes and
not with a view to distribution  and who will agree to imposition of restrictive
legends on the  certificates  representing  the security,  or (ii) may sell such
securities in an intrastate  offering  under Section  3(a)(11) of the Securities
Act of 1933,  and no sale so made in good faith by Secured Party shall be deemed
to be not "commercially reasonable" because so made.

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

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

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

         7.5 Voting Rights.  Upon the occurrence of an Event of Default,  Debtor
will not  exercise  any voting  rights  with  respect to  securities  pledged as
Collateral.  Debtor  hereby  irrevocably  appoints  Secured  Party  as  Debtor's
attorney-in-fact  (such power of attorney  being  coupled with an interest)  and
proxy to exercise any voting rights with respect to Debtor's  securities pledged
as Collateral upon the occurrence of an Event of Default.

                                  ARTICLE VIII

                             RIGHTS OF SECURED PARTY

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

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

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

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

         8.5 No  Liability  of Secured  Party.  Neither the  acceptance  of this
Agreement by Secured Party,  nor the exercise of any rights hereunder by Secured
Party,  shall be construed in any way as an  assumption  by Secured Party of any
obligations,  responsibilities,  or duties of Debtor arising in connection  with
the  Collateral  assigned  hereunder  or  otherwise  bind  Secured  Party to the
performance of any  obligations  respecting the  Collateral,  it being expressly
understood  that Secured  Party shall not be obligated to perform,  observe,  or
discharge  any  obligation,  responsibility,  duty,  or  liability  of Debtor in
respect of any of the Collateral,  including without limitation  appearing in or
defending any action, expending any money or incurring any expense in connection
therewith.

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

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

         8.8 Secured Party's Expenses. All reasonable advances, costs, expenses,
charges and attorneys' fees which Secured Party may make, pay or incur under any
provision  of this  Agreement  for the  protection  of its  security  or for the
enforcement  of any of  its  rights  hereunder,  or in  foreclosure  proceedings
commenced and subsequently  abandoned,  or in any dispute or litigation in which
Secured  Party or the holder of any of the  Obligations  may become  involved by
reason of or arising out of the Notes, or the Collateral  shall be a part of the
Obligations and shall be paid by Debtor to Secured Party, upon demand, and shall
bear interest until paid at the rate otherwise  chargeable on the Notes, but not
to exceed the maximum rate of interest  permitted by  applicable  law,  from the
date of such payment until repaid by Debtor.

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

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

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

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

                                   ARTICLE IX

                                  MISCELLANEOUS

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

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

                  Secured Party:      Prime Medical Services, Inc.
                                      1301 Capital of Texas Highway, Suite C-300
                                      Austin, Travis County, Texas 78746
                                      Attn:    President
                                      Facsimile:  (512) 314-4398

                  with a copy to:     Timothy L. LaFrey, Esq.
                                      Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                                      1900 Frost Bank Plaza
                                      816 Congress Avenue
                                      Austin, Texas 78701
                                      Facsimile:  (512) 703-1111

                  Debtor:             Innovative Medical Technologies, Inc.
                                      c/o Daedalus Consulting Group
                                      P.O. Box 2932
                                      Spokane, Washington  99220
                                      Attn:    Ronald Sorensen, M.D.
                                      Facsimile:  (509) 623-1023

                  with a copy to:     John A. Riherd, Esq.
                                      Riherd & Sherman, PF
                                      1212 N. Washington, Suite 210
                                      Spokane, Washington  99201
                                      Facsimile:  (509) 324-3364

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

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

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

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

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

         9.8 Assignment of Secured  Party's  Interest.  Secured Party shall have
the right to assign all or any portion of its rights in this  Agreement  without
approval or consent.  Debtor may not assign this  Agreement or any of its rights
or obligations  hereunder  without the express prior written  consent of Secured
Party in each instance.

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

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

                            [Signature page follows]

<PAGE>

S-1

                                 SIGNATURE PAGE

                                       TO

                        ASSIGNMENT AND SECURITY AGREEMENT

         EXECUTED as of the close of business December 31, 2000.

DEBTOR:                      INNOVATIVE MEDICAL TECHNOLOGIES, INC.

                              By:

                                  Ronald Sorensen, M.D., President

SECURED PARTY:               PRIME MEDICAL SERVICES, INC.

                              By:

                                  Cheryl   Williams,   Senior  Vice   President
                                           and  Chief Financial Officer

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