<PAGE>1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
AMERICAN SHARED HOSPITAL SERVICES
_______________________________________________________________
(Name of Issuer)
COMMON STOCK
_______________________________________________________________
(Title of Class of Securities)
029595105
_________________________________________________________
(CUSIP Number)
JOHN F. HARTIGAN, ESQ. MORGAN, LEWIS & BOCKIUS
801 SOUTH GRAND AVENUE, LOS ANGELES, CA 90017
(213) 612-2500
_______________________________________________________________
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 17, 1995
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box \ \.
Check the following box if a fee is being paid with the
statement \x\ . (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
<PAGE>
<PAGE>2 of 13 Pages
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures
provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however,
see the Notes).
<PAGE>
<PAGE>3 of 13 Pages
SCHEDULE 13D
CUSIP No. 029595105
_________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LION ADVISORS, L.P.
__________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) \x\
(b) \ \
__________________________________________________________________________
3 SEC USE ONLY
__________________________________________________________________________
4 SOURCE OF FUNDS*
OO
__________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) \ \
__________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
__________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF 263,863 SHARES OF COMMON STOCK (INCLUDES 55,067 SHARES
SHARES ISSUABLE UPON THE CONVERSION OF WARRANTS)
BENEFICIALLY ________________________________________________________
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING ________________________________________________________
PERSON 9 SOLE DISPOSITIVE POWER
WITH
263,863 SHARES OF COMMON STOCK (INCLUDES 55,067 SHARES
ISSUABLE UPON THE CONVERSION OF WARRANTS)
________________________________________________________
10 SHARED DISPOSITIVE POWER
__________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
263,863 SHARES OF COMMON STOCK (INCLUDES 55,067 SHARES ISSUABLE UPON
THE CONVERSION OF WARRANTS)
__________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* \ \
__________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.7%
__________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>4 of 13 Pages
SCHEDULE 13D
CUSIP No. 029595105
_________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AIF II, L.P.
__________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /x/
(b) / /
__________________________________________________________________________
3 SEC USE ONLY
__________________________________________________________________________
4 SOURCE OF FUNDS*
OO
__________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or (e) / /
__________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
__________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF 117,272 SHARES OF COMMON STOCK (INCLUDES 24,474 SHARES
SHARES ISSUABLE UPON THE CONVERSION OF WARRANTS)
BENEFICIALLY ___________________________________________________________
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING ___________________________________________________________
PERSON 9 SOLE DISPOSITIVE POWER
WITH
117,272 SHARES OF COMMON STOCK (INCLUDES 24,474 SHARES
ISSUABLE UPON THE CONVERSION OF WARRANTS)
___________________________________________________________
10 SHARED DISPOSITIVE POWER
__________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
117,272 SHARES OF COMMON STOCK (INCLUDES 24,474 SHARES ISSUABLE UPON
THE CONVERSION OF WARRANTS)
__________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
__________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9%
__________________________________________________________________________
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
<PAGE>5 of 13 Pages
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OR 1934, AS AMENDED
_________________________________________________________________
_________________________________________________________________
Item 1. Security and Issuer.
______ ___________________
This Statement on Schedule 13D relates to the Common
Stock, no par value, (the "Common Stock"), of American Shared
Hospital Services, a California corporation (the "Company"). The
principal executive offices of the Company are located at 4
Embarcadero Center, Suite 3620, San Francisco, California 94111-
4155.
Item 2. Identity and Background.
______ _______________________
This Statement is filed jointly by AIF II, L.P., a
Delaware limited partnership ("AIF"), and Lion Advisors, L.P., a
Delaware limited partnership ("Lion Advisors"). Such persons are
collectively referred to herein as the "Reporting Persons."
AIF is principally engaged in the business of
investment in securities. The address of AIF's principal
business and its principal office is c/o CIBC Bank and Trust
Company (Cayman) Limited, Edward Street, Georgetown, Grand
Cayman, Cayman Islands, British West Indies.
The managing general partner of AIF is Apollo Advisors,
L.P., a Delaware limited partnership ("Advisors"). The
administrative general partner of AIF is Apollo Fund
Administration Limited, a Cayman Islands corporation
("Administration"). Advisors is principally engaged in the
business of serving as managing general partner of AIF and
another investment fund. Administration is principally engaged
in the business of serving as administrative general partner of
AIF and another investment fund. AIF does not have any other
general partners.
<PAGE>
<PAGE>6 of 13 Pages
The respective addresses of the principal business and
principal office of each of Advisors and Administration are:
Apollo Advisors, L.P., Two Manhattanville Road, Purchase, New
York 10577; and Apollo Fund Administration Limited, c/o CIBC Bank
and Trust Company (Cayman) Limited, Edward Street, Georgetown,
Grand Cayman, Cayman Islands, British West Indies.
Lion Advisors, a limited partnership organized under
the laws of the State of Delaware, is principally engaged in the
business of serving as advisor to and representative for its
clients, including Artemis America Partnership ("Artemis"), a
general partnership organized under the laws of the State of
Delaware. The address of Lion Advisors' principal business and
its principal office is 1301 Avenue of the Americas, New York,
New York 10019. Pursuant to an investment management agreement
by and between Artemis and Lion Advisors (the "Investment
Management Agreement"), Artemis has appointed Lion Advisors as
its exclusive investment manager with respect to an investment
account, and Lion Advisors has the sole power to vote and dispose
of any securities held in such account.
The general partner of Lion Advisors is Lion Capital
Management, Inc. ("Capital Management"), a Delaware corporation,
which is principally engaged in the business of serving as
general partner of Lion Advisors. The address of the principal
business and principal office of Capital Management is c/o Lion
Advisors, L.P., 1301 Avenue of the Americas, New York, New York
10019.
The Reporting Persons may together constitute a "group"
within the meaning of Rule 13d-5(b) under the Securities and
Exchange Act of 1934, as amended.
Attached as Appendix A to Item 2 is information
concerning the principals, executive officers, directors and
principal shareholders of the Reporting Persons and other
entities as to which such information is required to be disclosed
in response to Item 2 and General Instruction C to Schedule 13D.
Neither the Reporting Persons, Advisors,
Administration, Capital Management nor any of the persons or
entities referred to in Appendix A to Item 2 has, during the last
five years, been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree, or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
Federal or state securities laws or finding any violation with
respect to such laws.
<PAGE>
<PAGE>7 of 13 Pages
Item 3. Source and Amount of Funds or Other Consideration.
______ _________________________________________________
In connection with a restructuring of the Company, the
Reporting Persons, pursuant to the terms of the Note Purchase
Agreement, dated as of May 12, 1995, by and among the Company and
the signatories thereto (the "Note Purchase Agreement"), were
entitled to receive an aggregate of 381,135 shares (including
79,541 warrants immediately exercisable upon the payment of an
exercise price initially equal to $0.75 per warrant (the
"Warrants")) of the Common Stock of the Company. In exchange for
an aggregate of $6,500,000 in principal amount of the Company's
16 1/2% Senior Subordinated Exchangeable Reset Notes Due 1996 (the
"Subordinated Notes") upon consummation of the Note Purchase
Agreement. On May 17, 1995, the terms and conditions of the Note
Purchase Agreement were satisfied, and in connection therewith,
the issuance of the 381,135 shares of Common Stock (including
79,541 Warrants) to the Reporting Persons in exchange for the
Subordinated Notes upon consummation of the Note Purchase
Agreement.
The Reporting Persons acquired beneficial ownership of
such shares of the Common Stock and the Warrants by virtue of the
distribution of shares of the Common Stock and the Warrants
pursuant to the Note Purchase Agreement.
The foregoing response to this Item 3 is qualified in
its entirety by reference to the Note Purchase Agreement and the
Common Stock Purchase Warrant, the full text of which are filed
as Exhibit 1 and Exhibit 2, respectively hereto, and incorporated
herein by this reference.
Item 4. Purpose of Transaction.
______ ______________________
The Reporting Persons acquired beneficial ownership of
the shares of the Common Stock and the Warrants described in Item
3 to which this Statement on Schedule 13D relates as a result of
the consummation of the Note Purchase Agreement described in Item
3 above. Such shares of the Common Stock and the Warrants were
acquired in the ordinary course of business for investment
purposes and not with the purpose of changing or influencing
control of the issuer.
The Reporting Persons may change any of their current
intentions, acquire additional shares of the Common Stock or the
Warrants or sell or otherwise dispose of all or any part of the
Common Stock or the Warrants beneficially owned by the Reporting
Persons, or take any other action with respect to the Company or
any of its debt or equity securities in any manner permitted by
law. Except as disclosed in this Item 4, the Reporting Persons
have no current plans or proposals which relate to or would
<PAGE>
<PAGE>8 of 13 Pages
result in any of the events described in Items (a) through (j) of
the instructions to Item 4 of Schedule 13D.
The foregoing response to this Item 4 is qualified in
its entirety by reference to the Note Purchase Agreement the full
text of which is filed as Exhibit 1 hereto and incorporated
herein by this reference.
Item 5. Interest in Securities of the Issuer.
______ ____________________________________
The Reporting Persons acquired beneficial ownership of
the shares of the Common Stock and the Warrants described in Item
3 to which this Statement on Schedule 13D relates as a result of
the consummation of the Note Purchase Agreement and the
distribution of shares of the Common Stock and the Warrants
thereunder.
(a) Lion Advisors indirectly beneficially owns 263,863
shares of the Common Stock (including 55,067 Warrants) or 6.7%
of the Common Stock outstanding. AIF beneficially owns 117,272
shares of the Common Stock (including 24,474 Warrants) or 2.9%
of the Common Stock outstanding. The Reporting Persons
beneficially own, in the aggregate, 381,135 shares of the Common
Stock (including 79,541 Warrants) or 9.6% of the Common Stock
outstanding. Beneficial ownership of such shares was acquired as
described in Item 3.
(b) The number of shares of the Common Stock as to
which there is sole power to vote or to direct the vote, shared
power to vote or to direct the vote, sole power to dispose or
direct the disposition, or shared power to dispose or direct the
disposition for the Reporting Persons is set forth in the cover
pages and such information is incorporated herein by this
reference.
(c) Except as disclosed in Item 3 herein, there have
been no reportable transactions with respect to the Common Stock
within the last 60 days by the Reporting Persons.
(d) Subject to the terms of the Investment Management
Agreement, the Reporting Persons have the sole right to receive
dividends from, or the proceeds from the sale of, the securities
reported hereon.
(e) Not applicable.
<PAGE>
<PAGE>9 of 13 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to the Securities of the Issuer.
______ ________________________________________________________
The responses to Item 3, Item 4 and Item 5 are
incorporated herein by this reference.
Pursuant to the terms of the Note Purchase Agreement,
the Reporting Persons have, among other things, agreed to vote
the shares of Common Stock acquired thereunder in favor of
certain proposals expected to be put to shareholder vote. In
addition, in order to induce the Reporting Persons and other
noteholders to enter into the Note Purchase Agreement, the
Company and such noteholders (including the Reporting Persons)
agreed to enter into a Registration Rights Agreement, dated as of
May 17, 1995, pursuant to which, among other things, the Company
granted certain registration rights to the Reporting Persons and
the other noteholders and the Reporting Persons and other
noteholders agreed not to sell or otherwise transfer the Common
Stock and Warrants acquired pursuant to the Note Purchase
Agreement until the earlier of September 17, 1995 and the
shareholder vote described above.
The foregoing response to this Item 6 is qualified in
its entirety by reference to the Registration Rights Agreement,
the full text of which is filed as Exhibit 3 hereto, and
incorporated herein by this reference.
Item 7. Material to be Filed as Exhibits.
______ ________________________________
(1) The Note Purchase Agreement, dated as of May 12,
1995.
(2) Form of Common Stock Purchase Warrant, dated as of
May 17, 1995.
(3) The Registration Rights Agreement, dated as of May
17, 1995.
<PAGE>
<PAGE>10 of 13 Pages
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct and agree that this
statement may be filed jointly with AIF II, L.P.
Dated: May 23, 1995
LION ADVISORS, L.P.
By: Lion Capital Management, Inc.,
General Partner
By: /s/ Michael D. Weiner
_________________________________________
Name: Michael D. Weiner
Title: Vice President, Lion Capital
Management, Inc.
<PAGE>
<PAGE>11 of 13 Pages
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth in
this statement is true, complete and correct and agree that this
statement may be filed jointly with Lion Advisors, L.P.
Dated: May 23, 1995
AIF II, L.P.
By: Apollo Advisors, L.P.,
Managing General Partner
By: Apollo Capital Management, Inc.,
General Partner
By: /s/ Michael D. Weiner
_________________________________________
Name: Michael D. Weiner
Title: Vice President, Apollo Capital
Management, Inc.
<PAGE>
<PAGE>12 of 13 Pages
APPENDIX A TO ITEM 2
The following sets forth information with respect to
the general partners, executive officers, directors and principal
shareholders of AIF, Advisors, which is the managing general
partner of AIF, Apollo Capital Management, Inc., a Delaware
corporation which is the managing general partner of Advisors
("Apollo Capital"), Administration which is the administrative
general partner of AIF, Advisors, Lion Advisors and Lion Capital
Management, Inc., a Delaware corporation which is the sole
general partner of Lion Advisors ("Capital Management").
The principal occupation of each of Leon Black, Craig
Cogut and John Hannan, each of whom is a United States citizen,
is to act as an executive officer and director of Apollo Capital
Management and of Capital Management, and each is a limited
partner of Advisors and Lion Advisors. The principal business of
Advisors and of Lion Advisors is to provide advice regarding
investments in securities.
Mr. Black is the President and a director of Apollo
Capital and the President and a director of Capital Management.
Mr. Black's business address is Two Manhattanville Road,
Purchase, New York 10577.
Mr. Cogut is a Vice President and a director of Apollo
Capital and the Secretary and a Vice President and director of
Capital Management. Mr. Cogut's business address is Two
Manhattanville Road, Purchase, New York 10577.
Mr. Hannan is a Vice President and director of Apollo
Capital and a Vice President and director of Capital Management.
Mr. Hannan's business address is Two Manhattanville Road,
Purchase, New York 10577.
Peter Henry Larder, Michael Francis Benedict Gillooly,
Ian Thomas Patrick and Martin William Laidlaw, each of whom is a
British citizen, each serves as a director of Administration.
Each of the above four individuals is principally employed by
CIBC Bank and Trust Company (Cayman) Limited ("CIBC") in the
following positions: Mr. Larder, Managing Director; Mr. Gillooly,
Deputy Managing Director; Mr. Patrick, Manager-Accounting
Services; and Mr. Laidlaw, Senior Fund Accountant. CIBC is a
Cayman Islands corporation which is principally engaged in the
provision of trust, banking and corporate administration
services, the principal address of which is Edward Street, Grand
Cayman, Cayman Islands, British West Indies. It provides
accounting, administrative and other services to Administration
pursuant to a contract. Messrs. Black, Cogut and Hannan are the
beneficial owners of the stock of Administration.
<PAGE>
<PAGE>13 of 13 Pages
EXHIBIT INDEX
Exhibit No. Description
___________ ___________
1 Note Purchase Agreement
2 Form of Common Stock Purchase Warrant
3 Registration Rights Agreement
<PAGE>1
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT (the "Agreement"),
dated as of May 12, 1995, is made by and among ANCHOR NATIONAL
LIFE INSURANCE COMPANY, a California corporation, SUN LIFE
INSURANCE COMPANY OF AMERICA, an Arizona corporation, and
SUNAMERICA INC., a Maryland corporation (collectively,
"SunAmerica"), AIF II, L.P., a Delaware limited partnership,
LION ADVISORS, L.P., a Delaware limited partnership, on behalf
of an account under management (together with AIF II, L.P.,
"Apollo"), GRACE BROTHERS, LTD., an Illinois limited
partnership ("Grace") and UPCHURCH LIVING TRUST U/A/D 12/14/90
("Upchurch") (each a "Holder," and collectively, the "Hold-
ers"), AMERICAN SHARED HOSPITAL SERVICES, a California corpo-
ration (the "Company") and Ernest A. Bates, M.D. ( Dr.
Bates ).
WHEREAS, the Company has not made interest payments
with respect to its 14-3/4% Senior Subordinated Notes due 1996
(the "14-3/4% Notes") and its Senior Subordinated Exchangeable
Reset Notes due 1996 (the "16-1/2% Notes" and together with
the 14-3/4% Notes, the "Notes") since April 15, 1992; and
WHEREAS, the Holders, severally and not jointly, are
the beneficial owners of certain of the Notes; and
WHEREAS, the parties hereto entered into an Exchange
Agreement, dated as of February 14, 1995 (the "Exchange
Agreement") providing for a comprehensive restructuring of the
Company's obligations including (a) an exchange offer and cer-
tain other transactions contemplated by the Exchange Agreement
(the "Exchange Offer"), providing for, among other things, the
exchange of 1,969.3556 shares of Common Stock (as defined
below) for each $1,000 principal amount (and accrued interest
thereon) of the 14-3/4% Notes held by the Holders and
2,020.7943 shares of Common Stock for each $1000 principal
amount (and accrued interest thereon) of the 16-1/2% Notes
held by the Holders, as described in the Company's proxy
statement dated February 14, 1995 (the "Proxy Statement") and
(b) the modification of certain equipment leases and certain
related transactions between the Company and its subsidiaries
on the one hand and General Electric Company, acting through
GE Medical Systems on the other hand, as described in the
Proxy Statement (the "GE Lease Modification" and, together
with the Exchange Offer, the "Restructuring Transactions");
WHEREAS, the Company has proposed a purchase of the
Holders' Notes (the "Note Purchase") for cash and equity in
lieu of the Restructuring Transactions; and
<PAGE>
<PAGE>2
WHEREAS, the Company and the Holders' desire to
amend the Exchange Agreement to, among other things, provide
that the Exchange Agreement shall terminate upon consummation
of the Note Purchase.
NOW THEREFORE, the parties hereby agree as follows:
ARTICLE 1.
The Note Purchase
_________________
1.1 Agreement to Sell and to Purchase
_________________________________
(a) Subject to the terms and conditions
hereof, each of the Holders, severally and not jointly, shall
sell to the Company, and the Company shall purchase from each
Holder, such principal amount of Notes, the Company shall, in
consideration therefore pay to each Holder, on the Closing
Date, the amount of cash, and number of shares of Common Stock
and warrants to purchase Common Stock, which shall be
substantially in the form of Exhibit A hereto and immediately
exerciseable upon the payment of an exercise price initially
equal to $0.75 (the "Warrants") as set forth below:
Shares of Common
Common Stock
Holder Notes Cash Stock Warrants
____________ __________ _____________ ________ ________
SunAmerica $9,515,000 $2,098,372.45 441,487 116,436
Apollo $6,500,000 $1,433,465.15 301,594 79,541
Grace $1,600,000 $ 343,864.65 72,347 19,081
Upchurch $ 79,000 $ 16,978.32 3,572 942
(b) Subject to the terms and conditions
hereof, if the Company issues additional equity to Dr. Bates
as described in the letter agreement dated May 5, 1995 (the
"Letter Agreement") among the Company, Apollo and SunAmerica
(the "Additional Issuance") after the Closing Date, the Compa-
ny shall, in consideration for the Notes purchased pursuant to
this Section 1, concurrently issue to each Holder such number
of additional Warrants and shares of Common Stock (the
"Delayed Securities") as set forth in Exhibit A to the Letter
Agreement (and in any event sufficient Delayed Securities so
that each such Holder thereafter holds the same percentage of
the outstanding Common Stock (assuming full exercise of the
Warrants)).
-2-
<PAGE>
<PAGE>3
1.2 Closing
_______
The closing of the Note Purchase (the "Closing")
shall take place at 2:00 p.m., local time, on May 17, 1995, or
such other date as the parties hereto shall agree in writing
(the "Closing Date"), at the offices of Sidley & Austin, Los
Angeles, California or at such other place as the parties
hereto shall agree in writing.
At the Closing (a) each Holder shall deliver
(i) either (A) certificates, duly endorsed for transfer, or
(B) by book-entry transfer into the indenture trustee's
account at The Depository Trust Company, of the Notes being
delivered by such Holder pursuant to Section 1.1, (ii) duly
executed consents with respect to each Note substantially in
the form of Exhibit A to the Exchange Agreement (the "Con-
sents"), and (iii) executed letters of withdrawal or
resignation from the Board of Directors of the Company from
each of the persons nominated by the Holders, and (b) the
Company shall (i) deposit into bank accounts, designated by
each Holder, by wire transfer of immediately available funds,
an amount equal to the aggregate cash portion of the purchase
price being paid to such Holder pursuant to Section 1.1 above,
and (ii) deliver to each Holder (x) a stock certificate or
certificates representing the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common
Stock specified pursuant to Section 1.1 above, and (y) a war-
rant certificate or certificates substantially in the form of
Exhibit A representing the Warrants specified pursuant to
Section 1.1 above. Concurrently with the closing of any
Additional Issuance the Company shall deliver to each Holder a
stock certificate or certificates representing the number of
duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock and a warrant certificate or cer-
tificates representing the duly authorized and validly issued
Warrants comprising the Delayed Securities issuable on such
date. The certificates representing the shares of Common
Stock and the Warrants shall be in definitive form and
registered in the name of the Holder or its nominee or
designee and in such denominations as such Holder shall
request not later than one business day prior to the Closing
Date or the closing date of an Additional Issuance as the case
may be.
ARTICLE 2.
Amendment of Exchange Agreement
_______________________________
(a) The last sentence of Section 1(a)(ii) of
the Exchange Agreement is hereby amended in its entirety by
substituting therefore the following:
-3-
<PAGE>
<PAGE>4
"The Consents shall not be effective for
any purpose until immediately prior to the consum-
mation of the Exchange Offer and shall be returned
to the respective Holders who executed such instru-
ments at the close of business on May 25, 1995, if
the Exchange Offer has not been consummated."
(b) Section 1(b) of the Exchange Agreement is
hereby amended in its entirety by substituting therefore the
following:
"(b) The Company hereby agrees to cause
all of the Notes tendered into the Exchange Offer to
be returned to the respective Holders thereof at the
close of business on May 25, 1995, if the Exchange
Offer has not been consummated."
(c) Section 2.1(o) of the Exchange Agreement
is hereby amended in its entirety by substituting therefore
the following:
"the Company and CuraCare, Inc., on the
one hand, and DVI Financial Services, Inc. and DVI
Business Credit, Inc. (collectively, "DVI"), on the
other hand, shall have entered into a permanent
credit facility in accordance with the terms of
DVI's letter to the Company dated April 28, 1995 and
in accordance with the intercreditor arrangements
with GE as set forth in GE's letter to the Company
dated April 21, 1995;"
(d) Section 5 of the Exchange Agreement is
hereby amended by adding the following immediately after
Section 5.4 thereof:
"5.5 Shareholders Meeting
____________________
The Company hereby agrees that it
will (i) reconvene the April 7, 1995 shareholders
meeting on May 18, 1995, (ii) not adjourn such
reconvened meeting, and (iii) take the shareholders
vote and all related actions with respect to the
matters described in the Proxy Statement on such
date.
5.6 Specific Performance
____________________
Each of the Company and Dr. Bates
hereby acknowledges and agrees that irreparable
harm, for which there may be no adequate remedy at
law and for which the ascertainment of damages would
be difficult, would occur in the event any of the
-4-
<PAGE>
<PAGE>5
provisions of this Agreement or any of the Documents
or any of the Restructuring Transactions were not
performed in accordance with their specific terms or
were otherwise breached. Consequently, each of the
Company and Dr. Bates hereby agrees that each Holder
shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement
or any other Document or any of the Restructuring
Transactions and to enforce specifically the terms
and provisions hereof or thereof in any court of the
United States or any state thereof having
jurisdiction, in each instance without being
required to post bond or other security and in
addition to, and without having to prove the
inadequacy of, other remedies at law."
(e) Section 6.1(d) of the Exchange Agreement
is hereby amended in its entirety by substituting therefore
the following:
"(d) automatically on the earlier of
(i) the closing of the purchase of the Notes held by
each Holder pursuant to the Note Purchase Agreement,
dated as of May 12, 1995, by and among the parties
hereto and (ii) May 25, 1995 or such earlier date on
or after May 15, 1995 designated by Apollo and
SunAmerica in a written notice to the Company."
(f) Except as expressly set forth herein, all
terms and conditions of the Exchange Agreement shall remain
unaffected. All references to the term "Agreement" therein
shall be deemed to refer to the Exchange Agreement as modified
hereby.
ARTICLE 3.
Closing Conditions
__________________
3.1 Conditions to Obligations of Holders
____________________________________
The obligations of the Holders pursuant to Section 1
hereof are subject to the satisfaction of each of the follow-
ing conditions:
(a) The expiration or termination of any wait-
ing period (and any extension thereof) applicable to the
consummation of the Note Purchase or any of the transactions
contemplated hereby (collectively, the "Purchase Transac-
tions") under any applicable law;
(b) the delivery of a certificate or certifi-
cates, dated the Closing Date and signed by the Chairman of
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<PAGE>
<PAGE>6
the Board of Directors and the Chief Financial Officer of the
Company, certifying (A) that the conditions set forth in
Sections 3.1(h) and 3(j) hereof have been satisfied and (B)
such other matters as each of the Holders may reasonably
request;
(c) the delivery of an opinion, dated the
Closing Date and addressed to each Holder, from Sidley &
Austin, counsel to the Company, substantially in the form of
Exhibit B hereto;
(d) the delivery of a certificate, dated as of
a recent date and signed by the Company's stock transfer
agent, certifying the number of outstanding Shares of Common
Stock;
(e) all fees and expenses incurred in connec-
tion with the negotiation of the Restructuring Transactions
and the negotiation and consummation of the Note Purchase and
the other Purchase Transactions including, without limitation,
the fees and expenses of legal counsel representing Apollo and
SunAmerica shall have been paid in full;
(f) there shall have been no order or prelim-
inary or permanent injunction entered in any action, claim or
proceeding and no law enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (A) the Holders, the
Company or any subsidiary or affiliate of the Company or the
Holders or (B) the Note Purchase, which shall have remained in
effect and which shall have had the effect of: (1) making
illegal, materially delaying or otherwise directly or indi-
rectly prohibiting or making materially more costly the con-
summation of the Note Purchase or the other Purchase
Transactions; (2) prohibiting or materially limiting the
ownership of the Company's Common Stock by any of the Holders;
(3) compelling the Company, the Holders or any of their
respective affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company,
the Holders or any of their respective affiliates, as a result
of the Note Purchase; or (4) requiring divestiture by any
Holder or any affiliate of any Holder of any Warrants or
shares of Common Stock;
(g) as of the Closing Date, each of the em-
ployees of the Company listed on Schedule A to the Exchange
Agreement (each a "Key Employee") shall continue to be
employed by the Company in the capacity indicated on Schedule
A to the Exchange Agreement;
(h) the representations and warranties con-
tained in Section 4 of this Agreement shall be true and cor-
rect at and as of the Closing Date;
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<PAGE>
<PAGE>7
(i) as of the date of the Proxy Statement and
as of the Closing Date, none of the Proxy Statement or any
amendment or supplement thereto contains or will contain an
untrue statement of a material fact or omit to state a materi-
al fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(j) subsequent to the date hereof (A) there
has been no material adverse effect on the condition, finan-
cial or otherwise, or in the earnings or business affairs or
business prospects ("Material Adverse Effect") of the Company
or its subsidiaries, whether or not arising in the ordinary
course of business, the occurrence of which gives rise to an
obligation of the Company to amend, supplement or otherwise
revise the disclosure provided in the Proxy Statement, (B)
without the prior written consent of each of the Holders, the
Company has not incurred any material liabilities or obli-
gations, direct or contingent, nor entered into any material
transaction not in the ordinary course of business, or re-
quired to be disclosed on a balance sheet prepared in accor-
dance with GAAP, either when considered alone or together with
all other such transactions, and (C) there has been no divi-
dend or distribution of any kind declared, paid or made by the
Company on its capital stock;
(k) the Note Purchase shall not be prohibited
by any applicable law;
(l) each of the Holders shall participate in
the Note Purchase in accordance with Section 1 hereof;
(m) the Company and CuraCare, Inc., on the one
hand, and DVI Financial Services, Inc. and DVI Business
Credit, Inc. (collectively, "DVI"), on the other hand, shall
have entered into a permanent credit facility in accordance
with the terms of DVI's letter to the Company dated April 28,
1995 and in accordance with the intercreditor arrangements
with GE as set forth in GE's letter to the Company dated April
21, 1995 (the "DVI Facility");
(n) the GE Lease Modification shall continue
to remain in effect, an Event of Default (as defined in the
documents relating to the GE Lease Modification) shall not
have occurred and be continuing and any amendment thereto
shall be under terms reasonably acceptable to each of the
Holders; and
(o) the Company and the Holders shall have en-
tered into a registration rights agreement substantially in
the form of Exhibit C hereto (the "Registration Rights
Agreement").
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<PAGE>
<PAGE>8
3.2 Conditions to Obligations of the Company
________________________________________
(a) the expiration or termination of any wait-
ing period (and any extension thereof) applicable to the
consummation of the Note Purchase and the Purchase Transac-
tions under any applicable law;
(b) there shall have been no order or prelim-
inary or permanent injunction entered in any action, claim or
proceeding and no law enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (A) the Holders, the
Company or any subsidiary or affiliate of the Company or the
Holders or (B) the Note Purchase, which shall have remained in
effect and which shall have had the effect of: (1) making
illegal, materially delaying or otherwise directly or indi-
rectly prohibiting or making materially more costly the con-
summation of the Note Purchase or the other Purchase
Transactions; (2) prohibiting or materially limiting the
ownership of the Company's Common Stock by any of the Holders;
(3) compelling the Company, the Holders or any of their
respective affiliates to dispose of or hold separate all or
any material portion of the business or assets of the Company,
the Holders or any of their respective affiliates, as a result
of the Note Purchase; or (iv) requiring divestiture by any
Holder or any affiliate of any Holder of any Warrants of
shares of Common Stock; and
(c) the Note Purchase shall not be prohibited
by any applicable law;
(d) each of the Holders shall participate in
the Note Purchase in accordance with Section 1 hereof; and
(e) each of the persons nominated by the
Holders shall have withdrawn or resigned from the Company's
Board of Directors;
(f) each of the Holders shall have provided
the Consents; and
(g) DVI shall have agreed to enter into the
DVI Facility.
ARTICLE 4.
Representations and Warranties
______________________________
The Company represents and warrants to each Holder
as follows:
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<PAGE>
<PAGE>9
4.1 Capitalization
______________
(a) The total authorized capital stock of the
Company consists of 10,000,000 shares of common stock, no par
value (the "Common Stock"), 2,867,401 of which are issued and
outstanding on the date hereof. Each share of the Company's
capital stock that is issued and outstanding (i) has been duly
authorized and validly issued and (ii) is fully paid and
nonassessable and free of preemptive and similar rights.
(b) Upon consummation of the Note Purchase,
and upon each issuance of Delayed Securities, each Holder will
acquire valid title to the shares of Common Stock and Warrants
being acquired by it, free and clear of all liens and restric-
tions on voting and transfer other than (x) restrictions on
transfer imposed by Federal and state securities laws, (y)
liens or restrictions on voting and transfer arising from the
actions of any Holder, and (z) as set forth in this Agreement
and the Registration Rights Agreement.
(c) The Common Stock and Warrants to be issued
as consideration for the Notes (including the Delayed
Securities, if any) have been duly authorized and, upon
consummation of the Note Purchase, and upon each issuance of
Delayed Securities, will be validly issued, fully paid and
nonassessable and free of preemptive or similar rights, and
the Common Stock issuable upon exercise of the Warrants (the
"Warrant Shares") has been duly authorized and, when issued
upon such exercise in accordance with the terms thereof, will
be validly issued, fully paid and nonassessable and free of
preemptive or similar rights. A sufficient number of shares
of Common Stock have been reserved solely for issuance and
delivery upon exercise of the Warrants.
(d) Except for this Agreement, the warrants to
purchase an aggregate of 225,000 shares of Common Stock issued
or to be issued in connection with the GE Lease Modification
and the DVI Facility, the shares of Common Stock to be issued
in the Additional Issuance, and options granted pursuant to
and listed in the Proxy Statement and referred to in Exhibit A
to the Letter Agreement, there are, and immediately following
the Closing Date there will be, no outstanding (i) securities
convertible into or exchangeable for any capital stock of the
Company or any subsidiary of the Company, (ii) options,
warrants or other rights to purchase or subscribe to capital
stock of the Company or any subsidiary of the Company or secu-
rities convertible into or exchangeable for capital stock of
the Company of any subsidiary of the Company, or (iii) con-
tracts, commitments, agreements, understandings, arrangements,
calls or claims of any kind, to which the Company or any of
its subsidiaries is a party or that arise from any action of
the Company or any of its subsidiaries, relating to the
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<PAGE>
<PAGE>10
issuance of any capital stock of the Company or any subsidiary
of the Company, any such convertible or exchangeable
securities or any such options, warrants or rights.
4.2 Authorization of Agreement
__________________________
The execution and delivery of this Agreement and the
other documents relating to the transactions contemplated
hereby (the "Documents") to which the Company or any subsid-
iary of the Company is a party, and the consummation of the
transactions contemplated hereby or thereby have been duly
authorized by the Company and no other proceedings on the part
of any of the Company, any subsidiary of the Company or any of
their respective stockholders or affiliates are necessary to
authorize this Agreement or the other Documents or to consum-
mate the transactions contemplated hereby or thereby. This
Agreement is, and as of the Closing Date, each of the Docu-
ments to which the Company or any subsidiary of the Company is
a party will be, a valid and binding obligation of the Company
or such subsidiary, as the case may be, enforceable in accor-
dance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorga-
nization, moratorium, fraudulent conveyance or other similar
laws affecting enforcement of creditor's rights generally, and
by general principles of equity (regardless of whether en-
forcement is considered in a proceeding at law or in equity).
4.3 No Violation
____________
Neither the execution or delivery by the Company or
any of its subsidiaries of the Documents to which it is a
party, the performance by each of the Company and each of its
subsidiaries of its obligations under this Agreement and the
other Documents, nor the consummation of the transactions
contemplated hereby or thereby will (i) constitute a breach or
violation under the Charter Documents of the Company or any of
its subsidiaries, or (ii) constitute a violation of any
Applicable Law, in each case as defined in the Exchange
Agreement.
4.4 No Default
__________
(a) No Event of Default (as defined in each of
the Documents) has occurred, which Event of Default could,
singly or in the aggregate, have a Material Adverse Effect on
the Company after the date on which the Purchase transactions
are consummated. There exists no condition that, with the
passage of time or otherwise, would (i) except as set forth in
the Proxy Statement, result in a default by the Company or any
of its subsidiaries under any agreement, which default could,
singly or in the aggregate, have a Material Adverse Effect on
the Company after the date on which the transactions
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<PAGE>
<PAGE>11
contemplated hereby or thereby are consummated, or (ii) except
as set forth in the Proxy Statement on the date hereof, result
in the imposition of any penalty or the acceleration of any
indebtedness or obligation which could, singly or in the
aggregate, have a Material Adverse Effect on the Company.
(b) Neither the execution or delivery by the
Company or any of its subsidiaries of the Documents to which
it is a party, the performance by any of the Company or any of
its subsidiaries of its obligations under this Agreement and
the other Documents, nor the consummation of the transactions
contemplated hereby or thereby will conflict with, violate,
constitute a breach or violation of or a default (with the
passage of time or otherwise) under, require the consent of
any person under, give to others any rights of termination,
amendment, acceleration or cancellation of or result in the
imposition of a lien on any of the properties or assets of any
of the Company's subsidiaries or an acceleration of
indebtedness pursuant to, any material agreement, except for
such conflicts, violations, breaches or defaults (i) for which
consents have already been obtained; and (ii) which could not,
singly or in the aggregate, have a Material Adverse Effect on
the Company.
4.5 Representations and Warranties in the Exchange
Agreement
_______________________________________________________________
The representations and warranties of the Company in
the Exchange Agreement were true on the date thereof, are true
on the date hereof and will be true on the Closing Date after
giving effect to the transactions contemplated by this
Agreement and the other Documents.
4.6 Proposed Restructurings
_______________________
Neither the Company nor any of its subsidiaries is
currently contemplating or has taken any action with respect
to any liquidation, bankruptcy, dissolution or other reorgani-
zation proceedings except as contemplated by the Purchase
Transactions and the Restructuring Transactions.
ARTICLE 5.
Representations and Warranties of each of the Holders
_____________________________________________________
Each of the Holders, severally and not jointly,
represents and warrants to the Company as follows:
5.1 Authorization of Agreement
__________________________
The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly autho-
rized by such Holder and no other proceedings on the part of
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<PAGE>
<PAGE>12
any such Holder or any of its respective stockholders or
affiliates are necessary to authorize this Agreement or to
consummate the Note Purchase. This Agreement is a valid and
binding obligation of such Holder, enforceable in accordance
with its terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws af-
fecting enforcement of creditor's rights generally, and by
general principles of equity (regardless of whether enforce-
ment is considered in a proceeding at law or in equity).
5.2 Title to Notes
______________
As of the date hereof, each of the Holders benefi-
cially owns free and clear of all claims, liens, charges,
encumbrances, options and security interests, to the Notes in
the principal amount set forth below:
Principal
Amount of Notes
_______________
SunAmerica $9,515,000
Apollo $6,500,000
Grace $1,600,000
Upchurch $ 79,000
5.3 Private Placement
_________________
(a) Such Holder understands that the Note
Purchase is intended to be exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act").
(b) The shares of Common Stock and Warrants
(including the Delayed Securities, if any) to be acquired by
such Holder in the Note Purchase are being acquired for its
own account for investment and without a view to making a dis-
tribution thereof in violation of the Securities Act or any
state securities laws which may be applicable.
(c) Such Holder has sufficient knowledge and
experience in financial and business matters so as to be
capable of evaluating the merits and risks of its investment
in such shares of Common Stock and Warrants (including the
Delayed Securities, if any) and such Holder is capable of
bearing the economic risks of such investment, including a
complete loss of its investment.
(d) Such Holder is an "accredited investor" as
such term is defined in Regulation D under the Securities Act.
(e) Such Holder acknowledges that the Company
and, for purposes of the opinions to be delivered to the
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<PAGE>
<PAGE>13
Holders pursuant to Section 3.1(c) hereof, Sidley & Austin,
will rely on the accuracy and truth of its representations in
this Section 5.3, and such Holder hereby consents to such
reliance.
(f) Such Holder acknowledges that upon origi-
nal issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the
Securities Act, each certificate evidencing the shares of
Common Stock and Warrants being acquired by it (including the
Delayed Securities, if any) shall bear a legend substantially
in the form of Schedule B hereto.
ARTICLE 6.
Other Agreements
________________
6.1 Warrant Shares
______________
The Company hereby agrees that it will (a) not
permit the par value, if any, of any Warrant Shares to exceed
the amount payable therefore upon exercise, and (b) at all
times reserve and keep available, solely for issuance and
delivery upon exercise of the Warrants, the number of shares
of Common Stock from time to time issuable upon exercise of
the Warrants.
6.2 Supplemental Indentures
_______________________
The Company hereby agrees to execute and deliver the
Supplemental Indentures.
6.3 Covenants of Holders
____________________
Each Holder, severally and not jointly, hereby
agrees:
(a) to vote the shares of Common Stock issued
to such Holder pursuant to Section 1 hereof (and held by such
Holder on the date of any such vote) in favor of the Addition-
al Issuance; and
(b) that the exercise of the proxy granted by
Dr. Bates pursuant to that certain Agreement and Proxy, dated
as of the date hereof, shall constitute such Holder's
agreement (i) to waive any then remaining conditions to the
Holders' performance under the Exchange Agreement and (ii) to
perform thereunder, in each case so long as (A) the Company
performs its obligations thereunder and (B) the transactions
contemplated by the Exchange Agreement are consummated on or
before May 25, 1995.
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<PAGE>
<PAGE>14
6.4 Further Assurances
__________________
Each party hereto agrees to use all reasonable
efforts to obtain all consents and approvals, and to do all
other things, necessary for the transactions contemplated by
this Agreement on or prior to the termination of this Agree-
ment pursuant to Section 7.1 hereof. The parties agree to
take such further action and to deliver or cause to be deliv-
ered to each other at the closing and at such other times
thereafter as shall be reasonably agreed by such additional
agreements or instruments as any of them may reasonably re-
quest for the purpose of carrying out this Agreement and the
agreements and transactions contemplated hereby.
ARTICLE 7.
Miscellaneous
_____________
7.1 Termination
___________
This Agreement may be terminated and the Note
Purchase may be abandoned at any time prior to the closing
(provided that any such termination or consummation of the
Exchange Offer shall not relieve any party from liability for
a breach of any provision hereof prior to such termination):
(a) by the unanimous written consent of the
Company, Dr. Bates and the Holders;
(b) by the Holders if (i) any representation,
warranty, covenant or agreement of the Company or Dr. Bates
contained in this Agreement or any of the other Documents
shall have been breached in any material respect (other than
those qualified by a materiality standard which shall have
been breached in any respect); or (ii) the Company's board of
directors fails to approve this Agreement or the Note Purchase
and the other transactions contemplated hereby and by the
other Documents; and
(c) automatically on May 17, 1995, unless
otherwise extended by the Holders in their sole discretion.
Termination pursuant to the foregoing clause
(a), (b) or (c) notwithstanding, Sections 2 and 6.3(b) hereof
shall remain in effect.
7.2 Successors and Assigns
______________________
This Agreement shall be binding upon and shall inure
to the benefit of any and all successors and assigns of the
parties hereto. This Agreement may not be assigned by any
party, by operation of law or otherwise, without the express
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<PAGE>
<PAGE>15
prior written consent of each of the other parties, which
consent may be granted or withheld in each such party's sole
discretion; provided, however, that no such consent shall be
necessary in connection with an assignment by Apollo or
SunAmerica to any Related Person of such Holder if such Relat-
ed Person shall agree to be bound by the terms of this Agree-
ment. "Related Person" of any Holder means any subsidiary or
affiliate of such Holder or any investment fund, investment
account or investment entity whose investment manager, invest-
ment advisor, or principal thereof, is such Holder, an affili-
ate of such Holder or an investment manager, investment advi-
sor or principal of such Holder or affiliate.
7.3 Specific Performance
____________________
Each of the Company and Dr. Bates and, with respect
to Section 6.3, the Holders hereby acknowledges and agrees
that irreparable harm, for which there may be no adequate
remedy at law and for which the ascertainment of damages would
be difficult, would occur in the event any of the provisions
of this Agreement or any of the Documents or any of the
Purchase Transactions were not performed in accordance with
their specific terms or were otherwise breached.
Consequently, each of the Company and Dr. Bates and, with
respect to Section 6.3, the Holders hereby agrees that each
party hereto shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement or any
other Document or any of the Purchase Transactions and to
enforce specifically the terms and provisions hereof or
thereof in any court of the United States or any state thereof
having jurisdiction, in each instance without being required
to post bond or other security and in addition to, and without
having to prove the inadequacy of, other remedies at law.
7.4 Amendment and Waiver
____________________
This Agreement may be amended, modified or supple-
mented, and waivers or consents to departures from the provi-
sions hereof may be given, provided that the same are in
writing and signed by the parties hereto.
7.5 Counterparts
____________
This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counter-
parts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one
and the same agreement.
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<PAGE>
<PAGE>16
7.6 Headings
________
The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the
meaning hereof.
7.7 Governing Law
_____________
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, AS AP-
PLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
7.8 Entire Agreement
________________
This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or
referred to herein and therein.
7.9 Severability
____________
If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and re-
strictions without including any of such which may be
hereafter declared invalid, void or unenforceable.
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<PAGE>
<PAGE>17
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the date
first above written.
AMERICAN SHARED HOSPITAL SERVICES
By:_________________________________
Its: Chairman and CEO
AIF II, L.P.
By: Apollo Advisors, L.P.
Managing General Partner
By: Apollo Capital Management, Inc.
General Partner
By:_________________________________
Its:________________________________
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By:__________________________________
_____________________________________
Ernest A. Bates, M.D.
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<PAGE>
<PAGE>18
GRACE BROTHERS, LTD.
By:________________________________
Its:_______________________________
LION ADVISORS, L.P.
on behalf of an account
under management
By: Lion Capital Management, Inc.
General Partner
By:___________________________
Its:__________________________
SUN LIFE INSURANCE COMPANY OF AMERICA
By:________________________________
SUNAMERICA INC.
By:_________________________________
Its:________________________________
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<PAGE>
<PAGE>19
UPCHURCH LIVING TRUST U/A/D 12/14/90
By:_________________________________
Its: Trustee
-19-
<PAGE>1
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES LAWS, AND MAY BE OFFERED AND SOLD ONLY IF
SO REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
HOLDER OF THIS WARRANT OR ANY SUCH SHARES MAY BE REQUIRED TO DELIVER TO
THE COMPANY, IF THE COMPANY SO REQUESTS, AN OPINION OF COUNSEL (REASON-
ABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY) TO THE EFFECT
THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (OR QUALI-
FICATION UNDER STATE SECURITIES LAWS) IS AVAILABLE WITH RESPECT TO ANY
TRANSFER OF THIS WARRANT OR THESE SHARES THAT HAS NOT BEEN SO REGISTERED
(OR QUALIFIED).
AMERICAN SHARED HOSPITAL SERVICES
Common Stock Purchase Warrant
No. W-1~ *2~ shares
May 17, 1995
AMERICAN SHARED HOSPITAL SERVICES, a California corporation
(together with any corporation that shall succeed to or assume the
obligations of the Company hereunder in compliance with Section 4, the
"Company"), for value received, hereby certifies that 3~, or its regis-
tered assigns (the "Holder"), is entitled to purchase from the Company
an aggregate of 4~ shares of Common Stock (as defined below), at the
Exercise Price (as defined below) per share, subject to the terms,
conditions and adjustments set forth below, in whole or in part, at any
time or from time to time from and after the date hereof and on or prior
to the Expiration Date (defined below).
1. The following terms shall have the meanings ascribed to
them below:
"Business Day" shall mean any day other than a Saturday or
Sunday or a day on which banking institutions in the State of California
are authorized or obligated by law or executive order to close.
<PAGE>
<PAGE>2
"Closing Price" with respect to any security on any day shall
mean (i) the closing sale price, regular way, on such day or, in case no
such sale takes place on such day, the average of the reported closing
bid and asked prices, regular way, in each case on the principal
national securities exchange or quotation system on which such security
is quoted or listed or admitted to trading or (ii) if not so quoted or
listed, the average of the closing bid and asked prices of such security
on the over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or (iii) if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time
to time by the Board of Directors, or, to the extent permitted by
applicable law, a duly authorized committee thereof (the "Board of
Directors") for that purpose.
"Common Stock" shall mean the Common Stock, no par value, of
the Company and any stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification of such Common
Stock.
"Current Market Price" on any day shall mean the average
Closing Price of the Common Stock during the 30 Trading Day period
ending on such day.
"Expiration Date" shall mean May 17, 2002.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, business trust, joint-
stock company, trust, unincorporated organization or government or
agency or political subdivision thereof.
"Record Date" with respect to any dividend or distribution,
shall mean the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution.
"Trading Day" with respect to any Security shall mean (x) if
such security is listed or admitted for trading or quoted on a national
securities exchange or quotation system, a day on which such national
securities exchange is open for business or (y) if such security is not
otherwise listed, admitted for trading or quoted, any Business Day.
2. Exercise of Warrant.
___________________
2.1 Manner of Exercise. This Warrant may be exercised by the
Holder hereof, in whole or in part, during normal business hours on any
Business Day, by surrender of this Warrant to the Company at its office
maintained pursuant to Section 9, accompanied by a subscription in
substantially the form attached to this Warrant (or a reasonable fac-
simile thereof), duly executed by such Holder and, in the case of clause
(a) below, accompanied by payment of the aggregate Exercise Price of the
number of shares of Common Stock designated in such subscription.
Payment of such Exercise Price may be made, at the option of the Holder
-2-<PAGE>
<PAGE>3
(a) in cash, by certified or official bank check payable to the order of
the Company, or (b) by the Company withholding that number of shares of
Common Stock with an aggregate Closing Price as of the date of exercise
equal to such aggregate Exercise Price.
2.2 When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant and the accompanying
subscription shall have been duly surrendered to the Company as provided
in Section 2.1, and at such time the Holder shall be deemed to have
become the holder of record of a number of shares of Common Stock equal
to the number of shares designated in such subscription less, in the
case of clause 2.1(b), the number of shares of Common Stock withheld by
the Company as payment therefor.
2.3 Delivery of Stock Certificates, etc. As soon as prac-
ticable after each exercise of this Warrant, in whole or in part, in
accordance with the terms of Section 2.1, the Company shall cause to be
issued in the name of the Holder (or its designee), and delivered to the
Holder (or at its direction),
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock to which such Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Holder would other-
wise be entitled, cash in an amount equal to the same fraction of the
Closing Price per share on the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant
of like tenor, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock equal to the number of such shares
called for on the face of this Warrant (after giving effect to any
adjustment thereof after the date hereof) minus the number of such
shares designated by the Holder upon such exercise as provided in
Section 2.1.
3. Adjustments.
___________
3.1 General. The number of shares of Common Stock that the
Holder shall be entitled to receive upon each exercise hereof shall be
determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 3) be issuable
upon such exercise, by a fraction (i) the numerator of which is $0.75
and (ii) the denominator of which is the Exercise Price on the date of
such exercise.
The "Exercise Price" shall initially be $0.75 per share;
provided, that the Exercise Price shall be adjusted and readjusted from
time to time as provided in this Section 3; provided, however, that no
such adjustment shall be made to the Exercise Price in connection with
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<PAGE>
<PAGE>4
the issuance of (i) up to 1,495,000 shares of Common Stock to the
chairman and chief executive officer of the Company on or prior to May
17, 1996, (ii) warrants to purchase shares of Common Stock to General
Electric Company, a New York corporation acting through GE Medical
Systems ("GE") on or prior to May 17, 1996, and (iii) options granted to
members of management (other than the chairman and chief executive
officer) pursuant to an incentive stock option plan approved by a
majority of the Company's shareholders to purchase up to five percent
(5%) of the fully-diluted shares of Common Stock outstanding on the date
of adoption of the plan.
3.2 Stock Dividends. If, after the date hereof, the Company
shall declare or pay any dividend on the Common Stock payable in Common
Stock, then, and in each such case, the Exercise Price shall be reduced,
as of the close of business on the Record Date, by multiplying such
Exercise Price by a fraction (a) the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business on
such Record Date and (b) the denominator of which shall be the sum of
such number of shares and the total number of shares constituting such
dividend or other distribution.
3.3 Rights. If, after the date hereof, the Company shall
pay or make a dividend or other distribution on its Common Stock
consisting exclusively of, or shall otherwise issue to all holders of
its Common Stock, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price on the Record Date, the Exercise
Price shall be reduced, as of the close of business on the Record Date,
by multiplying such Exercise Price by a fraction (a) the numerator of
which shall be the number of shares of Common Stock outstanding at the
close of business on such Record Date plus the number of shares of
Common Stock that the aggregate of the offering price of the total
number of shares of Common Stock so offered for subscription or purchase
would purchase at such Closing Price and (b) the denominator of which
shall be the number of shares of Common Stock outstanding at the close
of business on such record date plus the number of shares of Common
Stock so offered for subscription or purchase. For purposes of this
Section 3.3, the issuance of rights or warrants to subscribe for or
purchase stock or securities convertible into shares of Common Stock
shall be deemed to be the issuance of rights or warrants to purchase the
shares of Common Stock into which such stock or securities are convert-
ible at an aggregate offering price equal to the aggregate offering
price of such stock or securities plus the minimum aggregate amount (if
any) payable upon conversion of such stock or securities into Common
Stock.
3.4 Stock Splits, etc. If, after the date hereof, the
outstanding shares of Common Stock shall be subdivided into a greater
number of shares of Common Stock or combined into a smaller number of
shares of Common Stock by stock split, combination, reclassification or
otherwise, the Exercise Price in effect at the close of business on the
day upon which such subdivision or combination becomes effective shall
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<PAGE>
<PAGE>5
be proportionately reduced or increased, such reduction or increase, as
the case may be, to become effective immediately prior to the opening of
business on the day following the day upon which such subdivision or
combination becomes effective.
3.5 Other Distributions. If, after the date hereof, the
Company shall, by dividend or otherwise, distribute to all holders of
record of its Common Stock evidences of indebtedness, shares of capital
stock, cash or assets (including securities, but excluding any dividend
or distribution for which an adjustment is made pursuant to Section 3.2
or 3.3 above), the Exercise Price shall be reduced, as of the close of
business on the Record Date, by multiplying such Exercise Price by a
fraction (a) the numerator of which shall be the Closing Price per share
of Common Stock on the Record Date less the fair market value on such
Record Date, of such evidences of indebtedness, shares of capital stock,
cash and assets that are distributed to a holder of one share of Common
Stock and (b) the denominator of which shall be such Closing Price per
share of the Common Stock. For purposes of this Section 3.5, any
dividend or distribution that includes shares of Common Stock or rights
or warrants to subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the evidences of
indebtedness, cash, assets or shares of capital stock other than such
shares of Common Stock, rights or warrants (so that any Exercise Price
reduction required by this Section 3.5 is made) immediately followed by
(2) a dividend or distribution of such shares of Common Stock, rights or
warrants (so that there is made any further Exercise Price reduction
required by Section 3.2 or 3.3 hereof).
In lieu of any adjustment to the Exercise Price provided for
in this Section 3.5, the Holder may elect, in its sole discretion, to
receive such dividend or distribution as would be received by a holder
of the number of shares of Common Stock issuable upon the exercise of
this Warrant. Such dividend or distribution shall be declared, ordered,
made or paid at the time such dividend or distribution is declared,
ordered, made or paid on the Common Stock, without any requirement of
any exercise hereof.
3.6 Sales Below Market Price. If, after the date hereof, the
Company shall issue or sell its shares of Common Stock for consideration
per share that is less than the Current Market Price on the Trading Day
next preceding the date of such issuance (unless (i) the provisions of
3.2, 3.3, 3.4 or 3.5 shall be applicable, (ii) such issuance or sale is
in connection with a bona fide underwritten public offering, or (iii)
such issuance or sale is in consideration for assets or ownership
interests acquired by the Company in an arm's length transaction with a
bona fide third party) the Exercise Price shall be adjusted to equal the
product of the Exercise Price in effect immediately prior to such
action, multiplied by a fraction (a) the numerator of which is the
Adjusted Fair Market Value per share and (b) the denominator of which is
such Current Market Price.
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<PAGE>
<PAGE>6
"Adjusted Fair Market Value" shall mean (i) the sum of (x) the
product of (A) the number of shares of Common Stock outstanding immedi-
ately prior to such issue or sale times (B) the Current Market Price,
plus (y) the consideration, if any, received by the Company upon such
issue or sale, divided by (ii) the number of shares of Common Stock
outstanding immediately after such issue or sale.
3.7 Minimum Adjustment of Warrant Price. If the amount of
any adjustment of the Exercise Price required pursuant to this Section 3
would be less than one percent (1%) of the Exercise Price in effect at
the time such adjustment is otherwise so required to be made, such
amount shall be carried forward and adjustment with respect thereto made
at the time of and together with any subsequent adjustment which, to-
gether with such amount and any other amount or amounts so carried for-
ward, shall aggregate at least one percent (1%) of such Exercise Price,
provided, that all such adjustments required pursuant to Section 3 and
carried forward under this Section 3.7 shall be made upon (and in
connection with) any exercise of the Warrant.
3.8 Form of Warrants. Irrespective of any adjustments in the
Exercise Price or the number of shares of Common Stock purchasable upon
the exercise of this Warrant, this Warrant (and any Warrant hereafter
issued) may continue to express the same price and number and kind of
shares as are stated in the Warrant initially issued.
4. Consolidation, Merger, etc. If, after the date hereof,
the Company shall
(a) consolidate with or merge into any other Person and
shall not be the continuing or surviving corporation of such consoli-
dation or merger, or
(b) permit any other Person to consolidate with or merge
into the Company and the Company shall be the continuing or surviving
Person but, in connection with such consolidation or merger, the Common
Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or
(c) effect a capital reorganization or reclassification
of the Common Stock,
then (i) lawful and adequate provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant, upon the exercise hereof after the consummation
of such transaction, shall be entitled to receive, in lieu of the Common
Stock issuable upon such exercise, the kind and amount of securities,
cash or other property to which such Holder would have been entitled
upon such consummation if such Holder had exercised the rights repre-
sented by this Warrant in full immediately prior thereto and
(ii) appropriate provision shall be made with respect to rights and
interests of the Holder to the end that the provisions hereof (including
without limitation provisions for adjustment of the Exercise Price)
-6-<PAGE>
<PAGE>7
shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of any conversion rights hereunder.
5. Certain Covenants. The Company shall (a) not permit the
par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable
therefor upon such exercise, and (b) take all such action
as may be necessary or appropriate to validly and legally
issue fully paid and nonassessable shares of stock on the
exercise of this Warrant.
6. Accountants' Report as to Adjustments. Upon the
occurrence of any event requiring adjustment or readjust-
ment in the Exercise Price or the shares of Common Stock
issuable upon the exercise of this Warrant, the Company
will promptly compute such adjustment or readjustment in
accordance with the terms of this Warrant and cause
independent certified public accountants of recognized
national standing (which may be the regular auditors of
the Company) to verify such computation and prepare a
report setting forth such adjustment or readjustment and
showing in reasonable detail the method of calculation
thereof and the facts upon which such adjustment or
readjustment is based. The Company will promptly mail a
copy of each such report to the Holder.
7. Payment of Taxes. The Company shall pay any and all
issue or other taxes that may be payable in respect of
any issue or delivery of shares of Common Stock upon
exercise of the Warrants. The Company shall not, howev-
er, be required to pay any tax payable in respect of any
transfer involved in the issue or delivery of Warrants or
shares of Common Stock issued upon exercise of the
Warrants (or other securities or assets) in a name other
than that in which the Warrants so exercised were
registered.
8. Reservation of Stock, etc. The Company shall at all
times reserve and keep available, solely for issuance and
delivery upon exercise of this Warrant, the number of
shares of Common Stock from time to time issuable upon
exercise of this Warrant. All shares of Common Stock
issuable upon exercise of this Warrant shall be duly
authorized and, when issued upon such exercise in accor-
dance with the terms hereof, shall be validly issued,
fully paid and nonassessable, with no liability on the
part of the holders thereof.
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<PAGE>
<PAGE>8
9. Ownership and Transfer.
(a) The Company shall treat the person in whose name
this Warrant is registered on the register (the "Warrant Register") kept
at the office of the Company maintained pursuant to this Section 9 as
the owner and holder hereof for all purposes.
(b) This Warrant shall be transferable only on the
Warrant Register, upon delivery hereof, accompanied by a written
instrument or instruments of transfer, duly executed by the registered
Holder hereof or by the duly appointed legal representative hereof or by
a duly authorized attorney. Upon the surrender of this Warrant, proper-
ly endorsed, for registration of transfer or for exchange at the office
of the Company maintained pursuant to Section 9, the Company shall
execute and deliver to or upon the order of the Holder hereof a new
Warrant or Warrants of like tenor, in the name of such Holder or as such
Holder may direct, calling in the aggregate on the face or faces thereof
for the number of shares of Common Stock called for on the face hereof.
(c) The Company will maintain an office in the State of
California, which office shall initially be at Four Embarcadero Center,
Suite 3620, San Francisco, California 94111-4115, until such time as the
Company shall notify the Holder of any change of location of such of-
fice.
(d) If any warrant certificate shall be mutilated, lost,
stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon cancellation of the mutilated certificate, or
in lieu of and substitution for the certificate lost, stolen or de-
stroyed, and upon receipt of evidence to their reasonable satisfaction
of the destruction, loss or theft of any certificate and such security
or indemnity as may reasonably be required by them to save each of them
and any of their agents harmless, to issue a new certificate of like
tenor and representing an equivalent right or interest.
10. No Rights or Liabilities as Stockholder. Nothing con-
tained in this Warrant shall be construed as conferring
upon the Holder any rights as a stockholder of the
Company or as imposing any obligation on such Holder to
purchase any securities or as imposing any liabilities on
such Holder as a stockholder of the Company, whether such
obligation or liabilities are asserted by the Company or
by creditors of the Company.
11. Notices. All notices, demands, requests, consents,
approvals or other communications required or permitted
to be given hereunder or which are given with respect to
this Warrant shall be in writing and shall be personally
served or delivered by a reputable air courier service
with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed (a) if to the
Holder, at the registered address of such Holder as set
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<PAGE>
<PAGE>9
forth in the register kept at the principal office of the
Company, or (b) if to the Company, to the attention of
its Chief Executive Officer at its office maintained
pursuant to Section 9, provided that the exercise of any
Warrant shall be effective only in the manner provided in
Section 2. Notice shall be deemed given on the date of
service or confirmation of receipt of transmission if
personally served or transmitted by telegram, telex or
facsimile. Notice otherwise sent as provided herein
shall be deemed given on the next Business Day following
delivery of such notice to a reputable air courier
service.
12. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termina-
tion is sought. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCI-
PLES OF CONFLICT OF LAWS. Titles and headings of
sections of this Warrant are for convenience only and
shall not affect the construction of any provision of
this Warrant.
AMERICAN SHARED HOSPITAL SERVICES
By:
Name:
Title:
Attest
By:
Name:
Title:
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<PAGE>
<PAGE>10
FORM OF SUBSCRIPTION
____________________
/To be executed only upon exercise of Warrant/
To: AMERICAN SHARED HOSPITAL SERVICES
The undersigned registered holder of the within
Warrant hereby irrevocably exercises such Warrant for, and
purchases thereunder, ______* shares of Common Stock of
AMERICAN SHARED HOSPITAL SERVICES and requests that the cer-
tificates for such shares be issued in the name of, and
delivered to the undersigned, whose address is set forth
below. In payment therefor (check one):
/ / The Company may withhold therefrom, and the undersigned
holder hereby surrenders its right to, that number of
shares of Common Stock with an aggregate Closing Price
as of the date of exercise equal to the aggregate
Exercise Price for the shares designated for purchase
in the preceding sentence.
/ / The undersigned holder has included a certified or
official bank check payable to the order of the Company
in an amount equal to the aggregate Exercise Price for
the shares designated for purchase in the preceding
sentence.
Dated:
__________________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
____________________
* Insert here the number of shares called for on the face
of this Warrant (or, in the case of a partial exercise,
the portion thereof as to which the Warrant is being
exercised), in either case after making any adjustment
for additional shares of Common Stock which, pursuant
to the adjustment provisions of this Warrant, may be
delivered upon exercise. In the case of a partial
exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the
Warrant, to the holder surrendering the Warrant.
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<PAGE>
<PAGE>11
FORM OF ASSIGNMENT
__________________
For value received _________________ hereby sells,
assigns and transfers unto ______________ the within
Warrant, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________ attorney, to transfer said Warrant on the
books of the Company, with full power of substitution in the
premises.
Dated: ___________________
____________________________________________
Note: The above signature must correspond
with the name as written upon the face
of this Warrant in every particular,
without alternation or enlargement or
any change whatever.
Signature Guaranteed:
-11-
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement")
is made pursuant to the Note Purchase Agreement, dated as of
May 17, 1995 among American Shared Hospital Services, a
California corporation (the "Company"), the Holders referred
to therein (the "Note Purchase Agreement") and General
Electric Company, a New York corporation acting through GE
Medical Systems. In order to induce the Holders to enter into
the Note Purchase Agreement, the Company has agreed to provide
the registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions
___________
Capitalized terms used by not otherwise defined
herein shall have the meaning given thereto in the Note
Purchase Agreement. As used in this Agreement, the following
terms shall have the following meanings:
Advice: See Section 5 hereof.
Common Stock: The common stock, no par value, of
the Company.
DTC: See Section 5 hereof.
GE Warrant: Warrants to purchase 225,000 shares of
Common Stock.
Losses: See Section 7 hereof.
NASDAQ: See Section 5 hereof.
Person: Any individual, partnership, corporation,
joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political
subdivision thereof, or other entity.
Piggyback Registration: See Section 3 hereof.
Prospectus: The prospectus included in any Regis-
tration Statement (including, without limitation, a prospectus
that discloses information previously omitted from a
prospectus filed as part of an effective registration state-
ment in reliance upon Rule 430A promulgated under the Secu-
rities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Regis-
tration Statement and all other amendments and supplements to
the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
<PAGE>
<PAGE>2
Registrable Securities: The Shares and Warrants,
upon the respective original issuance thereof, and at all
times subsequent thereto, until, in the case of any such secu-
rity, (i) it is effectively registered under the Securities
Act and disposed of in accordance with the Registration
Statement covering it, (ii) it is saleable by the holder
thereof pursuant to Rule 144(k) or (iii) it is distributed to
the public pursuant to Rule 144.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement
of the Company that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits,
and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
Shareholder: Each of the shareholders party hereto
and any party who shall hereafter acquire from a Shareholder
and hold Registrable Securities.
Shares: Any shares of capital stock of the Company
owned by any Shareholder, whether owned on the date hereof or
hereafter acquired, including (without limitation) any shares
issued upon exercise of the Warrants or the GE Warrant.
Special Counsel: Any special counsel to the
Shareholders, the fees and expenses of which the Shareholders
of Registrable Securities will be reimbursed pursuant to
Section 7(b) hereof.
Underwritten registration or underwritten offering:
A registration in which securities of the Company are to be
sold to an underwriter for reoffering to the public.
Warrants: Any warrants to purchase shares of Common
Stock owned by any Shareholder, whether owned on the date
hereof or hereafter acquired.
<PAGE>
<PAGE>3
Warrant Shares: The shares of Common Stock issued
upon exercise of the Warrants in accordance with the terms
thereof.
2. Shelf Registration
__________________
(a) The Company shall, on or prior to July 31,
1995 prepare and file with the SEC a Registration Statement
under the Securities Act for an offering to be made on a
continuous basis pursuant to Rule 415 (or any similar rule
that may be adopted by the SEC) under the Securities Act
covering all the Registrable Securities (the "Shelf
Registration").
(b) The Shelf Registration shall be on Form
S-1 or another appropriate Form (reasonably acceptable to the
holders of the Registrable Securities offered thereby)
permitting registration of such Registrable Securities for
resale by such holders in the manner or manners designated by
them (including, without limitation, one or more underwritten
offerings). The Company shall not permit any securities other
than the Registrable Securities to be included in the Shelf
Registration.
(c) The Company shall use its best efforts to
cause the Shelf Registration to become effective under the
Securities Act on or prior to 60 days after the filing thereof
and shall keep the Shelf Registration continuously effective
for a period of 36 months from the date on which the Shelf
Registration becomes effective under the Securities Act
(subject to extension pursuant to Section 4(a) and Section 5
hereof), or such shorter period that will terminate when all
Registrable Securities covered by the Shelf Registration have
been sold. The Company shall also supplement or make
amendments to the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration
form used by the Company or if required by the Securities Act
or if reasonably requested by holders of a majority of the
Registrable Securities covered by the Shelf Registration or
any underwriter of the Registrable Securities.
(d) If any of the Registrable Securities
registered pursuant to the Shelf Registration are to be sold
in one or more firm commitment underwritten offerings, and the
managing underwriter advises the Shareholders of such
securities in writing that in its opinion the total number or
dollar amount of Registrable Securities proposed to be sold in
such offering is such as to materially and adversely affect
the success of such offering, then there shall be included in
such firm commitment underwritten offering the number or
dollar amount of Registrable Securities held by the
Shareholders that in the opinion of such managing underwriter
<PAGE>
<PAGE>4
can be sold, and such Registrable Securities shall be allo-
cated pro rata on the basis of the number or dollar amount of
securities owned by each such Shareholder participating in
such offering.
3. Piggyback Registration
______________________
(a) Right to Piggyback. If at any time the
Company proposes to file a registration statement under the
Securities Act with respect to an offering of any class of
equity securities (other than a registration statement (i) on
Form S-4 or S-8 or any successor forms thereto, or (ii) filed
in connection with an offering made solely to employees of the
Company), whether or not for its own account, then the Company
shall give written notice of such proposed filing to the Shar-
eholders of Registrable Securities at least fifteen days
before the anticipated filing date. Such notice shall offer
such Shareholders the opportunity to register such amount of
Registrable Securities as each such Shareholder may request (a
"Piggyback Registration"). Subject to Section 3(b) hereof,
the Company shall include in each such Piggyback Registration
all Registrable Securities with respect to which the Company
has received written requests for inclusion therein. The
Shareholders of Registrable Securities shall be permitted to
withdraw all or part of the Registrable Securities from a
Piggyback Registration at any time prior to the effective date
of such Piggyback Registration.
(b) Priority on Piggyback Registrations. The
Company shall cause the managing underwriter of a proposed
underwritten offering to permit Shareholders of Registrable
Securities requested to be included in the registration for
such offering to include all such Registrable Securities on
the same terms and conditions as any similar securities, if
any, of the Company included therein. Notwithstanding the
foregoing, if the managing underwriter of such offering
delivers an opinion to the holders of Registrable Securities
that the total number or dollar amount of securities that such
Shareholders, the Company and any other Persons having rights
to participate in such registration ("Other Holders"), propose
to include in such offering is such as to materially and
adversely affect the success of such offering, then:
(i) if such Piggyback Registration is a
primary registration on behalf of the Company, the amount of
securities to be offered for the account of Shareholders of
Registrable Securities and Other Holders, shall be reduced (to
zero if necessary) pro rata on the basis of the number or
dollar amounts of securities owned by each such holder
participating in such offering to the extent necessary to
reduce the total amount of securities to be included in such
<PAGE>
<PAGE>5
offering to the amount recommended by such managing underwrit-
er or underwriters; and
(ii) if such Piggyback Registration is an
underwritten secondary registration on behalf of holders of
securities of the Company pursuant to demand registration
rights, the Company shall include in such registration: (x)
first, up to the full number or dollar amount of securities of
such Persons exercising "demand" registration rights that in
the opinion of such managing underwriter or underwriters can
be sold or allocated among such holders as they may otherwise
so determine, and (y) second, any securities to be sold for
the account of the Company and (z) third, the number or dollar
amount of Registrable Securities and securities held by Share-
holders and Other Holders in excess of the amount of securi-
ties such Persons exercising "demand" registration rights
propose to sell that, in the opinion of such managing
underwriter or underwriters, can be sold (allocated pro rata
among the Shareholders of such Registrable Securities and
Other Holders on the basis of the number or dollar amount of
securities owned by such holders).
4. Hold-Back Agreements
____________________
(a) Restrictions on Sale by Shareholders of
Registrable Securities. Each Shareholder agrees not to effect
any sale or transfer of the Registrable Securities issued to
it as part of the consideration under the Note Purchase
Agreement until the earlier to occur of (i) September 17,
1995, and (ii) the shareholder vote with respect to the
Additional Issuance. In addition, each Shareholder whose
Registrable Securities are covered by a Registration Statement
filed pursuant to Section 2 or 3 hereof, agrees that, if such
Shareholder is requested (pursuant to a timely written notice)
by the managing underwriter in an underwritten offering, not
to effect any public sale or distribution of any of the
Company's equity securities, including a sale pursuant to Rule
144 (except as part of such underwritten registration), during
the 10-day period prior to, and during the 90-day period
beginning on, the closing date of each underwritten offering
made pursuant to such Registration Statement. If a request is
made pursuant to this Section 4(a), the time period during
which a Shelf Registration is required to remain continuously
effective pursuant to Section 2(c) shall be extended by 100
days or such shorter period that will terminate when all such
Registrable Securities not so included have been sold pursuant
to such Registration Statement.
(b) Restrictions on Sale by the Company and
Others. The Company shall not effect any registration of its
securities (other than a registration statement on Form S-8 or
any successor form thereto), or effect any public or private
<PAGE>
<PAGE>6
sale or distribution of any of its securities other than in
connection with the Additional Issuance, including a sale
pursuant to Regulation D under the Securities Act, whether on
its own behalf or at the request of any holder or holders of
such securities (other than pursuant to and in accordance with
this Agreement), (i) from the date hereof until 90 days after
the effective date of the Shelf Registration, and (ii) for a
90 day period from the date of each notice to the Company of a
Shareholder's intent to sell Registrable Securities pursuant
to an underwritten public offering, unless the Company shall
have first notified in writing the Shareholders of Registrable
Securities covered by such Registration Statement of its
intention to do so, and the Shareholders of a majority of the
Registrable Securities requested to be registered pursuant to
Section 2 shall have consented thereto in writing; provided
that the Company shall not be obligated to refrain from sales
or transfers pursuant to clause (ii) above with respect to
more than one such underwritten public offering during any 12-
month period.
The Company shall cause each holder of its equity
securities purchased from the Company at any time on or after
the date of this Agreement (other than in a registered public
offering) to agree not to effect any public sale or
distribution of any such securities during such period,
including a sale pursuant to Rule 144.
5. Registration Procedures
_______________________
In connection with the Company's registration obli-
gations pursuant to Sections 2 and 3 hereof, the Company shall
effect such registrations to permit the sale of such
Registrable Securities in accordance with the intended method
or methods of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(a) Prepare and file with the SEC a Registra-
tion Statement or Registration Statements on any appropriate
Form under the Securities Act available for the sale of the
Registrable Securities by the holders thereof in accordance
with the intended method or methods of distribution thereof,
and cause each such Registration Statement to become effective
and remain effective as provided herein; provided, however,
that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto (including documents
that would be incorporated or deemed to be incorporated
therein by reference) the Company shall furnish to the
Shareholders of the Registrable Securities covered by such
Registration Statement, the Special Counsel and the managing
underwriters, if any, copies of all such documents proposed to
be filed, which documents will be subject to the review of
such Shareholders, the Special Counsel and such underwriters,
<PAGE>
<PAGE>7
and the Company shall not file any such Registration Statement
or amendment thereto or any Prospectus or any supplement
thereto (including such documents which, upon filing, would or
would be incorporated or deemed to be incorporated by
reference therein) to which the Shareholders of a majority of
the Registrable Securities covered by such Registration
Statement, the Special Counsel or the managing underwriter, if
any, shall reasonably object to the contents thereof on a
timely basis.
(b) Prepare and file with the SEC such amend-
ments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration State-
ment continuously effective for the applicable period speci-
fied in Section 2; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set
forth in such Registration Statement as so amended or to such
Prospectus as so supplemented.
(c) Notify the selling Shareholders of Regis-
trable Securities, the Special Counsel and the managing under-
writers, if any, promptly, and (if requested by any such
Person) confirm such notice in writing, (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or
any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any other Federal
or state governmental authority for amendments or supplements
to a Registration Statement or related Prospectus or for
additional information, (iii) of the issuance by the SEC or
any other Federal or state governmental authority of any stop
order suspending the effectiveness of a Registration Statement
or the initiation of any proceedings for that purpose, (iv) if
at any time the representations and warranties of the Company
contained in any agreement contemplated by Section 5(m) below
(including any underwriting agreement) below cease to be true
and correct, (v) of the receipt by the Company of any notifi-
cation with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the
happening of any event which makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference
untrue or which requires the making of any changes in a
Registration Statement, Prospectus or documents so that, in
<PAGE>
<PAGE>8
the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the
case of the Prospectus, it will not contain any untrue
statement of a material fact required to be stated therein is
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
(vii) of the Company's reasonable determination that a post-
effective amendment to a Registration Statement would be
appropriate.
(d) Use every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at
the earliest possible moment.
(e) If requested by the managing underwriters,
if any, or any Shareholder of Registrable Securities being
sold, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing
underwriters, if any, and such Shareholder agree should be
included therein as may be required by applicable law, (ii)
make all required filings of such Prospectus supplement or
such post-effective amendment as soon as the Company has
received notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to any Registration
Statement.
(f) Furnish to each selling Shareholder of
Registrable Securities, the Special Counsel and each managing
underwriter, if any, without charge, (i) at least one signed
copy of the Registration Statement or Statements and any post-
effective amendment thereto, including financial statements
and schedules, all documents incorporated therein by reference
or deemed incorporated therein by reference and all exhibits
(including those previously furnished or incorporated by
reference) at the earliest practicable time under the
circumstances before the filing of such documents with the SEC
and (ii) as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each
preliminary prospectus) and any amendment or supplement
thereto as such Persons may request. The Company hereby
consents to the use of such Prospectus or each amendment or
supplement thereto by each of the selling Shareholders of
Registrable Securities and the underwriters, if any, in con-
nection with the offering and sale of the Registrable Secu-
rities covered by such Prospectus or any amendment or sup-
plement thereto.
<PAGE>
<PAGE>9
(g) Prior to any public offering of Registra-
ble Securities, to register or qualify or cooperate with the
selling Shareholders of Registrable Securities, the underwrit-
ers, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such
registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of
such jurisdictions as any seller or underwriter reasonably
requests in writing; keep each such registration or
qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept
effective and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the applicable Regis-
tration Statement; provided, however, that the Company will
not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take
any action that would subject it to taxation or general
service of process in any such jurisdiction where it is not
then so subject.
(h) Cooperate with the selling Shareholders of
Registrable Securities and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certif-
icates representing Registrable Securities to be sold, which
certificates shall not bear any restrictive legends; and
enable such Registrable Securities to be registered in such
names as the managing underwriters, if any, request at least
two business days prior to any sale of Registrable Securities
to the underwriters.
(i) Cause the Registrable Securities covered
by the applicable Registration Statement to be registered with
or approved by such other governmental agencies or authorities
as may be necessary to enable the sellers thereof or the
underwriters, if any, to consummate the disposition of such
Registrable Securities.
(j) Upon the occurrence of any event contem-
plated by paragraph 5(c)(vi) or 5(c)(vii) above, prepare a
supplement or post-effective amendment to each Registration
Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereun-
der, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
<PAGE>
<PAGE>10
(k) Cause all Registrable Securities covered
by such Registration Statement to be (i) listed on each
securities exchange, if any, on which similar securities
issued by the Company are then listed, or (ii) authorized to
be quoted on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or the National Market
System of NASDAQ if the securities so qualify.
(l) Enter into such agreements (including an
underwriting agreement in form, scope and substance as is
customary in underwritten offerings) and take all such other -
actions in connection therewith (including those requested by
the managing underwriters, if any, or the Shareholders of a
majority of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such
representations and warranties to the Shareholders of such
Registrable Securities and the underwriters, if any, with
respect to the business of the Company and its subsidiaries,
the Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference,
if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii)
obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters,
if any, and the Shareholders of a majority of the Registrable
Securities being sold) addressed to each selling Shareholder
of Registrable Securities and each of the underwriters, if
any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as
may be reasonably requested by such Shareholders and
underwriters, including without limitation the matters
referred to in paragraph 5(m)(i) above; (iii) obtain "cold
comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if neces-
sary, any other certified public accountants of any subsidiary
of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is
required to be, included in the Registration Statement),
addressed to each selling Shareholder of Registrable
Securities and each of the underwriters, if any, such letters
to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection
with underwritten offerings; and (iv) deliver such documents
and certificates as may be requested by the Shareholders of a
majority of the Registrable Securities being sold, the Special
Counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties of
<PAGE>
<PAGE>11
the Company and its subsidiaries made pursuant to clause (i)
above and to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement
entered into by the Company.
(m) Make available for inspection by a repre-
sentative of the Shareholders of Registrable Securities being
sold, any underwriter participating in any disposition of
Registrable Securities, if any, and any attorney or accountant
retained by such selling Shareholders or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the
officers, directors and employees of the Company and its
subsidiaries to supply all information reasonably requested by
any such representative, underwriter, attorney or accountant
in connection with such Registration Statement; provided,
however, that any records, information or documents that are
designated by the Company in writing as confidential at the
time of delivery of such records, information or documents
shall be kept confidential by such Persons unless (i) such
records, information or documents are in the public domain or
otherwise publicly available, (ii) disclosure of such records,
information or documents is required by court or administra-
tive order or is necessary to respond to inquiries of
regulatory authorities or (iii) disclosure of such records,
information or documents, in the opinion of counsel to such
Person, is otherwise required by law (including, without
limitation, pursuant to the requirements of the Securities
Act).
(n) File any reports required to be filed by
it under the Securities Act and the Securities Exchange Act of
1934, as amended, and that it will take such further action as
any Shareholder may reasonably request, all to the extent
required from time to time to enable Shareholders to sell
Registrable Securities without registration under the Securi-
ties Act within the limitation of the exemptions provided by
(a) Rule 144 or Rule 144A under the Securities Act, as such
Rules may be amended from time to time, or (b) any similar
rule or regulation hereafter adopted by the SEC. Upon the re-
quest of any Shareholder, the Company will deliver to such
Shareholder a written statement as to whether it has complied
with such requirements.
(o) Use its best efforts to comply with all
applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date
of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
<PAGE>
<PAGE>12
(p) Prior to the effective date of the Shelf
Registration or the first Piggy-Back Registration, whichever
shall occur first, (i) provide the transfer agent with printed
certificates for the Registrable Securities in a form eligible
for deposit with The Depository Trust Company ("DTC"), and
(ii) provide a CUSIP number for the Registrable Securities.
(q) In connection with an underwritten
offering, participate, to the extent reasonably requested by
the managing underwriter for the offering or the Holders, in
customary efforts to sell the securities under the offering,
including, without limitation, participating in "road shows";
provided that the Company shall not be obligated so to
participate in more than one such offering in any 12-month
period.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company such information regarding the dis-
tribution of such Registrable Securities as the Company may,
from time to time, reasonably request in writing.
Each Shareholder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt
of any notice from the Company of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(v),
5(c)(vi) or 5(c)(vii) hereof, such Shareholder will forthwith
discontinue disposition of such Registrable Securities covered
by such Registration Statement or Prospectus until such
Shareholder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or
until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and
has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by
reference in such Prospectus. In the event the Company shall
give any such notice, the time period mentioned in Section
2(c) hereof shall be extended by the number of days during the
time period from and including the date of the giving of such
notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement
shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof or (y)
the Advice.
6. Registration Expenses
_____________________
(a) All fees and expenses incident to the
performance of or compliance with this Agreement by the
Company shall be borne by the Company whether or not any of
the Registration Statements become effective. Such fees and
expenses shall include, without limitation, (i) all regis-
<PAGE>
<PAGE>13
tration and filing fees (including, without limitation, fees
and expenses (x) with respect to filings required to be made
with the National Association of Securities Dealers, Inc. and
(y) of compliance with securities or "blue sky" laws
(including without limitation fees and disbursements of
counsel for the underwriters or selling holders in connection
with "blue sky" qualifications of the Registrable Securities
and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions
as the managing underwriters, if any, or Shareholders of a
majority of the Registrable Securities being sold may desig-
nate)), (ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities
in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by
the Shareholders of a majority of the Registrable Securities
included in any Registration Statement), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements
of counsel for the Company, (v) fees and disbursements of all
independent certified public accountants referred to in
Section (5)(m)(iii) hereof (including the expenses of any
annual or special audit and "cold comfort" letters required by
or incident to such performance), and (vi) fees and expenses
of all other Persons retained by the Company.
(b) In connection with any Shelf Registration
or Piggyback Registration hereunder, the Company shall
reimburse the Shareholders of the Registrable Securities being
registered in such registration for the reasonable fees and
disbursements of not more than one counsel (or more than one
counsel if a conflict exists among such selling Shareholders
in the exercise of the reasonable judgment of counsel for the
selling Shareholders and counsel for the Company), together
with appropriate local counsel, chosen by the Shareholders of
a majority of the Registrable Securities being registered.
7. Indemnification
_______________
(a) Indemnification by the Company. The
Company shall, without limitation as to time, indemnify and
hold harmless, to the fullest extent permitted by law, each
Shareholder of Registrable Securities, the partners, officers,
directors, agents and employees of each of them, each Person
who controls such Shareholder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act)
and the partners, officers, directors, agents and employees of
each such controlling person, from and against all losses,
claims, damages, liabilities, costs (including, without
limitation, the costs of preparation and attorneys' fees) and
expenses (collectively, "Losses") to be reimbursed promptly,
as incurred, arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any
<PAGE>
<PAGE>14
Registration Statement, Prospectus or form of Prospectus or in
any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are based solely
upon information furnished in writing to the Company by such
Shareholder expressly for use therein. The Company shall also
indemnify each underwriter, selling broker, dealer manager and
similar securities industry professional participating in the
distribution, and each of their officers, directors, agents
and employees and each Person who controls such Persons
(within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) to the same extent as provided
above with respect to the indemnification of the holders of
Registrable Securities.
(b) Indemnification by Shareholder of Regis-
trable Securities. In connection with any Registration State-
ment in which a Shareholder of Registrable Securities is
participating, such Shareholder of Registrable Securities
shall furnish to the Company in writing such information as
the Company reasonably requests for use in connection with any
Registration Statement or Prospectus and agrees to indemnify,
to the fullest extent permitted by law, the Company, its
directors and officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling
persons, from and against all Losses arising out of or based
upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus
or arising out of or based upon any omission of a material
fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to
the extent, that such untrue statement or omission is
contained in and in conformity with any information so
furnished in writing by such Shareholder to the Company ex-
pressly for use in such Registration Statement or Prospectus
and that such information was solely relied upon by the
Company in preparation of such Registration Statement,
Prospectus or preliminary prospectus. In no event shall the
liability of any selling Shareholder of Registrable Securities
hereunder be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such
Shareholder upon the sale of the Registrable Securities giving
rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings.
If any Person shall be entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall give prompt
notice to the party from which such indemnity is sought (the
<PAGE>
<PAGE>15
"indemnifying party") of any claim or of the commencement of
any Proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto;
provided, however, that the failure to so notify the
indemnifying party shall not relieve the indemnifying party
from any obligation or liability except to the extent that the
indemnifying party has been prejudiced materially by such
failure. All such fees and expenses (including any fees and
expenses incurred in connection with investigating or
preparing to defend such action or proceeding) shall be paid
to the indemnified party, as incurred, within five days of
written notice thereof to the indemnifying party (regardless
of whether it is ultimately determined that an indemnified
party is not entitled to indemnification hereunder). The
indemnifying party shall not consent to entry of any judgment
or enter into any settlement or otherwise seek to terminate
any Proceeding in which any indemnified party is or could be a
party and as to which indemnification or contribution could be
sought by such indemnified party under this Section 7, unless
such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release, in form and
substance satisfactory to the indemnified party, from all
liability in respect of such claim or litigation for which
such indemnified party would be entitled to indemnification
hereunder.
(d) Contribution. If the indemnification pro-
vided for in this Section 7 is unavailable to an indemnified
party under Section 7(a) or 7(b) hereof in respect of any
Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall, jointly and
severally, contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such pro-
portion as is appropriate to reflect the relative fault of the
indemnifying party or indemnifying parties, on the one hand,
and such indemnified party, on the other hand, in connection
with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
or indemnifying parties, on the one hand, and such indemnified
party, on the other hand, shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include any legal or other
<PAGE>
<PAGE>16
fees or expenses incurred by such party in connection with any
Proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 7(d)
were determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section
7(d), an indemnifying party that is a selling Shareholder of
Registrable Securities shall not be required to contribute any
amount in excess of the amount by which the total price at
which the Registrable Securities sold by such indemnifying
party and distributed to the public were offered to the public
exceeds the amount of any damages which such indemnifying
party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimburse-
ment obligations of the Company hereunder shall be in addition
to any liability the Company may otherwise have hereunder or
otherwise. The provisions of this Section 7 shall survive so
long as Registrable Securities remain outstanding, not-
withstanding any transfer of the Registrable Securities by any
Shareholder or any termination of this Agreement.
8. Underwritten Registrations
__________________________
If any of the Registrable Securities covered by a
Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or
managers that will manage the offering will be selected by the
Shareholders of a majority of such Registrable Securities
included in such offering. If any Piggyback Registration is
an underwritten offering, the Company shall have the right to
select the investment banker or investment bankers and
managers to administer the offering; provided, however, that
such investment bank or manager shall be reasonably
satisfactory to the Shareholders of a majority of the
Registrable Securities included in such offering.
9. Miscellaneous
_____________
(a) Remedies. In the event of a breach by the
Company of its obligations under this Agreement, each
Shareholder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance
<PAGE>
<PAGE>17
of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that,
in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at
law would be adequate.
(b) No Inconsistent Agreements. The Company
has not, as of the date hereof, and shall not, on or after the
date of this Agreement, enter into any agreement with respect
to its securities which is inconsistent with the rights
granted to the Shareholders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof.
The Company has not entered into any agreement with respect to
its securities granting any registration rights to any Person
other than this Agreement.
(c) Amendments and Waivers. This Agreement
may be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may be
given, provided the same are in writing and signed by the
Company and each of the Shareholders of Registrable Securi-
ties. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Shareholders of
Registrable Securities whose securities are being sold
pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Shareholders
of Registrable Securities may, in lieu of complying with the
first sentence of this Section 9(c), be given by all Shar-
eholders of the Registrable Securities being sold; provided,
however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communica-
tions provided for or permitted hereunder shall be made in
writing and shall be deemed given (i) when made, if made by
hand delivery, (ii) upon confirmation, if made by telecopier
or (iii) one business day after being deposited with a
reputable next-day courier, postage prepaid, to the parties as
follows:
(x) if to a Shareholder of Registrable
Securities, at the most current address given by such
Shareholder to the Company in accordance with the pro-
visions of this Section 9(d), which address initially is
the address set forth on its respective signature page
attached hereto; and
<PAGE>
<PAGE>18
(y) if to the Company, initially at Four
Embarcadero Center, Suite 3620, San Francisco, California
94111-4115, Fax: (415) 788-5660, Attention: Chief Execu-
tive Officer, and thereafter at such other address,
notice of which is given in accordance with the
provisions of this Section 9(d);
or to such other address as any party may have furnished to
the other parties in writing in accordance herewith.
(e) Owner of Registrable Securities. The
Company will maintain, or will cause its registrar and trans-
fer agent to maintain, a stock book with respect to the Common
Stock and the Warrants, in which all transfers of Registrable
Securities of which the Company has received notice will be
recorded. The Company may deem and treat the person in whose
name Registrable Securities are registered in the stock book
of the Company as the owner thereof for all purposes,
including without limitation, the giving of notices under this
Agreement.
(f) Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of any
and all successors and assigns of each of the parties and
shall inure to the benefit of each Shareholder of any Regis-
trable Securities. The Company may not assign its rights or
obligations hereunder without the prior written consent of
each Shareholder of any Registrable Securities. Notwith-
standing the foregoing, no transferee shall have any of the
rights granted under this Agreement (i) until such transferee
shall acknowledge its rights and obligations hereunder by a
signed written statement of such transferee's acceptance of
such rights and obligations or (ii) if the transferor notifies
the Company in writing on or prior to such transfer that the
transferee shall not have such rights.
(g) Counterparts. This Agreement may be
executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement
are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, AS APPLIED TO CONTRACTS MADE AND PER-
FORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
<PAGE>
<PAGE>19
(j) Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforce-
able, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invali-
dated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such which
may be hereafter declared invalid, void or unenforceable.
(k) Attorneys' Fees. In any action or pro-
ceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense,
the prevailing party, as determined by the court, shall be
entitled to recover reasonable attorneys' fees in addition to
any other available remedy.
<PAGE>
<PAGE>20
IN WITNESS WHEREOF, each of the parties hereto has
executed this Agreement as of the date first above written.
AMERICAN SHARED HOSPITAL SERVICES
By:_______________________________
Name:
Title:
AIF II, L.P.
By: Apollo Advisors, L.P.
Managing General Partner
By: Apollo Capital Management, Inc.
General Partner
By:___________________________
Its:__________________________
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attn: Pandora Pang
Fax: (310) 201-4198
<PAGE>
<PAGE>21
ANCHOR NATIONAL LIFE INSURANCE COMPANY
By:_______________________________
Name:
Title:
Address for Notice:
1999 Avenue of the Stars, 38th Floor
Los Angeles, California 90067
Attn:
Fax: (310) 772-6150
GENERAL ELECTRIC COMPANY
acting through GE MEDICAL SYSTEMS
By:_______________________________
Name:
Title:
Address for Notice:
20825 Swensen Drive, Suite 100
Waukesha, Wisconsin 53186
Attn: Investment Manager
Fax: (414) 798-4528
<PAGE>
<PAGE>22
GRACE BROTHERS, LTD.
By:_______________________________
Name:
Title:
Address for Notice:
1000 West Diversey Street, Suite 233
Chicago, Illinois 60614
Attn: Bradford Whitmore
Fax: (312) 868-0509
LION ADVISORS, L.P.
on behalf of an account under
management
By: Lion Capital Management, Inc.
General Partner
By:___________________________
Its:__________________________
Address for Notice:
1999 Avenue of the Stars, Suite 1900
Los Angeles, California 90067
Attn: Pandora Pang
Fax: (310) 201-4198
<PAGE>
<PAGE>23
SUN LIFE INSURANCE COMPANY OF AMERICA
By:_______________________________
Name:
Title:
Address for Notice:
1999 Avenue of the Stars, 38th Floor
Los Angeles, California 90067
Attn:
Fax: (310) 772-6150
SUNAMERICA INC.
By:_______________________________
Name:
Title:
Address for Notice:
1999 Avenue of the Stars, 38th Floor
Los Angeles, California 90067
Attn:
Fax: (310) 772-6150
<PAGE>
<PAGE>24
UPCHURCH LIVING TRUST U/A/D 12/14/90
By:_______________________________
Name:
Title:
Address for Notice:
James B. Upchurch
C/O Libra Investments, Inc.
11766 Wilshire Boulevard, Suite 870
Los Angeles, California 90025
Fax: (310) 312-5666
