<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
AMERICAN SHARED HOSPITAL SERVICES
---------------------------------
(Name of Issuer)
Common Shares, without par value
--------------------------------
(Title of Class of Securities)
029595-10-5
-----------
(CUSIP Number)
Richard Magary
American Shared Hospital Services
Four Embarcadero Center, Suite 3620
San Francisco, California 94111-4155
(415) 788-5300
(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.)
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).
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SCHEDULE 13D
CUSIP NO. 029595-10-5 PAGE 2 OF 6 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ernest A. Bates, M.D.
SS# ###-##-####
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E)
/ /
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Citizenship: United States
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,189,000
NUMBER OF -----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,189,000
WITH
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWED BY EACH REPORTING PERSON
1,189,000
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.72%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 029595-10-5 PAGE 3 OF 6 PAGES
ITEM 1 SECURITY AND ISSUER
This statement on Schedule 13D relates to the Common Shares,
without par value (the "Common Shares"), of American Shared
Hospital Services, a California corporation (the "Company"),
with principal executive offices located at Four Embarcadero
Center, Suite 3620, San Francisco, California 94111-4155.
ITEM 2 IDENTITY AND BACKGROUND
This statement is being filed on behalf of Ernest A. Bates,
M.D. ("Dr. Bates"), the Chairman and Chief Executive Officer
of the Company. His business address is c/o American Shared
Hospital Services, Four Embarcadero Center, Suite 3620, San
Francisco, California 94111-4155. Dr. Bates is a citizen of
the United States.
During the last five years, Dr. Bates has neither been
convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) nor been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he 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.
ITEM 3 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On May 17, 1995, the Company issued 184,000 Common Shares to
Dr. Bates in partial consideration of his personal guarantee
of $6,500,000 of new loans made to the Company (or its
affiliates) by a third party lender and his agreement to enter
into an employment contract. No cash payment was made by Dr.
Bates in connection with his receipt of such Common Shares.
ITEM 4 PURPOSE OF TRANSACTION
The securities to which this statement relates were acquired
and are held for investment purposes, and Dr. Bates has no
plans or proposals which relate to or would result in any
transaction, change or event specified in clauses (a) through
(j) of Item 4 of Schedule 13D. Dr. Bates reserves the right
to dispose of the securities to which this statement relates
or to acquire additional Common Shares.
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SCHEDULE 13D
CUSIP NO. 029595-10-5 PAGE 4 OF 6 PAGES
ITEM 5 INTEREST IN SECURITIES OF THE ISSUER
(a) Dr. Bates beneficially owns 1,189,000 Common Shares.
The total outstanding number of Common Shares is
3,870,401 (which excludes immediately exercisable
options and warrants giving the holders the right to
acquire up to an additional 441,000 Common Shares).
This represents 30.72% of the outstanding Common
Shares.
(b) Dr. Bates has the sole power to vote and dispose of
the Common Shares described in Item 5(a) as
beneficially owned by him.
(c) On May 17, 1995, the Company issued 184,000 Common
Shares to Dr. Bates in partial consideration of his
personal guarantee of $6,500,000 of new loans made to
the Company (or its affiliates) by a third party
lender and his agreement to enter into an employment
contract.
(d) Not applicable.
(e) Not applicable.
ITEM 6 CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
On May 17, 1995, the Company completed the repurchase of
approximately 96% of its outstanding Senior Subordinated
Notes, which had been in default since October 1992, for a
combination of cash, Common Shares and Warrants to purchase
Common Shares. The repurchase of the Senior Subordinated
Notes was the culmination of a restructuring of the Company's
indebtedness. Funding for the repurchase was provided by two
secured credit facilities that permit borrowings up to
$6,500,000. Dr. Bates personally guaranteed the credit
facilities. In partial consideration of these guarantees and
Dr. Bates's agreement to enter into an employment contract,
the Company issued to Dr. Bates 184,000 Common Shares.
The Company has announced its intention to call a
shareholders' meeting in 1995 in part to obtain shareholder
approval of the issuance of an additional 1,495,000 Common
Shares (or options to purchase 1,495,000 Common Shares at
$0.01 per share) to Dr. Bates. If the Company's shareholders
approve the proposal, it is expected that Dr. Bates would own
approximately 46.76% of the outstanding Common Shares (not
including immediately exercisable warrants to purchase up to
an additional 539,000 Common Shares and a management stock
option plan covering up to 330,000 Common Shares). The former
holders of approximately 96% of the Company's Senior
Subordinated Notes, who own 819,000 Common Shares
(approximately 21.16% of the outstanding Common Shares), have
agreed to vote such shares in favor of the proposed issuance
of Common Shares to Dr. Bates.
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SCHEDULE 13D
CUSIP NO. 029595-10-5 PAGE 5 OF 6 PAGES
ITEM 7 MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Note Purchase Agreement dated as of May 12,
1995 among SunAmerica (as defined therein),
Apollo (as defined therein), Grace Brothers,
Ltd., Upchurch (as defined therein), the
Company and Dr. Bates.
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.
Dated May 26, 1995 /s/ Ernest A. Bates
____________________________________
(Signature)
Ernest A. Bates, M.D.
_____________________
(Name)
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SCHEDULE 13D
CUSIP NO. 029595-10-5 PAGE 6 OF 6 PAGES
EXHIBITS
1. Note Purchase Agreement dated as of May 12, 1995
among SunAmerica (as defined therein), Apollo (as
defined therein), Grace Brothers, Ltd., Upchurch (as
defined therein), the Company and Dr. Bates.
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Exhibit 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 "Holders"), AMERICAN
SHARED HOSPITAL SERVICES, a California corporation (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 Agree- ment") providing
for a comprehensive restructuring of the Company's obligations including (a) an
exchange offer and certain 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");
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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
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:
SECTION 1. The Note Purchase
Section 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:
<TABLE>
<CAPTION>
Shares of Common
Common Stock
Holder Notes Cash Stock Warrants
- ---------- ---------- ------------- --------- --------
<S> <C> <C> <C> <C>
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
</TABLE>
(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 Company
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
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Delayed Securities so that each such Holder thereafter holds the same
percentage of the outstanding Common Stock (assuming full exercise of the
Warrants)).
Section 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 "Consents"), 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 warrant
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 certificates 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.
SECTION 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:
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"The Consents shall not be effective for any purpose
until immediately prior to the consummation of the Exchange Offer and
shall be returned to the respective Holders who executed such
instruments 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
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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 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.
SECTION 3. Closing Conditions
Section 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 following conditions:
(a) The expiration or termination of any waiting
period (and any extension thereof) applicable to the consummation of the Note
Purchase or any of
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the transactions contemplated hereby (collectively, the "Purchase
Transactions") under any applicable law;
(b) the delivery of a certificate or certificates,
dated the Closing Date and signed by the Chairman of 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 connection 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 preliminary 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 indirectly prohibiting or making materially more costly
the consummation 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;
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(g) as of the Closing Date, each of the employees 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 contained in
Section 4 of this Agreement shall be true and correct at and as of the Closing
Date;
(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 material 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, financial 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 obligations, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business, or required to be disclosed on a balance sheet prepared in
accordance with GAAP, either when considered alone or together with all other
such transactions, and (C) there has been no dividend 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");
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(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 entered
into a registration rights agreement substantially in the form of Exhibit C
hereto (the "Registration Rights Agreement").
Section 3.2 Conditions to Obligations of the Company
(a) the expiration or termination of any waiting
period (and any extension thereof) applicable to the consummation of the Note
Purchase and the Purchase Transactions under any applicable law;
(b) there shall have been no order or preliminary 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 indirectly prohibiting or making materially more costly
the consummation 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
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(g) DVI shall have agreed to enter into the DVI
Facility.
SECTION 4. Representations and Warranties
The Company represents and warrants to each Holder as follows:
Section 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 restrictions 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
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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 securities convertible into or exchangeable for capital stock of the Company
of any subsidiary of the Company, or (iii) contracts, 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 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.
Section 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 subsidiary 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 consummate the transactions contemplated hereby or thereby. This
Agreement is, and as of the Closing Date, each of the Documents 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 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 affecting enforcement of creditor's
rights generally, and by general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).
Section 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.
Section 4.4 No Default
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(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
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.
Section 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.
Section 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 reorganization proceedings except as
contemplated by the Purchase Transactions and the Restructuring Transactions.
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SECTION 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:
Section 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 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
affecting enforcement of creditor's rights generally, and by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity).
Section 5.2 Title to Notes
As of the date hereof, each of the Holders beneficially owns
free and clear of all claims, liens, charges, encumbrances, options and
security interests, to the Notes in the principal amount set forth below:
<TABLE>
<CAPTION>
Principal
Amount of Notes
---------------
<S> <C>
SunAmerica $9,515,000
Apollo $6,500,000
Grace $1,600,000
Upchurch $ 79,000
</TABLE>
Section 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
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being acquired for its own account for investment and without a view to making
a distribution 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 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 original
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.
SECTION 6. Other Agreements
Section 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 therefor 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.
Section 6.2 Supplemental Indentures
The Company hereby agrees to execute and deliver the
Supplemental Indentures.
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Section 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 Additional 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.
Section 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 Agreement pursuant to Section 7.1 hereof. The parties agree to take
such further action and to deliver or cause to be delivered 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 request
for the purpose of carrying out this Agreement and the agreements and
transactions contemplated hereby.
SECTION 7. Miscellaneous
Section 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;
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(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.
Section 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 prior written consent of each of the other parties, which
consent may be granted or withheld in each such party's sole discretion;
provid- ed, 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 Related Person shall agree to be bound by the terms of this Agreement.
"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, investment advisor, or principal thereof, is such Holder,
an affiliate of such Holder or an investment manager, investment advisor or
principal of such Holder or affiliate.
Section 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
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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.
Section 7.4 Amendment and Waiver
This Agreement may be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may be given,
provided that the same are in writing and signed by the parties hereto.
Section 7.5 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.
Section 7.6 Headings
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 7.7 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 PERFORMED WITHIN THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
Section 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.
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Section 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 restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
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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: /s/ Ernest A. Bates
-----------------------------------
Its: Chairman and CEO
AIF II, L.P.
By: Apollo Advisors, L.P.
Managing General Partner
By: Apollo Capital Management, Inc.
General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Its: V.P.
----------------------------------
ANCHOR NATIONAL LIFE INSURANCE
COMPANY
By: /s/ Peter McMillan
-----------------------------------
/s/ Ernest A. Bates
--------------------------------------
Ernest A. Bates, M.D.
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GRACE BROTHERS, LTD.
By: /s/ Bradford Whitmore
-----------------------------------
Its: General Partner
----------------------------------
LION ADVISORS, L.P.
on behalf of an account
under management
By: Lion Capital Management, Inc.
General Partner
By: /s/ Michael D. Weiner
-----------------------------------
Its: V.P.
----------------------------------
SUN LIFE INSURANCE COMPANY OF AMERICA
By: /s/ Peter McMillan
-----------------------------------
SUNAMERICA INC.
By: /s/ Peter McMillan
-----------------------------------
Its:
----------------------------------
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UPCHURCH LIVING TRUST U/A/D 12/14/90
By: /s/ James B. Upchurch
-----------------------------------
Its: Trustee
20
