<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
American Shared Hospital Services
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable.
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not applicable.
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
Not applicable.
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable.
- --------------------------------------------------------------------------------
(5) Total fee paid:
Not applicable.
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
Not applicable.
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Not applicable.
- --------------------------------------------------------------------------------
(3) Filing Party:
Not applicable.
- --------------------------------------------------------------------------------
(4) Date Filed:
Not applicable.
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<PAGE> 2
AMERICAN SHARED HOSPITAL SERVICES
FOUR EMBARCADERO CENTER, SUITE 3620
SAN FRANCISCO, CALIFORNIA 94111-4155
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 26, 1997
TO THE SHAREHOLDERS OF AMERICAN SHARED HOSPITAL SERVICES:
NOTICE IS HEREBY GIVEN that, pursuant to a call of the Board of Directors,
the 1997 Annual Meeting (the "Meeting") of Shareholders of American Shared
Hospital Services, a California corporation (the "Company"), will be held at the
American Stock Exchange, 86 Trinity Place, 13th Floor Board Room, New York, New
York on Friday, September 26, 1997 at 10:00 a.m. (Eastern time) to consider and
act upon the following matters, all as set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS. To elect the following seven nominees to the
Board of Directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and have qualified.
<TABLE>
<S> <C>
Ernest A. Bates, M.D. Stanley S. Trotman, Jr.
Willie R. Barnes Augustus A. White, III, M.D.
Matthew Hills Charles B. Wilson, M.D.
John F. Ruffle
</TABLE>
2. OTHER BUSINESS. To transact such other business and to consider and take
action upon any and all matters that may properly come before the Annual Meeting
and any and all adjournments thereof.
The Board of Directors knows of no matters, other than those set forth in
paragraph (1) above, that will be presented for consideration at the Annual
Meeting.
The Board of Directors has fixed the close of business on August 19, 1997
as the Record Date for the determination of shareholders entitled to vote at the
Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED AS PROMPTLY AS
POSSIBLE. THE PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING. IN ORDER TO FACILITATE THE PROVISION OF
ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER YOU PLAN TO ATTEND
THE MEETING IN PERSON.
By Order of the Board of Directors
/s/ WILLIE R. BARNES
--------------------
Willie R. Barnes
Corporate Secretary
Dated: August 19, 1997
San Francisco, California
<PAGE> 3
AMERICAN SHARED HOSPITAL SERVICES
FOUR EMBARCADERO CENTER, SUITE 3620
SAN FRANCISCO, CALIFORNIA 94111-4115
------------------------
PROXY STATEMENT
1997 ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 26, 1997
------------------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders of American Shared
Hospital Services, a
California corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors for use at the 1997 Annual Meeting
of Shareholders scheduled to be held on Friday, September 26, 1997 and at any
adjournment or adjournments thereof (the "Meeting"). It is anticipated that this
Proxy Statement and the Proxy will first be sent to shareholders on or about
August 26, 1997.
The matters to be considered and voted upon at the Meeting will be:
(1) To elect seven persons to the Board of Directors to serve until
the next Annual Meeting of Shareholders and until their successors are
elected and have qualified.
(2) To transact such other business as may properly be brought before
the Meeting and any and all adjournments thereof.
Only shareholders of record at the close of business on August 19, 1997
(the "Record Date") are entitled to notice of and to vote at the Meeting.
REVOCABILITY OF PROXIES
A proxy for use at the Meeting is enclosed. Any shareholder who executes
and delivers such proxy may revoke it at any time prior to its use by filing
with the Secretary of the Company either written instructions revoking such
proxy or a duly executed proxy bearing a later date. Written notice of the death
of the person executing a proxy, before the vote is counted, is tantamount to
revocation of such proxy. A proxy may also be revoked by attending the Meeting
and voting in person.
SOLICITATION OF PROXIES
This proxy solicitation is being made by the Board of Directors of the
Company. The expense of the solicitation will be paid by the Company. To the
extent necessary to assure sufficient representation at the Annual Meeting,
proxies may be solicited by any appropriate means by directors, officers,
regular employees of the Company and the stock transfer agent for the Common
Shares, who will not receive any additional compensation therefor. The Company
will request that banks, brokers and other fiduciaries solicit their customers
who own beneficially the Common Shares listed of record in names of nominees
and, although there is no formal arrangement to do so, the Company will
reimburse such persons the reasonable expenses of such solicitation. In
addition, the Company may pay for and utilize the services of individuals or
companies not regularly employed by the Company in connection with the
solicitation of proxies, if the Board of Directors of the Company determines
that this is advisable.
OUTSTANDING SECURITIES
The Board of Directors has fixed August 19, 1997 as the Record Date for the
determination of shareholders entitled to notice of, and to vote at, the
Meeting. At the close of business on the Record Date, there were outstanding and
entitled to vote 4,769,384 Common Shares. The Common Shares are the only class
of securities entitled to vote at the Meeting.
<PAGE> 4
VOTE REQUIRED AND VOTING PROCEDURES
Each holder of Common Shares will be entitled to one vote, in person or by
proxy, for each share standing in its name on the books of the Company as of the
Record Date for the Meeting on each of the matters duly presented for vote at
the Meeting. However, in connection with the election of directors, shares are
permitted to be voted cumulatively, if (i) a shareholder present at the Annual
Meeting has given notice at the Annual Meeting, prior to the voting, of such
shareholder's intention to vote its shares cumulatively and (ii) the names of
the candidates for whom such shareholder desires to cumulate votes have been
placed in nomination prior to the voting. If a shareholder has given such
notice, all shareholders may cumulate their votes for candidates in nomination.
Cumulative voting allows a shareholder to give one nominee as many votes as is
equal to the number of directors to be elected, multiplied by the number of
shares owned by such shareholder or to distribute votes on the same principle
between two or more nominees. In the election of directors, the seven candidates
receiving the highest number of votes will be elected directors of the Company.
Discretionary authority to cumulate votes is hereby solicited by the Board of
Directors.
All outstanding shares of the Company's Common Stock represented by
properly executed and unrevoked proxies received in time for the Meeting will be
voted. A shareholder may, with respect to the election of directors (i) vote for
the election of all seven nominees named herein as directors, (ii) withhold
authority to vote for all such director nominees or (iii) vote for the election
of all such director nominees other than any nominee(s) with respect to whom the
shareholder withholds authority to vote by so indicating in the appropriate
space on the proxy. Withholding authority to vote for a director nominee will
not prevent such director nominee from being elected. Shares will be voted as
instructed in the accompanying proxy on each matter submitted to shareholders.
If no instructions are given, the shares will be voted for the election of all
seven nominees named herein as directors.
A proxy submitted by a shareholder may indicate that all or a portion of
the shares represented by such proxy are not being voted by such shareholder
with respect to a particular matter. This could occur, for example, when a
broker is not permitted to vote stock held in street name on certain matters in
the absence of instructions from the beneficial owner of the stock. The shares
subject to any such proxy which are not being voted with respect to a particular
matter (the "non-voted shares") will be considered shares not present and
entitled to vote on such matter, although such shares may be considered present
and entitled to vote for other purposes and will count for purposes of
determining the presence of a quorum. In the election of directors, the seven
nominees receiving the highest number of votes of shares of Common Stock
represented in person or by proxy at the Meeting and entitled to vote on such
matter will be elected directors of the Company. Accordingly, non-voted shares
with respect to such matters will not affect the outcome of the election of
directors.
In connection with the solicitation by the Board of Directors of proxies
for use at the Annual Meeting, the Board of Directors has designated Ernest A.
Bates, M.D and Richard Magary as proxies. Common Shares represented by all
properly executed proxies will be voted at the Annual Meeting in accordance with
the instructions specified thereon. If no instructions are specified, the Common
Shares represented by any properly executed proxy will be voted FOR the election
of the seven nominees for the Board of Directors named herein.
The Board of Directors is not aware of any matters that will come before
the Annual Meeting other than as described above. However, if such matters are
presented, the named proxies will, in the absence of instructions to the
contrary, vote such proxies in accordance with the judgment of such named
proxies with respect to any such other matter properly coming before the Annual
Meeting.
A majority of the Common Shares outstanding on the Record Date must be
represented in person or by proxy at the Annual Meeting in order to constitute a
quorum for the transaction of business. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of the Common Shares represented
in person or by proxy and entitled to vote (which shares voting affirmatively
also constitute at least a majority of the required quorum) is required for the
approval of the election of Directors.
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<PAGE> 5
The Board of Directors has appointed Geraldine Zarbo of American Stock
Transfer & Trust Company, the registrar and transfer agent for the Common
Shares, or her designee, as the Inspector of Elections for the Annual Meeting.
The Inspector of Elections will determine the number of Common Shares
represented in person or by proxy at the Annual Meeting, whether a quorum
exists, the authenticity, validity and effect of proxies and will receive and
count the votes. The election of directors will not be by ballot unless a
shareholder demands election by ballot at the Annual Meeting before the voting
begins.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Shares as of August 15, 1997, of (i) each
person known to the Company to own beneficially 5% or more of the Common Shares,
(ii) each director of the Company, (iii) the chief executive officer and each
other executive officer named in the Summary Compensation Table, and (iv) all
directors and executive officers as a group.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
COMMON SHARES OWNED BENEFICIALLY
-----------------------------------------------
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(4) PERCENT OF CLASS(9)
- ------------------------------------------------------- ----------------------- -------------------
<S> <C> <C>
Total Number of Shares 6,984,700(5) 100.0%
Ernest A. Bates, M.D.(1) 2,342,642(6) 37.4%
SunAmerica Inc.(2) 128,066(2) 2.7%
SunAmerica Life Insurance Company(2) 277,473(2) 5.7%
Anchor National Life Insurance Company(2) 307,219(2) 6.3%
Lion Advisors, L.P. 384,095(7) 7.9%
1301 Avenue of the Americas
New York, NY 10019
AIF II, L.P. 170,752(7) 3.6%
c/o Apollo Advisors, L.P.
1999 Avenue of the Stars
Los Angeles, CA 90071
General Electric Company 225,000(8) 4.7%
c/o GE Medical Systems
20825 Swenson Drive
Waukesha, WI 53186
Willie R. Barnes(1) 11,000(6) *
Matthew Hills(1)(3) 6,915(6) *
John F. Ruffle(1) 84,711(6) 1.8%
Stanley S. Trotman, Jr.(1)(3) 108,295(6) 2.3%
Augustus A. White, III, M.D.(1) 17,992(6) *
Charles B. Wilson, M.D.(1) 9,600(6) *
Craig K. Tagawa(1) 137,600(6) 2.8%
Senior Vice President
Chief Financial Officer
David Neally(1) 54,450(6) 1.1%
Senior Vice President -- Operations
Gregory Pape(1) 61,500(6) 1.3%
Senior Vice President -- Sales and Marketing
All Directors & Executive Officers as a Group (11
persons) 2,918,005(6) 44.1%
</TABLE>
- ---------------
* Less than 1%
3
<PAGE> 6
(1) The address of each such individual is c/o American Shared Hospital
Services, Four Embarcadero Center, Suite 3620, San Francisco, California
94111-4155.
(2) Based on information provided to the Company by SunAmerica Inc. and its
direct and indirect subsidiaries, SunAmerica Life Insurance Company
(formerly known as Sun Life Insurance Company of America) and Anchor
National Life Insurance Company as of March 27, 1997, such entities then
owned beneficially 712,758 Common Shares, including immediately exercisable
Warrants to acquire 169,264 Common Shares. The address of each Beneficial
Owner is c/o SunAmerica Inc., 1 SunAmerica Center, Los Angeles, CA 90067.
(3) Mr. Hills and Mr. Trotman were elected to the Board of Directors effective
February 16, 1996.
(4) Each person directly or indirectly has sole voting and investment power with
respect to the shares listed under this column as being owned by such
person.
(5) Represents the aggregate of issued and outstanding Common Shares plus Common
Shares that all persons or groups of persons are entitled to acquire upon
the exercise of options or warrants within 60 days after August 15, 1997.
(6) Includes shares underlying options that are currently exercisable or which
will become exercisable within 60 days following August 15, 1997: Dr. Bates,
1,495,000; Mr. Barnes, 10,000 shares; Mr. Hills, 5,333 shares; Mr. Ruffle,
8,000 shares; Mr. Trotman, 5,333 shares; Dr. White, 12,000 shares; Dr.
Wilson, 9,600 shares; Mr. Tagawa, 125,000 shares; Mr. Neally, 53,350 shares;
Mr. Pape, 61,000 shares; and Directors and Executive Officers as a group,
1,844,616 shares.
(7) Based on information provided to the Company by Lion Advisors, L.P. ("Lion")
and AIF II, L.P. ("AIF II") as of March 17, 1997, such entities then owned
beneficially 554,847 Common Shares, including immediately exercisable
Warrants to acquire 115,629 Common Shares. The managing general partner of
AIF II is Apollo Advisors, L.P. ("Advisors"). Advisors and Lion are
affiliates. Lion beneficially holds the indicated securities for an
investment account under managment over which Lion has investment,
dispositive and voting power. The Company does not believe that Lion and AIF
II are affiliates of the Company under the Act.
(8) Represents Common Shares acquired upon exercise of Warrants including 97,853
shares on August 15, 1997 and 127,147 shares on September 26, 1996.
(9) Shares that any person or group of persons is entitled to acquire upon the
exercise of options or warrants within 60 days after August 15, 1997, are
treated as issued and outstanding for the purpose of computing the percent
of the class owned by such person or group of persons but not for the
purpose of computing the percent of the class owned by any other person.
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Company's Bylaws provide that there shall be not fewer than six nor
more than 11 directors and the exact number shall be fixed from time to time by
a resolution of the Board of Directors. The number of directors currently is
fixed at seven.
The Board of Directors is proposing the persons named below for election to
the Board of Directors. Each of the persons identified below will be nominated
for election to serve until the next Annual Meeting of Shareholders and until
their successors shall be elected and qualified. Votes will be cast pursuant to
the enclosed proxy in such a way as to effect the election of each of the
persons named below or as many of them as possible under applicable voting
rules. If a nominee shall be unable or unwilling to accept nomination for
election as a director, it is intended that the proxy holders will vote for the
election of such substitute nominee, if any, as shall be designated by the Board
of Directors. Each of the nominees named below has notified the Board of
Directors that, if elected, he is willing to serve as a Director.
4
<PAGE> 7
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED BELOW. PROXIES RETURNED TO THE COMPANY WILL BE VOTED "FOR" THE NOMINEES
NAMED BELOW UNLESS OTHERWISE INSTRUCTED.
Set forth below is certain information regarding each of the nominees.
ERNEST A. BATES, M.D. has been a director, the Chairman of the Board and
Chief Executive Officer of the Company since it was incorporated in 1983. He
founded the Company's predecessor limited partnership in 1980. Dr. Bates is 60
years old.
WILLIE R. BARNES has been a director and Corporate Secretary of the Company
since 1984. He has been a partner in the law firm of Musick Peeler & Garrett
since June 1992, was in solo practice from February 1992 until June 1992, was a
partner in the law firm of Katten Muchin Zavis & Weitzman from March 1991 until
January 1992, was a partner in the law firm of Wyman Bautzer Kuchel & Silbert
from April 1989 until its dissolution effective March 14, 1991, and was a
partner in the law firm of Manatt Phelps Rothenberg & Phillips from April 1979
until March 1989. He is a Director of Franchise Finance Corporation of America.
Mr. Barnes is 65 years old.
MATTHEW HILLS became a director of the Company effective February 16, 1996
and has been the Chief Planning Officer and a Senior Vice President of The
Berkshire Group, a healthcare and financial services company, since 1993. From
1990 to 1993, Mr. Hills was a Manager and Consultant at The LEK Partnership.
Prior to joining LEK, Mr. Hills was an Associate in the Corporate Finance
Department at Drexel Burnham Lambert from 1987 to 1990. He is also a Director of
KBro Linen Systems. Mr. Hills graduated from Brandeis University in 1981 and
from Harvard Business School in 1987. Mr. Hills was nominated to serve on the
Board of Directors by certain shareholders who were participants in the Notes
Repurchase. Mr. Hills is 37 years old.
JOHN F. RUFFLE was elected a Director of the Company on May 18, 1995. He
retired in 1993 as Vice-Chairman of the Board and a Director of J.P. Morgan &
Co. Incorporated and Morgan Guaranty Trust Co. of New York. He also is a
Director of Bethlehem Steel Corporation; a Director of J.P.M. Series Trust II; a
Director of Trident Corp.; a Director of Wackenhut Corrections Corp; and a
Trustee of The Johns Hopkins University. He is a graduate of The Johns Hopkins
University, with an M.B.A. in finance from Rutgers University, and is a
Certified Public Accountant. Mr. Ruffle is 60 years old.
STANLEY S. TROTMAN, JR., became a director of the Company effective
February 16, 1996. He has been a Managing Director with the Health Care Group of
PaineWebber, an investment banking firm, since 1995 following the consolidation
of Kidder, Peabody, also an investment banking firm, with PaineWebber, and had
previously co-directed Kidder, Peabody's Health Care Group since April 1990.
Formerly he had been head of the Health Care Group at Drexel Burnham Lambert,
Inc. where he had been employed for approximately 22 years. He received his
undergraduate degree from Yale University in 1965 and holds an M.B.A from
Columbia Business School in 1967. Mr. Trotman is 54 years old.
AUGUSTUS A. WHITE III, M.D. has been a director of the Company since 1990.
He has been a Professor of Orthopaedic Surgery at Harvard Medical School since
1978. He was Orthopaedic Surgeon-in-Chief at Beth Israel Hospital, Boston, MA.,
from 1978 to 1991. He also is a director of Orthologic Corporation. Dr. White is
61 years old.
CHARLES B. WILSON, M.D. has most recently been a director of the Company
since June 1993. He also was a director of the Company from March 1984 until
March 1989. He has been a Professor and Director of the Brain Tumor Research
Foundation at the University of California Medical Center, San Francisco, since
1968, and from 1968 until April 1, 1994 and March 8, 1996 to present, has held
the position of Chief of its Department of Neurosurgery. Dr. Wilson is 67 years
old.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six (6) meetings during 1996.
During 1996, Mr. Barnes, Dr. White and Dr. Wilson each attended fewer than 75%
of the aggregate number of meetings of both the
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<PAGE> 8
Board of Directors and of the Committees of the Board on which such Director
served during the year. Mr. Hills and Mr. Trotman were elected to the Board of
Directors in February 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation, Stock Option and Nominating
Committees, each of which is described below.
Members of the Audit Committee include Mr. Ruffle (Chairman), Mr. Hills and
Dr. White. The purpose of the Audit Committee is to review the financial records
of the Company, to recommend to the Board of Directors the appointment of
independent auditors and to review the reports of such auditors. During 1996,
the Audit Committee held three meetings.
Members of the Compensation Committee include Dr. White (Chairman), Mr.
Barnes and Dr. Wilson. The function of the Compensation Committee is to
recommend to the Board of Directors the compensation of the Company's executive
officers. The Compensation Committee did not meet during 1996.
Dr. Bates (Chairman) and Mr. Ruffle are members of the Stock Option
Committee. The purpose of the Stock Option Committee is to administer the
Company's 1984 Stock Option Plan and 1995 Stock Option Plan, and to determine
recipients of awards pursuant to such plans and the terms of such awards. No
member of the Stock Option Committee received a discretionary grant or award
under an option plan of the Company while serving on such committee or during
the year preceding such service. There were no meetings of the Stock Option
Committee during 1996.
Members of the Nominating Committee include Mr. Trotman (Chairman) and Mr.
Ruffle. The purpose of the Nominating Committee is to recommend candidates for
election to the Board of Directors. The Nominating Committee did not meet during
1996. The Nominating Committee will consider nominations submitted by
shareholders. A shareholder who wishes to have a nomination for director
considered by such committee must submit the name of the nominee and a brief
description of such person's professional background. Such information must be
delivered in writing to the Company, attention Secretary, at its principal
executive offices on or prior to April 1 of a given year to be considered in
connection with the annual meeting to be held in such year.
DIRECTOR COMPENSATION
During 1996 and 1995, non-employee directors were scheduled to receive an
annual retainer fee of $5,000 each. The non-employee directors agreed to defer
payment of the 1996 and 1995 retainer fees until late 1996 to assist the Company
with its cash flow. The Board also approved the election by a director to
receive a portion of his 1995 and/or 1996 retainer fees in Common Shares in an
amount approximately equalling such fees otherwise payable in cash. Non-employee
directors also were entitled in 1995 and 1996 to receive $1,000 for attendance
in person at each regular and special meeting of the Board of Directors, as well
as an automatic grant of Options from the Company's 1995 Stock Option Plan, to
acquire up to 4,000 common shares annually of the Company's common stock at the
market price on date of grant, until a Director has options for a total of
12,000 shares in all Company plans. In addition, non-employee directors who were
members of a committee of the Board of Directors were entitled to receive $200
for attendance in person at each committee meeting. Non-employee directors are
not entitled to any fee for Board of Directors or committee meetings held by
conference telephone at which they are not present in person. Of the six Board
meetings held during 1996, four were regular meetings which directors attended
in person, and two were special meetings which were held by conference
telephone. Non-employee directors also received reimbursement of expenses
incurred in attending meetings. No payment is made for attendance at meetings by
any director who is an employee of the Company.
Non-employee directors will continue in 1997 to receive $1,000 for
attendance in person at each regular and special meeting of the Board of
Directors, and $200 for attendance in person at each committee meeting, as well
as an automatic grant of Options from the Company's 1995 Stock Option Plan, to
acquire up to 4,000 common shares annually of the Company's common stock at the
market price on date of grant, until a
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<PAGE> 9
Director has options for a total of 12,000 shares in all Company plans. The
Board of Directors currently is reviewing its policy with respect to Annual
Directors Retainer Fees for 1997.
EXECUTIVE OFFICERS
Executive Officers
The following table provides current information, concerning those persons
who serve as executive officers of the Company. The executive officers were
appointed by the Board of Directors and serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- ----------------------------------------------
<S> <C> <C>
Ernest A. Bates, M.D. 60 Chairman of the Board, Chief Executive
Officer, acting President and Chief Operating
Officer
Craig K. Tagawa 44 Senior Vice President -- Chief Financial
Officer
Richard Magary 56 Senior Vice President -- Administration,
Assistant Secretary
David Neally 45 Senior Vice President -- Operations
Gregory Pape 41 Senior Vice President -- Sales and Marketing
</TABLE>
ERNEST A. BATES, M.D., founder of the Company, has served in the positions
listed above since the incorporation of the Company, except for the periods May
1, 1991 through November 6, 1992 and February 1989 through August 1989, during
which time Dr. Bates did not serve in the capacity of President and Chief
Operating Officer. Dr. Bates is a graduate of The Johns Hopkins University and
the University of Rochester School of Medicine. He is currently an Assistant
Clinical Professor of Neurosurgery at the University of California Medical
Center at San Francisco, and a member of the Board of Trustees of The Johns
Hopkins University and the University of Rochester.
CRAIG K. TAGAWA has served as Chief Financial Officer since May 1996. Mr.
Tagawa also served as Chief Financial Officer from January 1992 through October
1995. Previously a Vice President in such capacity, Mr. Tagawa became a Senior
Vice President on February 28, 1993. He is also the Chief Executive Officer of
GK Financing, LLC. From September 1988 through January 1992, Mr. Tagawa served
in various positions with the Company. From 1982 through August 1988, Mr. Tagawa
served as Vice President of Finance and Controller of Medical Ambulatory Care,
Inc., the Dialysis division of National Medical Enterprises, Inc. (now Tenet
Healthcare Corporation), an owner and operator of hospitals and other health
care businesses. Mr. Tagawa received his Undergraduate degree from the
University of California at Berkeley and his M.B.A from Cornell University.
RICHARD MAGARY has served as Senior Vice President -- Administration since
February 28, 1993 and Assistant Secretary since 1985. From April 1987 through
February 1993, Mr. Magary served as a Vice President in the same capacity. From
1982 through March 1987, he served as Chief Financial Officer of the Company and
its predecessor. Mr. Magary is a graduate of the University of San Francisco.
DAVID NEALLY has served as Senior Vice President -- Operations since May
1994. From January 1993 through May 1994, Mr. Neally was a Zone Vice President
for Operations. Prior to January 1993, Mr. Neally had served in a variety of
sales and operations positions since joining CuraCare in 1980. Mr. Neally
received his undergraduate degree from John Wood College in Quincy, Illinois and
is also a graduate of St. Mary's School of Cardiopulmonary Technology in Quincy,
Illinois.
GREGORY PAPE has served as Senior Vice President -- Sales and Marketing
since June 1994. From January 1993 through June 1994, Mr. Pape was a Zone Vice
President -- Sales and Marketing for the Company. Mr. Pape served in the
capacity of Regional Sales Manager for the Company for the period from March
1991 through January 1993. From September 1989 through February 1991, Mr. Pape
was a Regional Sales Manager for Medical Imaging Corporation of America, Inc.
Mr. Pape earned his undergraduate degree at the University of Miami, with
postgraduate work in law at the University of Dayton, Ohio.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company for the
fiscal years ending December 31, 1994, December 31, 1995 and December 31, 1996
and paid in those years for services rendered in all capacities during 1994,
1995 and 1996, respectively, to the Chief Executive Officer and each executive
officer other than the Chief Executive Officer who served as an officer at
December 31, 1996 and earned cash compensation of $100,000 or more during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS(3)
ANNUAL COMPENSATION ------------
-------------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING
POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS
- -------------------------- ---- -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Ernest A. Bates, M.D. 1996 $223,412 -- -- --
Chairman of the Board, 1995 $223,253 -- -- 1,495,000
Chief Executive Officer 1994 $225,218 -- -- --
Craig K. Tagawa, 1996 $165,747 -- -- --
Senior Vice President, 1995 $129,328 $26,003 -- 90,000
Chief Financial Officer 1994 $119,426 -- -- --
David Neally 1996 $101,000 $38,500 -- --
Senior Vice President 1995 $104,654 $48,076 -- 45,000
Operations 1994 $ 91,000 $17,322 -- --
Gregory Pape 1996 $278,895(4) -- -- --
Senior Vice President 1995 $265,745(5) -- -- 45,000
Sales and Marketing 1994 $238,186(6) -- -- --
</TABLE>
- ---------------
(1) Each amount under this column includes amounts accrued in 1994, 1995 and
1996 that would have been paid to such persons in such years, except that
such amounts were instead deferred pursuant to the Retirement Plan for
Employees of American Shared Hospital Services and CuraCare, a defined
contribution plan and ASHS' Flexible Benefit Plan, a defined contribution
plan. Both plans are available to employees of the Company generally.
(2) The Company has determined that, with respect to the executive officers
named in the Summary Compensation Table, the aggregate amount of other
benefits does not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported in the Summary Compensation Table as paid to such
executive officer in the relevant year.
(3) No restricted stock awards or long-term incentive plan payouts were made to
the executive officers named in the Summary Compensation Table during the
years listed in the Summary Compensation Table.
(4) Includes Sales Commissions of approximately $82,000 earned in 1995 and paid
in 1996 and $107,000 earned and paid in 1996.
(5) Includes sales commissions of approximately $83,000 earned in 1994 and paid
in 1995 and approximately $92,000 earned and paid in 1995.
(6) Includes sales commissions of approximately $80,000 earned in 1993 and paid
in 1994 and $68,000 earned and paid in 1994.
OPTION GRANTS IN LAST FISCAL YEAR
"The Options Grants for the Fiscal Year" Table has been omitted because no
options were granted during 1996 to the Company's executive officers named in
the Summary Compensation Table.
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<PAGE> 11
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
The "Long-Term Incentive Plan Awards" ("LTIP Awards") table has been
omitted because no LTIP Awards were made during 1996 to the Company's executive
officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized upon exercise of such options
during 1996, by the Company's executive officers named in the Summary
Compensation Table. The following table also sets forth the number of shares
underlying exercisable and unexercisable options held by such executive officers
on December 31, 1996.
1984 AND 1995 STOCK OPTION PLANS
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ernest A. Bates, M.D. -- -- 1,495,000 -- $ 2,694,738 --
Craig K. Tagawa -- -- 125,000 -- $ 23,437 --
David Neally -- -- 51,700 3,300 $ 9,693 $ 618
Gregory Pape -- -- 57,000 8,000 $ 10,688 $ 1,500
</TABLE>
- ---------------
(1) This amount is calculated by multiplying the number of Common Shares
underlying the options at December 31, 1996 by the market price per Common
Share on such date less the option exercise price.
EMPLOYMENT AGREEMENTS
The Company had no employment contracts with its directors or executive
officers named in the Summary Compensation Table in 1996.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The following Report of the Board of Directors shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
This Report of the Board of Directors describes the Company's method of
compensating its executive officers, and describes the basis on which 1996
compensation was paid to such executive officers, including those named in the
Summary Compensation Table.
The Board of Directors determined that compensation paid in 1996 by the
Company to its Chief Executive Officer and other executive officers would be
based on policies in effect in recent prior years. As a result, it was
unnecessary for the Compensation Committee to meet, and it did not meet, during
1996.
The Company's compensation program seeks to establish compensation that is
competitive in both the healthcare industry and among entrepreneurial,
growth-oriented companies in order to attract and retain high quality employees.
Compensation is linked to each employee's level of responsibility and personal
achievements with respect to operational and financial goals established by the
Chief Executive Officer and the Board of Directors. Depending on the individual
officer's area of responsibility, such goals may include new business and
revenue acquisition, operating expense reduction and control, operating
efficiencies, etc. In addition, the
9
<PAGE> 12
compensation system seeks to develop and encourage employee ownership of the
Company's stock through stock options.
The primary component of executive compensation for the Company in 1996 was
base salary, except in the case of the Senior Vice President -- Sales and
Marketing where sales commissions were a substantial component of compensation
and are included under "salary" in the table above. Discretionary bonuses may be
paid, based on a formula, if financial and other results of the individual
executive's area of responsibility meet or exceed financial and operational
targets established at the beginning of the fiscal year. No bonuses have been
paid by the Company during the last three fiscal years, except in the case of
bonuses paid pursuant to pre-established formulae based on goals and targets of
a specific business area.
Base salary was established for the Chief Executive Officer and other
executive officers with the assistance of an outside consulting firm in 1991.
Such compensation was designed to fall in the mid-range for the relevant
executive position or compensation paid by a group of entrepreneurial,
growth-oriented companies believed by the Company to be comparable in their
stage of development and business condition, based on information provided by
the independent compensation consulting organization. The companies surveyed
were not identical to those reflected in the performance graph set forth in this
Proxy Statement. The compensation of most of the Company's senior executives,
including the Chief Executive Officer, was reduced by up to 10% during the
period from June 1991 through March 1992. Such executive officers were
compensated throughout 1993 at the level in effect prior to the reductions. Any
other increases in base compensation during the past three fiscal years have
been made only to reflect the increased responsibilities of the particular
executive officer. The compensation of certain of the Company's executive
officers again was reduced, beginning in February 1994, by 5%.
In addition to base compensation, the Company has used grants of stock
options to retain senior executives and to motivate them to improve long-term
stock market performance. The number of options granted in the past was
determined by reference to the level of responsibility of the particular
executive in the Company and such executive's proposed role in the Company's
future operations. In addition, during 1995 the Shareholders approved a grant of
options to acquire 1,495,000 Common Shares at an initial exercise price of $0.01
per share to the Company's Chairman and Chief Executive Officer, in
consideration of his continued service to the Company and his personal guarantee
of $6,500,000 of indebtedness of the Company.
BOARD OF DIRECTORS
Ernest A. Bates, M.D. Chairman
Willie R. Barnes
Matthew Hills
John F. Ruffle
Stanley S. Trotman, Jr.
Augustus A. White III, M.D.
Charles B. Wilson, M.D.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 6, 1994, the Company entered into settlement agreements with each
of Elekta Instruments, Inc. ("Elekta"), the manufacturer of the Gamma Knife, and
NME Hospitals, Inc., d/b/a USC University Hospital ("USC Hospital"), the lessor
of a Gamma Knife, to resolve disputes arising out of the Company's inability to
make a required progress payment under the agreement to purchase such Gamma
Knife. The settlement agreements required that the Company terminate its
original agreement to purchase the Gamma Knife from Elekta and to lease the
Gamma Knife to USC Hospital. Further conditions to execution of the settlement
agreements included that Dr. Bates, the Company's Chairman and Chief Executive
Officer, enter into a purchase agreement and lease agreement with Elekta and USC
Hospital, respectively, substantially identical to the respective terminated
agreements.
Pursuant to the new purchase agreement, Dr. Bates was entitled to purchase
the Gamma Knife from Elekta for an aggregate purchase price of $2,900,000 plus
sales tax. Dr. Bates obtained financing for the Gamma Knife purchase from an
unaffiliated third party. Dr. Bates' lender financed the total purchase price,
less $290,000 advanced by the Company, pursuant to an interest bearing
installment note and security
10
<PAGE> 13
agreement. The Company advanced $290,000 of the purchase price, to be repaid by
Dr. Bates over the term of the new lease agreement, pursuant to a promissory
note bearing interest at 6% per annum and repayable over 60 months.
The Company and Dr. Bates entered into an option agreement entitling the
Company to purchase the Gamma Knife from Dr. Bates for an amount equal to the
remaining debt obligations associated with the Gamma Knife plus costs and
losses, if any, incurred by the Chief Executive Officer. This option was
assigned to GKF and exercised on February 3, 1996. In connection with the
exercise of the option by GKF, the interest bearing installment note was
cancelled.
On October 6, 1995, the Company entered into the Option Agreement with its
Chairman and Chief Executive Officer. Under the Option Agreement, Dr. Bates was
granted a ten-year option to purchase 1,495,000 Common Shares for an initial
exercise price of $0.01 per share. In addition, on May 17, 1995, as part of the
Notes Repurchase, the Company issued 184,000 Common Shares to Dr. Bates in
partial consideration of his personal guarantee of $6,500,000 of indebtedness of
the Company.
Willie R. Barnes, the Secretary and a director of the Company, is a partner
in the law firm of Musick, Peeler & Garrett. That law firm performed legal
services for the Company in 1996. The management of the Company is of the
opinion that the fees paid to Mr. Barnes' law firm are comparable to those fees
that would have been paid for comparable legal services from a law firm not
affiliated with the Company. Mr. Barnes served during 1996 on the Compensation
Committee of the Board of Directors.
Stanley S. Trotman, Jr., a director of the Company, is a Managing Partner
of PaineWebber, Inc., an investment banking firm. That firm performed services
for the Company during late 1996 and early 1997 in connection with a proposed
business combination and may perform similar services in the future. The
management of the Company is of the opinion that the Company's fee arrangements
with PaineWebber are comparable to the fees charged for comparable investment
banking services by firms not affiliated with the Company.
COMPLIANCE WITH SECTION 16(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Reports filed under the Exchange Act and received by the Company on or
after January 1, 1996, indicate that during 1996 directors, officers and 10%
shareholders of the Company filed all required reports within the periods
established by applicable rules.
11
<PAGE> 14
PERFORMANCE GRAPH, TOTAL RETURN TO SHAREHOLDERS
The following graph and table compare cumulative total shareholder return
on the Company's Common Shares with the cumulative total return of the Standard
& Poor's 500 Stock Index and a group of peer companies in the diagnostic imaging
industry during the five years ended December 31, 1996.
[GRAPH]
INDEPENDENT AUDITORS
The Company's consolidated financial statements have been audited by Ernst
& Young or its predecessor from 1983 through the fiscal year ended December 31,
1996. The Board of Directors intends to appoint Ernst & Young to be the
company's independent auditors for the fiscal year ending December 31, 1997.
Representatives of Ernst & Young are expected by be present at the Annual
Meeting to respond to appropriate questions and will be given an opportunity to
make a statement if they so desire.
SHAREHOLDER PROPOSALS
Under certain circumstances, shareholders are entitled to present proposals
at shareholders meetings. To be eligible for inclusion in the Proxy Statement
for the Company's next Annual Meeting of Shareholders, a shareholder proposal
must be received at the Company's principal executive offices prior to April 1,
1998.
12
<PAGE> 15
OTHER BUSINESS
Management knows of no business, other than as stated in the Notice of
Annual Meeting, which will be presented for consideration at the Annual Meeting.
If, however, other matters properly are brought before the Annual Meeting, it is
the intention of the persons named in the accompanying form of proxy to vote the
shares represented thereby on such matters in accordance with their best
judgment and in their discretion.
AMERICAN SHARED HOSPITAL SERVICES
By Order of the Board of Directors
/s/ WILLIE R. BARNES
--------------------
Willie R. Barnes
Corporate Secretary
Dated: August 19, 1997
13
<PAGE> 16
AMERICAN SHARED HOSPITAL SERVICES
For the Annual Meeting of Shareholders to be Held September 26, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominate(s), constitute(s) and appoint(s) Ernest
A. Bates, M.D. and Richard Magary, and each of them, the attorneys, agents and
proxies of the undersigned, with full powers of substitution to each, to attend
and to act as proxy or proxies of the undersigned at the Annual Meeting of
Shareholders (the "Meeting") of AMERICAN SHARED HOSPITAL SERVICES (the
"Company") to be held at the American Stock Exchange, 86 Trinity Place, 13th
Floor Board Room, New York, New York on Friday, September 26, 1997, at 10:00 am
eastern time, or at any adjournments thereof, and to vote as specified herein
the number of shares which the undersigned, if personally present, would be
entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE PERSONS
NOMINATED FOR ELECTION TO THE BOARD OF DIRECTORS. THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED,
SUBJECT TO THE PROXY HOLDER'S DISCRETIONARY AUTHORITY TO CUMULATE VOTES, "FOR"
THE ELECTION OF THE PERSONS NOMINATED ON THE REVERSE SIDE, AND WILL HAVE THE
EFFECT OF WITHHOLDING DISCRETIONARY AUTHORITY TO CUMULATE VOTES. THE BOARD OF
DIRECTORS IS NOT AWARE OF ANY MATTER THAT WILL COME BEFORE THE ANNUAL MEETING
OTHER THAN THOSE DESCRIBED IN THIS PROXY. HOWEVER, IF SUCH MATTERS ARE
PRESENTED, THE NAMED PROXIES WILL, IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY, VOTE SUCH PROXIES IN ACCORDANCE WITH THE JUDGMENT OF SUCH NAMED
PROXIES WITH RESPECT TO ANY SUCH OTHER MATTER PROPERLY COMING BEFORE THE ANNUAL
MEETING. THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE
SECRETARY OF THE COMPANY AN INSTRUMENT IN WRITING REVOKING THE PROXY OR A DULY
EXECUTED PROXY BEARING A LATER DATE. THIS PROXY MAY ALSO BE REMOVED BY
ATTENDANCE AT THE MEETING AND ELECTION TO VOTE IN PERSON.
<PAGE> 17
[REVERSE SIDE]
[X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as indicated to the contrary below) to vote for all nominees
ELECTION OF DIRECTORS
To elect the seven persons named below to the Board of Directors to
serve until the 1998 Annual Meeting of Shareholders and until their successors
are elected and have qualified
(Instruction: to withhold authority for any individual
nominee(s), write that nominee's name(s)
in the space below.)
- -------------------------------------
NOMINEES:
Ernest A. Bates, M.D.
Willie R. Barnes
Matthew Hills
John F. Ruffle
Stanley S. Trotman, Jr.
Augustus A. White III, M.D.
Charles B. Wilson
[ ] I PLAN TO ATTEND THE MEETING IN PERSON
The undersigned hereby ratifies and confirms all that said attorneys and
proxies, or any of them, or their substitutes, shall lawfully do or cause to be
done by virtue hereof, and hereby revokes any and all proxies heretofore given
by the undersigned to vote at the Meeting. The undersigned acknowledges receipt
of the Notice of the Annual Meeting and the Proxy Statement accompanying such
Notice.
Signature Date Date
--------------- ----- ------------------------ -----
Signature if held Jointly
NOTE: Please date this Proxy and sign as your name(s) appear(s) on this
document. Joint owners should each sign personally. Corporate Proxies
should be signed by an authorized officer. Executors, administrators,
trustees, etc. should give their full titles.
-2-
