Exhibit 10.48
( BANK OF AMERICA` LOGO) [f11686f1168600.gif]
LOAN AGREEMENT
This Agreement dated as of July 1, 2004, is between Bank of America, N.A. (the
“Bank”) and American Shared Hospital Services (the “Borrower”).

1.   FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS   1.1   Line of Credit
Amount.   (a)   During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of credit (the
“Facility No. 1 Commitment”) is Three Million Five Hundred Thousand and 00/100
Dollars ($3,500,000.00).   (b)   This is a revolving line of credit. During the
availability period, the Borrower may repay principal amounts and reborrow them.
  (c)   The Borrower agrees not to permit the principal balance outstanding to
exceed the Facility No. 1 Commitment. If the Borrower exceeds this limit, the
Borrower will immediately pay the excess to the Bank upon the Bank’s demand.

1.2 Availability Period. The line of credit is available between the date of
this Agreement and June 1, 2005, or such earlier date as the availability may
terminate as provided in this Agreement (the “Facility No. 1 Expiration Date”).
The availability period for this line of credit will be considered renewed if
and only if the Bank has sent to the Borrower a written notice of renewal
effective as of the Facility No. 1 Expiration Date for the line of credit (the
“Renewal Notice”). If this line of credit is renewed, it will continue to be
subject to all the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice. If this line of credit is renewed, the term
“Expiration Date” shall mean the date set forth in the Renewal Notice as the
Expiration Date and the same process for renewal will apply to any subsequent
renewal of this line of credit. A renewal fee may be charged at the Bank’s
option. The amount of the renewal fee will be specified in the Renewal Notice.

1.3   Repayment Terms.   (a)   The Borrower will pay interest on August 1, 2004,
and then on the same day of each month thereafter until payment in full of any
principal outstanding under this facility. Any interest period for an optional
interest rate (as described below) shall expire no later than the Facility No. 1
Expiration Date.   (b)   The Borrower will repay in full any principal, interest
or other charges outstanding under this facility no later than the Facility
No. 1 Expiration Date.   1.4   Interest Rate.   (a)   The interest rate is a
rate per year equal to the Bank’s Prime Rate minus 1 percentage point.   (b)  
The Prime Rate is the rate of interest publicly announced from time to time by
the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various
factors, including the Bank’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans. The Bank may price loans to its customers at, above, or

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    below the Prime Rate. Any change In the Prime Rate shall take effect at the
opening of business on the day specified in the public announcement of a change
in the Bank’s Prime Rate.

1.5 Optional Interest Rates. Instead of the Interest rate based on the rate
stated in the paragraph entitled “Interest Rate” above, the Borrower may elect
the optional interest rates listed below for this Facility No. 1 during interest
periods agreed to by the Bank and the Borrower. The optional interest rates
shall be subject to the terms and conditions described later in this Agreement.
Any principal amount bearing interest at an optional rate under this Agreement
is referred to as a “Portion,” The following optional interest rates are
available:

(a)   The LIBOR Rate plus 1.5 percentage points.   2.   OPTIONAL INTEREST RATES

2.1 Optional Rates. Each optional interest rate is a rate per year. Interest
will be paid on August 1, 2004, and then on the same day of each month
thereafter until payment in full of any principal outstanding under this
facility. No Portion will be converted to a different interest rate during the
applicable interest period. Upon the occurrence of an event of default under
this Agreement, the Bank may terminate the availability of optional interest
rates for interest periods commencing after the default occurs. At the end of
each interest period, the interest rate will revert to the rate stated in the
paragraph(s) entitled “Interest Rate” above, unless the Borrower has designated
another optional interest rate for the Portion.
2.2 LIBOR Rate.The election of LIBOR Rates shall be subject to the following
terms and requirements:

(a)   The interest period during which the LIBOR Rate will be in effect will be
one, two, and three months. The first day of the interest period must be a day
other than a Saturday or a Sunday on which the Bank is open for business in New
York and London and dealing in offshore dollars (a “LIBOR Banking Day”). The
last day of the interest period and the actual number of days during the
interest period will be determined by the Bank using the practices of the London
inter-bank market.   (b)   Each LIBOR Rate portion will be for an amount not
less than One Hundred Thousand and 00/100 Dollars ($100,000.00).   (c)   The
“LIBOR Rate” means the interest rate determined by the following formula,
rounded upward to the nearest 1/100 of one percent. (All amounts in the
calculation will be determined by the Bank as of the first day of the interest
period.)

                 
 
  LIBOR Rate =   London Inter-Bank Offered Rate        
 
   
 
(1.00 - Reserve Percentage)        

     Where,

  (i)   “London Inter-Bank Offered Rate” means the average per annum interest
rate at which U.S. dollar deposits would be offered for the applicable interest
period by major banks in the London inter-bank market, as shown on the Telerate
Page 3750 (or any successor page) at approximately 11:00 a.m. London time two
(2) London Banking Days before the commencement of the interest period. If such
rate does not appear on the Telerate Page 3750 (or any successor page), the
rat(e) for that interest period will be determined by such alternate method as
reasonably selected by the Bank. A “London Banking Day” is a day on which the
Bank’s London Banking Center is open for business and dealing in offshore
dollars.

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  (ii)   “Reserve Percentage” means the total of the maximum reserve percentages
for determining the reserves to be maintained by member banks of the Federal
Reserve System for Eurocurrency Liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage
will be expressed as a decimal, and will include, but not be limited to,
marginal, emergency, supplemental, special, and other reserve percentages.

(d) The Borrower shall irrevocably request a LIBOR Rate Portion no later than
12:00 noon Pacific time on the LIBOR Banking Day preceding the day on which the
London Inter-Bank Offered Rate will be set, as specified above. For example, if
there are no intervening holidays or weekend days in any of the relevant
locations, the request must be made at least three days before the LIBOR Rate
takes effect.
(e) The Bank will have no obligation to accept an election for a LIBOR Rate
Portion if any of the following described events has occurred and is continuing:

  (i)   Dollar deposits in the principal amount, and for periods equal to the
interest period, of a LIBOR Rate Portion are not available in the London
inter-bank market; or     (ii)   The LIBOR Rate does not accurately reflect the
cost of a LIBOR Rate Portion.

(f)   Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of
acceleration or otherwise, will be accompanied by the amount of accrued interest
on the amount prepaid and a prepayment fee as described below. A “prepayment” is
a payment of an amount on a date earlier than the scheduled payment date for
such amount as required by this Agreement.

(g)   The prepayment fee shall be in an amount sufficient to compensate the Bank
for any loss, cost or expense incurred by it as a result of the prepayment,
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Portion
or from fees payable to terminate the deposits from which such funds were
obtained. The Borrower shall also pay any customary administrative fees charged
by the Bank in connection with the foregoing. For purposes of this paragraph,
the Bank shall be deemed to have funded each Portion by a matching deposit or
other borrowing in the applicable Interbank market, whether or not such Portion
was in fact so funded.

3. COLLATERAL
3.1 Personal Property. The personal property listed below now owned or owned in
the future by the parties listed below will secure the Borrower’s obligations to
the Bank under this Agreement. The collateral is further defined in security
agreement(s) executed by the owners of the collateral. The Bank and the Borrower
acknowledge and agree that the collateral does not include accounts or
subaccounts owned by the Borrower’s related entities or affiliates.

(a)   The following investment property owned by the Borrower (for the purposes
of this subparagraph referred to as “Grantor”):

Account number P61-074330 maintained by Banc of America Investment Services,
Inc. (“Securities Intermediary”) in the name of Grantor, for the benefit of
Grantor, or as a collateral account of Bank of America, N.A. for Grantor,
together with any linked or related accounts or subaccounts held by any entity
as clearing broker for Securities Intermediary, in the name of Grantor, for the
benefit of Grantor or as a collateral account of Bank of America, N.A. for
Grantor and all successor and replacement accounts, regardless of the numbers of
such accounts or the offices at which such accounts are maintained.
Regulation U of the Board of Governors of the Federal Reserve System places
certain restrictions on loans secured by margin stock (as defined in the
Regulation). The Bank and the Borrower shall comply

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with Regulation U. If any of the collateral is margin stock, the Borrower shall
provide to the Bank a Form U-1 Purpose Statement.

4.   FEES AND EXPENSES   4.1   Fees.   (a)   Loan Fee. The Borrower agrees to
pay a loan fee in the amount of Three Thousand and 00/100 Dollars ($3,000.00).
This fee is due on the date of this Agreement.   (b)   Late Fee. To the extent
permitted by law, the Borrower agrees to pay a late fee in an amount not to
exceed four percent (4%) of any payment that is more than fifteen (15) days
late. The imposition and payment of a late fee shall not constitute a waiver of
the Bank’s rights with respect to the default.

4.2 Expenses.    The Borrower agrees to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees, and documentation fees.

4.3   Reimbursement Costs.   (a)   The Borrower agrees to reimburse the Bank for
any expenses it incurs in the preparation of this Agreement and any agreement or
instrument required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys’ fees, including any allocated costs of the Bank’s in-house
counsel to the extent permitted by applicable law.   (b)   The Borrower agrees
to reimburse the Bank for the cost of periodic appraisals of the collateral, at
such intervals as the Bank may reasonably require. The actions described in this
paragraph may be performed by employees of the Bank or by independent
appraisers.   5.   DISBURSEMENTS, PAYMENTS AND COSTS   5.1   Disbursements and
Payments.   (a)   Each payment by the Borrower will be made in U.S. Dollars and
immediately available funds by direct debit to a deposit account as specified
below or, for payments not required to be made by direct debit, by mail to the
address shown on the Borrower’s statement or at one of the Bank’s banking
centers in the United States.   (b)   Each disbursement by the Bank and each
payment by the Borrower will be evidenced by records kept by the Bank. In
addition, the Bank may, at its discretion, require the Borrower to sign one or
more promissory notes.   5.2   Telephone and Telefax Authorization.   (a)   The
Bank may honor telephone or telefax instructions for advances or repayments or
for the designation of optional interest rates given, or purported to be given,
by any one of the individuals authorized to sign loan agreements on behalf of
the Borrower, or any other individual designated by any one of such authorized
signers.   (b)   Advances will be deposited in and repayments will be withdrawn
from account number 14993-14357 owned by the Borrower or such other of the
Borrower’s accounts with the Bank as designated in writing by the Borrower.  
(c)   The Borrower will indemnify and hold the Bank harmless from all liability,
loss, and costs in connection with any act resulting from telephone or telefax
instructions the Bank reasonably

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    believes are made by any individual authorized by the Borrower to give such
instructions. This paragraph will survive this Agreement’s termination, and will
benefit the Bank and its officers, employees, and agents.

5.3   Direct Debit (Pre-Billing).   (a)   The Borrower agrees that the Bank will
debit deposit account number 14993-14357 owned by the Borrower or such other of
the Borrower’s accounts with the Bank as designated in writing by the Borrower
(the “Designated Account”) on the date each payment of principal and interest
and any fees from the Borrower becomes due (the “Due Date”).   (b)   Prior to
each Due Date, the Bank will mail to the Borrower a statement of the amounts
that will be due on that Due Date (the “Billed Amount”). The bill will be mailed
a specified number of calendar days prior to the Due Date, which number of days
will be mutually agreed from time to time by the Bank and the Borrower. The
calculations in the bill will be made on the assumption that no new extensions
of credit or payments will be made between the date of the billing statement and
the Due Date, and that there will be no changes in the applicable interest rate.
  (c)   The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the “Accrued Amount”). If the
Billed Amount debited to the Designated Account differs from the Accrued Amount,
the discrepancy will be treated as follows:

  (i)   If the Billed Amount is less than the Accrued Amount, the Billed Amount
for the following Due Date will be increased by the amount of the discrepancy.
The Borrower will not be in default by reason of any such discrepancy.     (ii)
  If the Billed Amount is more than the Accrued Amount, the Billed Amount for
the following Due Date will be decreased by the amount of the discrepancy.

    Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The Bank will
not pay the Borrower interest on any overpayment.   (d)   The Borrower will
maintain sufficient funds in the Designated Account to cover each debit. If
there are insufficient funds in the Designated Account on the date the Bank
enters any debit authorized by this Agreement, the Bank may reverse the debit.  
(e)   The Borrower may terminate this direct debit arrangement at any time by
sending written notice to the Bank at the address specified at the end of this
Agreement. If the Borrower terminates this arrangement, then the principal
amount outstanding under this Agreement will at the option of the Bank bear
interest at a rate per annum which is 0.5 percentage point(s) higher than the
rate of interest otherwise provided under this Agreement.

5.4 Banking Days. Unless otherwise provided in this Agreement, a banking day is
a day other than a Saturday, Sunday or other day on which commercial banks are
authorized to close, or are in fact closed, in the state where the Bank’s
lending office is located, and, if such day relates to amounts bearing interest
at an offshore rate (if any), means any such day on which dealings in dollar
deposits are conducted among banks in the offshore dollar interbank market. All
payments and disbursements which would be due on a day which is not a banking
day will be due on the next banking day. Ail payments received on a day which is
not a banking day will be applied to the credit on the next banking day.
5.5 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more Interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.

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5.6 Default Rate. Upon the occurrence of any default under this Agreement, all
amounts outstanding under this Agreement, Including any interest, fees, or costs
which are not paid when due, will at the option of the Bank bear interest at a
rate which is 6.0 percentage point(s) higher than the rate of interest otherwise
provided under this Agreement. This may result in compounding of interest. This
will not constitute a waiver of any default.

6.   CONDITIONS

Before the Bank is required to extend any credit to the Borrower under this
Agreement, it must receive any documents and other items it may reasonably
require, in form and content acceptable to the Bank, including any items
specifically listed below.
6.1 Authorizations. If the Borrower or any guarantor is anything other than a
natural person, evidence that the execution, delivery and performance by the
Borrower and/or such guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
6.2 Governing Documents. If required by the Bank, a copy of the Borrower’s
organizational documents.
6.3 Security Agreements. Signed original security agreements covering the
personal property collateral which the Bank requires.
6.4 Perfection and Evidence of Priority. Evidence that the security interests
and liens in favor of the Bank are valid, enforceable, property perfected in a
manner acceptable to the Bank and prior to all others’ rights and interests,
except those the Bank consents to in writing. All title documents for motor
vehicles which are part of the collateral must show the Bank’s interest.
6.5 Good Standing. Certificates of good standing for the Borrower from its state
of formation and from any other state in which the Borrower is required to
qualify to conduct its business.
6.6 Insurance. Evidence of insurance coverage, as required in the “Covenants”
section of this Agreement.
6.7 Condition to Each Extension of Credit. Before each extension of credit,
including the first, a monthly brokerage statement from Bank of America
investment Services, Inc.
7. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewal of these representations and
warranties as of the date of the request:
7.1 Formation. If the Borrower is anything other than a natural person, it is
duly formed and existing under the laws of the state or other jurisdiction where
organized.
7.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower’s powers, have been duly authorized, and do
not conflict with any of its organizational papers.
7.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
7.4 Good Standing. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.

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7.5 No Conflicts. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
7.6 Financial Information. All financial and other information that has been or
will be supplied to the Bank is sufficiently complete to give the Bank accurate
knowledge of the Borrower’s (and any guarantor’s) financial condition, including
all material contingent liabilities. Since the date of the most recent financial
statement provided to the Bank, there has been no material adverse change in the
business condition (financial or otherwise), operations, properties or prospects
of the Borrower (or any guarantor). If the Borrower is comprised of the trustees
of a trust, the foregoing representations shall also pertain to the trustor(s)
of the trust,
7.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower’s
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
7.8 Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others, except those which have been approved by the Bank in
writing.
7.9 Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights, copyrights and fictitious name rights necessary to enable
it to conduct the business in which it is now engaged.
7.10 Other Obligations. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
7.11 Tax Matters. The Borrower has no knowledge of any pending assessments or
adjustments of its income tax for any year and all taxes due have been paid,
except as have been disclosed in writing to the Bank.
7.12 No Event of Default. There is no event which is, or with notice or lapse of
time or both would be, a default under this Agreement.
7.13 Insurance. The Borrower has obtained, and maintained in effect, the
insurance coverage required in the “Covenants” section of this Agreement.
8. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
8.1 Use of Proceeds.
(a) To use the proceeds of Facility No. 1 only for working capital.
8.2 Financial information. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as requested by the Bank from time to time:

(a)   Within one hundred twenty (120) days of the fiscal year end, the annual
financial statements of the Borrower. These financial statements must be audited
(with an opinion satisfactory to the Bank) by a Certified Public Accountant
acceptable to the Bank. The statements shall be prepared on a consolidated
basis.

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(b)   Within ninety (90) days of the period’s end, semi-annual financial
statements of the Borrower. These financial statements may be company-prepared.
The statements shall be prepared on a consolidated basis.

8.3 Profitability. To maintain on a consolidated basis a positive net income
before taxes and extraordinary items for each annual accounting period.

8.4   Notices to Bank. To promptly notify the Bank in writing of:   (a)   Any
lawsuit over One Million and 00/100 Dollars ($1,000,000.00) against the Borrower
(or any guarantor or, if the Borrower is comprised of the trustees of a trust,
any trustor).   (b)   Any substantial dispute between any governmental authority
and the Borrower (or any guarantor or, if the Borrower is comprised of the
trustees of a trust, any trustor).   (c)   Any event of default under this
Agreement, or any event which, with notice or lapse of time or both, would
constitute an event of default.   (d)   Any material adverse change in the
Borrower’s (or any guarantor’s, or, if the Borrower is comprised of the trustees
of a trust, any trustor’s) business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit.   (e)   Any
change in the Borrower’s name, legal structure, place of business, or chief
executive office if the Borrower has more than one place of business.   (f)  
Any actual contingent liabilities of the Borrower (or any guarantor or, if the
Borrower is comprised of the trustees of a trust, any trustor), and any such
contingent liabilities which are reasonably foreseeable, where such liabilities
are in excess of One Million and 00/100 Dollars ($1,000,000.00) in the
aggregate.   8.5   Insurance.   (a)   General Business Insurance. To maintain
insurance as is usual for the business it is in.

8.6 Compliance with Laws. To comply with the laws (including any fictitious or
trade name statute), regulations, and orders of any government body with
authority over the Borrower’s business.
8.7 ERISA Plans. Promptly during each year, to pay and cause any subsidiaries to
pay contributions adequate to meet at least the minimum funding standards under
ERISA with respect to each and every Plan; file each annual report required to
be filed pursuant to ERISA in connection with each Plan for each year; and
notify the Bank within ten (10) days of the occurrence of any Reportable Event
that might constitute grounds for termination of any capital Plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a trustee to administer any Plan. “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.
Capitalized terms in this paragraph shall have the meanings defined within
ERISA.
8.8 Books and Records. To maintain adequate books and records.
8.9 Perfection of Liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
8.10 Cooperation. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.

9.   DEFAULT AND REMEDIES

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If any of the following events of default occurs, the Bank may do one or more of
the following: declare the Borrower in default, stop making any additional
credit available to the Borrower, and require the Borrower to repay its entire
debt immediately and without prior notice. If an event which, with notice or the
passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of default occurs, the
Bank shall have all rights, powers and remedies available under any instruments
and agreements required by or executed in connection with this Agreement, as
well as all rights and remedies available at law or in equity. If an event of
default occurs under the paragraph entitled “Bankruptcy,” below, with respect to
the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.
9.1 Failure to Pay. The Borrower fails to make a payment under this Agreement
when due.
9.2 Other Bank Agreements. Any default occurs under any other agreement the
Borrower (or any Obligor) or any of the Borrower’s related entities or
affiliates has with the Bank or any affiliate of the Bank. For purposes of this
Agreement, “Obligor” shall mean any guarantor, any party pledging collateral to
the Bank, or, if the Borrower is comprised of the trustees of a trust, any
trustor.
9.3 Cross-default. Any default occurs under any agreement in connection with any
credit the Borrower (or any Obligor) has obtained from anyone else or which the
Borrower (or any Obligor) has guaranteed.
9.4 False Information. The Borrower or any Obligor has given the Bank false or
misleading information or representations.
9.5 Bankruptcy. The Borrower, any Obligor, or any general partner of the
Borrower or of any Obligor files a bankruptcy petition, a bankruptcy petition is
filed against any of the foregoing parties, or the Borrower, any Obligor, or any
general partner of the Borrower or of any Obligor makes a general assignment for
the benefit of creditors.
9.6 Receivers. A receiver or similar official is appointed for a substantial
portion of the Borrower’s or any Obligor’s business, or the business is
terminated, or, if any Obligor is anything other than a natural person, such
Obligor is liquidated or dissolved.
9.7 Lien Priority. The Bank fails to have an enforceable first lien (except for
any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement (or any guaranty).
9.8 Judgments. Any judgments or arbitration awards are entered against the
Borrower or any Obligor, or the Borrower or any Obligor enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of One Million and 00/100 Dollars ($1,000,000.00) or more in
excess of any insurance coverage.
9.9 Material Adverse Change. A material adverse change occurs, or is reasonably
likely to occur, in the Borrower’s (or any Obligor’s) business condition
(financial or otherwise), operations, properties or prospects, or ability to
repay the credit.
9.10 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower’s or any Obligor’s financial
condition or ability to repay.
9.11 Default under Related Documents. Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other
document required by or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports to revoke or disavow
the guaranty.

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9.12 ERISA Plans. Any one or more of the following events occurs with respect to
a Plan of the Borrower subject to Title IV of ERISA, provided such event or
events could reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of the Borrower:

(a)   A reportable event shall occur under Section 4043(c) of ERISA with respect
to a Plan.   (b)   Any Plan termination (or commencement of proceedings to
terminate a Plan) or the full or partial withdrawal from a Plan by the Borrower
or any ERISA Affiliate.

9.13 Other Breach Under Agreement. A default occurs under any other term or
condition of this Agreement not specifically referred to in this Article. This
includes any failure or anticipated failure by the Borrower (or any other party
named in the Covenants section) to comply with the financial covenants set forth
in this Agreement, whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrower or the Bank.
10. ENFORCING THIS AGREEMENT; MISCELLANEOUS
10.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
10.2 California Law. This Agreement is governed by California state law.
10.3 Successors and Assigns. This Agreement is binding on the Borrower’s and the
Bank’s successors and assignees. The Borrower agrees that it may not assign this
Agreement without the Bank’s prior consent. The Bank may sell participations in
or assign this loan, and may exchange financial information about the Borrower
with actual or potential participants or assignees. If a participation is sold
or the loan is assigned, the purchaser will have the right of set-off against
the Borrower.
10.4 Arbitration and Waiver of Jury Trial

(a)   This paragraph concerns the resolution of any controversies or claims
between the parties, whether arising in contract, tort or by statute, including
but not limited to controversies or claims that arise out of or relate to:
(i) this agreement (including any renewals, extensions or modifications); or
(ii) any document related to this agreement (collectively a “Claim”). For the
purposes of this arbitration provision only, the term “parties” shall include
any parent corporation, subsidiary or affiliate of the Bank involved in the
servicing, management or administration of any obligation described or evidenced
by this agreement.   (b)   At the request of any party to this agreement, any
Claim shall be resolved by binding arbitration in accordance with the Federal
Arbitration Act (Title 9, U. S. Code) (the “Act”). The Act will apply even
though this agreement provides that it is governed by the law of a specified
state.   (c)   Arbitration proceedings will be determined in accordance with the
Act, the applicable rules and procedures for the arbitration of disputes of JAMS
or any successor thereof (“JAMS”), and the terms of this paragraph. In the event
of any inconsistency, the terms of this paragraph shall control.   (d)   The
arbitration shall be administered by JAMS and conducted, unless otherwise
required by law, in any U. S. state where real or tangible personal property
collateral for this credit is located or if there is no such collateral, in the
state specified in the governing law section of this agreement. All Claims shall
be determined by one arbitrator; however, if Claims exceed Five Million Dollars
($5,000,000), upon the request of any party, the Claims shall be decided by
three arbitrators. All arbitration hearings shall commence within ninety
(90) days of the demand for arbitration and

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    close within ninety (90) days of commencement and the award of the
arbitrator (s) shall be issued within thirty (30) days of the close of the
hearing. However, the arbitrator(s), upon a showing of good cause, may extend
the commencement of the hearing for up to an additional sixty (60) days. The
arbitrator(s) shall provide a concise written statement of reasons for the
award. The arbitration award may be submitted to any court having jurisdiction
to be confirmed and enforced.   (e)   The arbitrator(s) will have the authority
to decide whether any Claim is barred by the statute of limitations and, if so,
to dismiss the arbitration on that basis. For purposes of the application of the
statute of limitations, the service on JAMS under applicable JAMS rules of a
notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable shall be
determined by the arbitrator(s). The arbitrator(s) shall have the power to award
legal fees pursuant to the terms of this agreement.   (f)   This paragraph does
not limit the right of any party to: (i) exercise self-help remedies, such as
but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure
against any real or personal property collateral; (iii) exercise any judicial or
power of sale rights, or (iv) act in a court of law to obtain an interim remedy,
such as but not limited to, injunctive relief, writ of possession or appointment
of a receiver, or additional or supplementary remedies.   (g)   The procedure
described above will not apply If the Claim, at the time of the proposed
submission to arbitration, arises from or relates to an obligation to the Bank
secured by real property. In this case, all of the parties to this agreement
must consent to submission of the Claim to arbitration. If both parties do not
consent to arbitration, the Claim will be resolved as follows: The parties will
designate a referee (or a panel of referees) selected under the auspices of JAMS
in the same manner as arbitrators are selected in JAMS administered proceedings.
The designated referee(s) will be appointed by a court as provided in California
Code of Civil Procedure Section 638 and the following related sections. The
referee (or presiding referee of the panel) will be an active attorney or a
retired judge. The award that results from the decision of the referee(s) will
be entered as a judgment in the court that appointed the referee, in accordance
with the provisions of California Code of Civil Procedure Sections 644 and 645.
  (h)   The filing of a court action is not intended to constitute a waiver of
the right of any party, including the suing party, thereafter to require
submittal of the Claim to arbitration.   (i)   By agreeing to binding
arbitration, the parties irrevocably and voluntarily waive any right they may
have to a trial by jury in respect of any Claim. Furthermore, without intending
in any way to limit this agreement to arbitrate, to the extent any Claim is not
arbitrated, the parties irrevocably and voluntarily waive any right they may
have to a trial by jury in respect of such Claim. This provision is a material
inducement for the parties entering into this agreement.

10.5 Severability; Waivers. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.
10.6 Attorneys’ Fees. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys’ fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and in
connection with any amendment, waiver, “workout” or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys’ fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or successor statute, the Bank is entitled to recover costs and reasonable
attorneys’ fees incurred by the Bank related to the preservation, protection, or
enforcement of any rights of the Bank in such a case. As used in this paragraph,
“attorneys’ fees” includes the allocated costs of the Bank’s in-house counsel.

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10.7 One Agreement. This Agreement and any related security or other agreements
required by this Agreement, collectively:

(a)   represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;   (b)   replace any prior oral or
written agreements between the Bank and the Borrower concerning this credit; and
  (c)   are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail. Any reference in any
related document to a “promissory note” or a “note” executed by the Borrower and
dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.
10.8 Indemnification. The Borrower will indemnify and hold the Bank harmless
from any loss, liability, damages, judgments, and costs of any kind relating to
or arising directly or indirectly out of (a) this Agreement or any document
required hereunder, (b) any credit extended or committed by the Bank to the
Borrower hereunder, and (c) any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity
includes but is not limited to attorneys’ fees (including the allocated cost of
in-house counsel). This indemnity extends to the Bank, its parent, subsidiaries
and all of their directors, officers, employees, agents, successors, attorneys,
and assigns. This indemnity will survive repayment of the Borrower’s obligations
to the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand.
10.9 Notices. Unless otherwise provided in this Agreement or in another
agreement between the Bank and the Borrower, all notices required under this
Agreement shall be personally delivered or sent by first class mail, postage
prepaid, or by overnight courier, to the addresses on the signature page of this
Agreement, or sent by facsimile to the fax numbers listed on the signature page,
or to such other addresses as the Bank and the Borrower may specify from time to
time in writing. Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.
10.10 Headings. Article and paragraph headings are for reference only and shall
not affect the interpretation or meaning of any provisions of this Agreement.
10.11 Counterparts. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.

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The Agreement is executed as of the date stated at the top of the first page.

     
Borrower:
  Bank:
 
   
American Shared Hospital Services
  Bank of America, N.A.
 
   
By: /s/ Ernest A. Bates
  By: /s/ Vicki Hankins
 
   
Ernest A. Bates, M.D., Chairman of the Board
  Vicki Hankins, Senior Vice President
 
   
Address where notices to the Borrower are to be sent:
  Address where notices to the Bank are to be sent:
Four Embarcadero Center, Suite 3700
  San Francisco Middle Market Group
San Francisco, CA 94117-4107

  315 Montgomery Street

 
   
Telephone:
  San Francisco, CA
 
   
 
   
Facsimile:
  Facsimile: (415) 953-2247
 
   

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(BANK OF AMERICA LOGO) [f11686f1168600.gif]
AMENDMENT NO. 1 TO COMMERCIAL PLEDGE AGREEMENT
     This Amendment No. 1 (the “Amendment”) dated as of June 23, 2005 is between
Bank of America, N.A. (“Lender”) and American Shared Hospital Services
(“Grantor”).
RECITALS
     A. Grantor has executed various documents concerning credit extended by the
Lender, including, without limitation, the following document:
     1. A certain Commercial Pledge Agreement dated as of February 25, 2005
(together with any previous amendments, the “Pledge Agreement”).
     B. Lender and Grantor desire to amend the Pledge Agreement.
AGREEMENT
     1. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Pledge Agreement.
     2. Amendments to Pledge Agreement. The Pledge Agreement is hereby amended
as follows:
     (a) In the paragraph immediately following the CHART under subparagraph E
of the paragraph entitled “Value of Collateral,” the Original Advance and Margin
Call percentages, respectively, for the Account are hereby amended to read in
full as follows:
Account No. ending in 0796144 with Bank of America N.A. and any successor
account thereto          80%      85%
     3. Representations and Warranties. When Grantor signs this Amendment,
Grantor represents and warrants to Lender that: (a) there is no event which is,
or with notice or lapse of time or both would be, a default under the Pledge
Agreement except those events, if any, that have been disclosed in writing to
Lender or waived in writing by Lender, (b) the representations and warranties in
the Pledge Agreement are true as of the date of this Amendment as if made on the
date of this Amendment, (c) this Amendment does not conflict with any law,
agreement, or obligation by which Grantor is bound, and (d) this Amendment is
within Grantor’s powers, has been duly authorized, and does not conflict with
any of Grantor’s organizational papers.
     4. Effect of Amendment. Except as provided in this Amendment, all of the
terms and conditions of the Pledge Agreement shall remain in full force and
effect.
     5. Counterparts. This Amendment may be executed in counterparts, each of
which when so executed shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

 

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     6. FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND
AGREES THAT: (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS
RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET
OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE
CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND
(D) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
     This Amendment is executed as of the data stated at the beginning of this
Amendment.

     
Grantor:
  Lender:
 
   
American Shared Hospital Services
  Bank of America, N.A.
 
   
By: /s/ Ernest A. Bates
  By: /s/  (ILLEGIBLE)
 
   
Ernest A. Bates, M.D., Chairman
  Authorized Signer

 

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(BANK OF AMERICA LOGO) [f11686f1168600.gif]
AMENDMENT NO. 2 TO LOAN AGREEMENT
     This Amendment No. 2 (the “Amendment”) dated as of June 23, 2005 is between
Bank of America, N.A. (the “Bank”) and American Shared Hospital Services (the
“Borrower”).
RECITALS
     A. The Bank and the Borrower entered into a certain Loan Agreement dated as
of July 1, 2004 (together with any previous amendments, the “Agreement”).
     B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
     1. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.
     2. Amendments. The Agreement is hereby amended as follows:
     2.1 In paragraph number 1.1 (a), the amount “Three Million Five Hundred
Thousand and 00/100 Dollars ($3,500,000.00)” is changed to “Six Million Dollars
($6,000,000).”
     2.2 In paragraph number 1.2, entitled “Availability Period,” the date
June 1, 2005 is changed to June 1, 2006.
     2.3 The following paragraph number 8.4(g) is hereby added:

  (g)   any event wherein a government authority, including but not limited to
Medicare or the Food and Drug Administration, withdraws or fails to renew any
material license, permits or certification of the Borrower or its equipment.

     2.4 The following paragraph numbers 8.11 thru 8.13 are hereby added:

  8.11   Maintenance of Assets.     (a)   Not to sell, assign, lease, transfer
or otherwise dispose of any part of the Borrower’s business or the Borrower’s
assets except in the ordinary course of the Borrower’s business.     (b)   Not
to sell, assign, lease, transfer or otherwise dispose of any assets for less
than fair market value, or enter into any agreement to do so.     (c)   Not to
enter into any sale and leaseback agreement covering any of its fixed assets.  
  (d)   To maintain and preserve all rights, privileges, and franchises the
Borrower now has.     (e)   To make any repairs, renewals, or replacements to
keep the Borrower’s properties in good working condition.     8.12   Additional
Negative Covenants. Not to, without the Bank’s written consent:

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  (a)   Liquidate or dissolve the Borrower’s business.     (b)   Voluntarily
suspend the Borrower’s business for more than seven (7) days in any 365-day
period.

8.13 Audits. To allow the Bank and its agents to inspect the Borrower’s
properties and examine, audit, and make copies of books and records at any
reasonable time. If any of the Borrower’s properties, books or records are in
the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank’s requests for information concerning such
properties, books and records.

2.5   Paragraph number 10.4 is hereby amended to read in its entirety as
follows:

  10.4   Arbitration and Waiver of Jury Trial.     (a)   This paragraph concerns
the resolution of any controversies or claims between the parties, whether
arising in contract, tort or by statute, including but not limited to
controversies or claims that arise out of or relate to: (i) this agreement
(including any renewals, extensions or modifications); or (ii) any document
related to this agreement (collectively a “Claim”). For the purposes of this
arbitration provision only, the term “parties” shall include any parent
corporation, subsidiary or affiliate of the Bank involved in the servicing,
management or administration of any obligation described or evidenced by this
agreement.     (b)   At the request of any party to this agreement, any Claim
shall be resolved by binding arbitration in accordance with the Federal
Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though
this agreement provides that it is governed by the law of a specified state. The
arbitration will take place on an individual basis without resort to any form of
class action.     (c)   Arbitration proceedings will be determined in accordance
with the Act, the then current rules and procedures for the arbitration of
financial services disputes of the American Arbitration Association or any
successor thereof (“AAA”), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control. If AAA is unwilling or
unable to (i) serve as the provider of arbitration or (ii) enforce any provision
of this arbitration clause, any party to this agreement may substitute another
arbitration organization with similar procedures to serve as the provider of
arbitration.     (d)   The arbitration shall be administered by AAA and
conducted, unless otherwise required by law, in any U.S. state where real or
tangible personal property collateral for this credit is located or if there is
no such collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if Claims
exceed Five Million Dollars ($5,000,000), upon the request of any party, the
Claims shall be decided by three arbitrators. All arbitration hearings shall
commence within ninety (90) days of the demand for arbitration and close within
ninety (90) days of commencement and the award of the arbitrator(s) shall be
issued within thirty (30) days of the close of the hearing. However, the
arbitrator(s), upon a showing of good cause, may extend the commencement of the
hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide
a concise written statement of reasons for the award. The arbitration award may
be submitted to any court having jurisdiction to be confirmed, judgment entered
and enforced.

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  (e)   The arbitrator(s) will give effect to statutes of limitation in
determining any Claim and may dismiss the arbitration on the basis that the
Claim is barred. For purposes of the application of the statute of limitations,
the service on AAA under applicable AAA rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this agreement.     (f)   This paragraph does not limit
the right of any party to: (i) exercise self-help remedies, such as but not
limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against
any real or personal property collateral; (iii) exercise any judicial or power
of sale rights, or (iv) act in a court of law to obtain an interim remedy, such
as but not limited to, injunctive relief, writ of possession or appointment of a
receiver, or additional or supplementary remedies.     (g)   The filing of a
court action is not intended to constitute a waiver of the right of any party,
including the suing party, thereafter to require submittal of the Claim to
arbitration.     (h)   By agreeing to binding arbitration, the parties
irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of any Claim. Furthermore, without intending in any way to limit this
agreement to arbitrate, to the extent any Claim is not arbitrated, the parties
irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of such Claim. This provision is a material inducement for the parties
entering into this agreement.

     3. Representations and Warranties. When the Borrower signs this Amendment,
the Borrower represents and warrants to the Bank that: (a) there is no event
which is, or with notice or lapse of time or both would be, a default under the
Agreement except those events, if any, that have been disclosed in writing to
the Bank or waived in writing by the Bank, (b) the representations and
warranties in the Agreement are true as of the date of this Amendment as if made
on the date of this Amendment, (c) this Amendment does not conflict with any
law, agreement, or obligation by which the Borrower is bound, and (d) this
Amendment is within the Borrower’s powers, has been duly authorized, and does
not conflict with any of the Borrower’s organizational papers.
     4. Conditions. This Amendment will be effective when the Bank receives the
following items, in form and content acceptable to the Bank:
     (a) It the Borrower or any guarantor is anything other than a natural
person, evidence that the execution, delivery and performance by the Borrower
and/or such guarantor of this Amendment and any instrument or agreement required
under this Amendment have been duly authorized.
     (b) Payment by the Borrower of a loan fee in the amount of Five Thousand
Dollars ($5,000).
     5. Effect of Amendment. Except as provided in this Amendment, all of the
terms and conditions of the Agreement shall remain in full force and effect.
     6. Counterparts. This Amendment may be executed in counterparts, each of
which when so executed shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
     7. FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND
AGREES THAT: (A) THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B) THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS
RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM SHEET
OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE
CONTRARY, (C) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND
(D) THIS DOCUMENT MAY NOT BE

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CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
     This Amendment is executed as of the date stated at the beginning of this
Amendment.

     
Borrower:
  Bank:
 
   
American Shared Hospital Services
  Bank of America, N.A.
 
   
By:/s/ Ernest A. Bates
  By: /s/  [ILLEGIBLE]
 
   
Ernest A. Bates, M.D., Chairman
  Authorized Signer

4