exv10w48



 






Exhibit 10.48









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




10









 






	 	 	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.




11









 







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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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.



 









 





     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






 









 












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.




2









 






	 	(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



3









 




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