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                           SECURITIES PURCHASE AGREEMENT
                                          
                                          
                                          
                                    BY AND AMONG
                                          
                               ALLIANCE IMAGING, INC.
                                          
                            EMBARCADERO HOLDING CORP. I,
                                          
                           EMBARCADERO HOLDING CORP. II,
                                          
                         AMERICAN SHARED HOSPITAL SERVICES,
                                          
                                        AND
                                          
                                     MMRI, INC.
                                          
                                          
                                          
                                          
                                          
                             DATED AS OF MARCH 12, 1998
                                          

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                                      SECURITIES PURCHASE AGREEMENT dated as of
                              March 12, 1998, by and among ALLIANCE IMAGING,
                              INC., a Delaware corporation ("ALLIANCE"),
                              EMBARCADERO HOLDING CORP. I, a Delaware
                              corporation ("PURCHASER A"), EMBARCADERO HOLDING
                              CORP. II, a Delaware corporation ("PURCHASER B"
                              AND, TOGETHER WITH PURCHASER A, THE "PURCHASERS"),
                              AMERICAN SHARED HOSPITAL SERVICES, a California
                              corporation ("PARENT") and MMRI, INC., a
                              California corporation ("M SUB").

     WHEREAS, each Entity is engaged in the business of providing mobile,
shared diagnostic imaging services to hospitals, medical centers and medical
offices (including magnetic resonance imaging ("MRI") services, computed axial
tomography scanning ("CT") services, ultrasound services, nuclear medicine
services and related services) (collectively, the "BUSINESS");

     WHEREAS, the Parent owns all of the issued and outstanding shares of
common stock, par value $1.00, of CT Sub (the "CT SHARES") and the Parent
Partnership Interests;

     WHEREAS, M Sub owns the M Sub Partnership Interests;

     WHEREAS, the Sellers desire to sell to Alliance, and Alliance desires
to purchase from the Sellers, all of the Shares, on the terms and subject to the
conditions contained in this Agreement; and

     WHEREAS, Alliance has designated the Purchasers, each of which is a
wholly-owned Subsidiary of Alliance, to acquire the Shares for and on behalf of
Alliance.

     NOW, THEREFORE, in consideration of the premises and the mutual
representations hereinafter set forth, the parties hereto hereby agree as
follows (certain capitalized terms used herein are defined on ANNEX I hereto):
                                     
                              ARTICLE I      
                                     
                            PURCHASE AND SALE 

1.1         TRANSFER OF SHARES.

     (a)      On the terms and subject to the conditions of this Agreement, at
the Closing (after the transactions referenced in SECTION 1.2 have been
consummated), (i) the Parent shall sell, transfer, convey and assign to
Purchaser A, and Purchaser A shall purchase and acquire from the Parent, all of
the Shares (other than the M Sub Partnership Interests), free and clear of all
Encumbrances and (ii) M Sub shall sell, transfer, convey 


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and assign to Purchaser B and Purchaser B shall purchase and acquire from M 
Sub, the M Sub Partnership Interests, free and clear of all Encumbrances.  It 
is agreed by the parties, that Purchaser A and Purchaser B have been 
designated by, and hereto shall purchase the Shares for and on behalf of 
Alliance.

     (b)      The Sellers shall, at any time after the Closing, upon the
request of the Purchasers, take, execute, acknowledge and deliver, and cause to
be taken, executed, acknowledged and delivered, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney or assurances as may be
required to transfer, convey, grant and confirm to and vest in the Purchasers,
good and marketable title to all of the Shares, free and clear of all
Encumbrances.

1.2         TRANSFERS OF ASSETS AND LIABILITIES.

     (a)      Prior to the Closing Date, the Parent and M Sub shall effectively
sell, transfer, convey and assign (the "ASSET CONTRIBUTION") to the Partnership,
(i) all of the Parent's and M Sub's right, title and interest in, to and under
the assets, properties, interests in properties and rights of the Parent or M
Sub, as the case may be, of every kind, nature and description, whether real,
personal or mixed, movable or immovable, tangible or intangible, used in or held
for use in the Business, wherever located and listed on SCHEDULE 1.2(a) hereof
(the "PURCHASED PARENT ASSETS") and (ii) all of the Liabilities (other than any
Excluded Liabilities) related to the Purchased Parent Assets, on terms and
conditions satisfactory to the Purchasers including, without limitation,
pursuant to such deeds, bills of sale, endorsements, assignments and other good
and sufficient instruments of sale, transfer, conveyance and assignment
(collectively, the "CONVEYANCE INSTRUMENTS") as are necessary to sell, transfer,
convey and assign to the Partnership the Purchased Parent Assets and such
Liabilities.

     (b)      Prior to the Closing Date, (i) the Parent shall cause each of the
Entities to effectively sell, transfer, convey and assign (the "ASSET
DISPOSITION") to the Parent all of such Entities' right, title and interest in,
to and under the assets, properties, interests in properties and rights listed
on SCHEDULE 1.2(b) hereof (the "EXCLUDED ASSETS") and (ii) the Parent shall
assume from each of the Entities all of the Excluded Liabilities which are
Liabilities of each Entity, on terms and conditions satisfactory to the
Purchasers including, without limitation, pursuant to Conveyance Instruments as
are necessary to sell, transfer, convey and assign to the Parent the Excluded
Assets and the Excluded Liabilities.

     (c)      Anything contained in this Agreement to the contrary
notwithstanding, (i) neither the Purchasers nor Alliance are assuming any
Liabilities (fixed or contingent, known or unknown, matured or unmatured) of the
Sellers or the Entities whether or not relating to the Business which are
specified on SCHEDULE 1.2(c) (the "EXCLUDED LIABILITIES") all of which Excluded
Liabilities shall at and after the Closing become the exclusive responsibility
of the Parent and (ii) on the Closing Date, the Sellers or any of their
Subsidiaries (other than the Entities and GK Finance) shall retain (x) not less
than $600,000 aggregate amount of Liabilities in respect of accounts payable (y)
not less than $175,000 aggregate amount of Liabilities in respect of accrued
expenses (other than 

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Liabilities in respect of accrued expenses referenced in SECTION 1.2(c)(z)) 
and (z) all of the Liabilities in respect of accrued expenses for "accrued 
payroll" and "accrued payroll taxes and benefits" outstanding as of the 
Closing Date.

1.3         PAYMENT OF THE PURCHASE PRICE.

     The aggregate purchase price (the "PURCHASE PRICE") to be paid by
Alliance to the Sellers for the Shares and the covenants set forth in SECTION
5.10 of this Agreement shall be a cash amount equal to $13,552,000.  At the
Closing and subject to the terms and conditions of this Agreement and the
Related Documents, Alliance shall cause the Purchasers to make payment of the
Purchase Price (minus $75,000 of the Purchase Price which was previously paid to
the Parent) to the Sellers by wire transfer of immediately available funds to
the accounts previously designated in writing to the Purchasers by the Parent.

1.4         ALLOCATION OF PURCHASE PRICE.

     The parties hereto agree that the Purchase Price, subject to any
indemnification payments made hereunder, shall be allocated to the CT Shares and
to the Partnership Interests by the Purchasers on a basis reasonably
satisfactory to the Sellers.

                          ARTICLE II       
                                
                         THE CLOSING 

     Unless this Agreement shall have terminated pursuant to its terms, the
closing (the "CLOSING") of the transactions contemplated by this Agreement and
the Related Documents shall take place at the offices of O'Sullivan Graev &
Karabell, LLP, 30 Rockefeller Plaza, New York, New York 10112, at 10:00 a.m.
(New York time) on a date that shall be mutually agreeable to the parties hereto
(the "CLOSING DATE"), PROVIDED, HOWEVER, that the parties shall use commercially
reasonable efforts to consummate the Closing, in accordance with SECTION 5.3
hereof, as soon as practicable following the date of the Parent Stockholder
Approval.
                                
                           ARTICLE III      
                                
                REPRESENTATIONS AND WARRANTIES 

     The Sellers jointly and severally represent and warrant to the Purchasers
and Alliance as of the date hereof, and as of the Closing Date as follows:

3.1         TITLE TO THE SHARES. 

     Each of the Sellers is the lawful record and beneficial owner of the Shares
purported to be owned by it and has good and marketable title to such Shares,
free and clear of any Encumbrances whatsoever and with no restriction on the
voting rights and other incidents of record and beneficial ownership pertaining
thereto (except restrictions 

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imposed by federal and state securities laws).  No Entity is the subject of 
any bankruptcy, reorganization or similar proceeding.

3.2         ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING. 

     (a)      CT Sub is a corporation.  The Partnership is a general
partnership.  The Parent was incorporated on October 31, 1983 in the State of
California.  CT Sub was incorporated on May 1, 1984 in the State of Delaware.  M
Sub was incorporated on October 8, 1987 in the State of California. The
Partnership was formed on March 7, 1985 in the State of California.

     (b)      Each Seller and each Entity is duly organized and validly
existing and in good standing under the laws of its jurisdiction of organization
and has all requisite power and authority (corporate and otherwise) to own,
lease and operate its assets and properties and to carry on its business as
presently conducted.

     (c)      Each Seller and each Entity is duly qualified and in good
standing to transact business as a foreign Person in those jurisdictions set
forth opposite its name on SCHEDULE 3.2(c), which constitute all the
jurisdictions in which the character of the property owned, leased or operated
by such Person or the nature of the business or activities conducted by such
Person makes such qualification necessary other than those jurisdictions in
which the failure to be so qualified and in good standing could not reasonably
be expected to have a Material Adverse Effect.

     (d)      The Purchasers have been furnished with true, correct and
complete copies of the Organizational Documents of each Entity and each Seller,
in each case as amended and in effect on the date hereof.

     (e)      No Entity or Seller has (i) during the five year period prior to
the date hereof, engaged in any business other than the Business or as otherwise
set forth opposite its name on SCHEDULE 3.2(e)(i) and (ii) within the last five
years, used any trade names or assumed names other than the trade names or
assumed names set forth opposite its name on SCHEDULE 3.2(e)(ii).

     (f)      Each Seller has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby.  Except for the Parent
Stockholder Approval, each Seller's execution and delivery of this Agreement and
each Related Document to which it is or will be a party, and the performance by
each Seller of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of such Seller,
and this Agreement and each Related Document to which either Seller is or will
be a party has been, or upon the execution thereof will be, duly and validly
executed and delivered by such Seller, respectively, and constitutes, or upon
its execution and delivery will constitute, a valid and binding obligation of
such Seller, respectively, enforceable against such Seller, respectively, in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, 

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moratorium or other similar laws affecting creditors' rights generally and by 
general principles of equity (regardless of whether enforcement is sought in 
equity or at law).  Except as set forth on SCHEDULE 3.2(f), none of the 
execution and delivery by each Seller of this Agreement and each Related 
Document, the performance by either Seller of its obligations under this 
Agreement and each Related Document to which it is or will be a party, or the 
consummation of the transactions contemplated hereby or thereby, does or will 
(a) result in the creation of an Encumbrance upon any Entities' assets or 
properties, (b) conflict with, or result in any violation or breach of, any 
of the terms, conditions or provisions of, or constitute (with due notice or 
lapse of time, or both) a default or give rise to any right of contingent 
payment, termination, cancellation, acceleration or non-renewal, under, any 
provision of any Organizational Document of any such Person or any Contract 
to which any such Person is a party or by which any of its assets or 
properties is or may be bound which, in the case of such Contracts, could 
reasonably be expected to have a Material Adverse Effect or prevent the 
consummation of the transactions contemplated hereby or under the Related 
Documents and other than with respect to the foregoing for which consents 
have been obtained, or (c) violate any Law applicable to any Entity or 
Seller, which conflict or violation could prevent the consummation of the 
transactions contemplated by this Agreement or any of the Related Documents 
to which any such Person is or will be a party.

     (g)      Except as contemplated by this Agreement or as set forth on
SCHEDULE 3.2(g), no consent, approval, Permit, Order, notification or
authorization of, or any exemption from or registration, declaration or filing
with, any Governmental Entity or any Person is required in connection with the
execution, delivery and performance by any Seller of this Agreement or any
Related Document to which any Seller is or will be a party or the consummation
by any Seller of the transactions contemplated hereby or thereby, except for
those consents, approvals, Permits, Orders, notifications, authorizations,
exemptions, registrations, declarations or filings the failure to obtain could
not reasonably be expected to have a Material Adverse Effect or prevent the
consummation of the transactions contemplated hereunder or under the Related
Documents or for those consents, approvals, Permits, Orders, notifications,
authorizations, exemptions, registrations, declarations and filings which have
been obtained.

3.3         CAPITALIZATION.

     (a)      The authorized capital stock of CT Sub consists of 1,000 duly
authorized shares of common stock, par value $1.00 per share, of which 1,000
shares are duly and validly issued and outstanding, fully paid and
nonassessable, with no personal Liability attached to the ownership thereof and
all of which are held of record and beneficially by the Parent.

     (b)      The Partnership Interests of the Partnership are owned
beneficially and of record in the amounts and by the Persons set forth in
SCHEDULE 3.3(b).

     (c)      There are no securities outstanding which are convertible into,
exchangeable for, or carrying the right to acquire, Equity Interests of any
Entity, or 

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subscriptions, warrants, options, calls, puts, convertible securities, 
registration or other rights, arrangements or commitments obligating any 
Entity to issue, sell, register, purchase or redeem any of its Equity 
Interests or any ownership interest or rights therein.  There are no voting 
trusts or other similar agreements to which any Entity is bound with respect 
to the voting of the any Entity's Equity Interests.  There are no stock 
appreciation rights, phantom stock rights or similar rights or arrangements 
outstanding with respect to any Entity.

     (d)      Except as set forth on SCHEDULE 3.3(d), there are no Contracts,
commitments, arrangements, understandings or restrictions to which any Seller or
any of its Subsidiaries is bound relating in any way to any Equity Interest of
any Entity, including any rights of first refusal and any rights of first offer.

     (e)      All Shares issued by each Entity have been issued in transactions
exempt from registration under the Securities Act and the rules and regulations
promulgated thereunder and all applicable state securities or "blue sky" laws,
and no Entity has violated the Securities Act or any applicable state securities
or "blue sky" laws which may give rise to rights of rescission, cancellation or
damages in connection with the issuance of any such securities.

3.4         SUBSIDIARIES; INVESTMENTS. 

     No Entity owns or holds, directly or indirectly, any Equity Interest in any
Person.

3.5         FINANCIAL INFORMATION. 

     (a)      The Parent has filed with the SEC all reports, forms, schedules
and statements and other documents required to be filed by it (the "SEC
DOCUMENTS").  As of their respective filing dates, (i) the SEC Documents
complied in all material respects with the requirements of the Securities Act,
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such SEC Documents, and (ii) none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  The financial statements included in the SEC Documents
complied, as of their respective filing dates, as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC and as otherwise noted therein) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present, in all material respects, the consolidated financial position of the
Parent and its Subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  Except as set
forth on SCHEDULE 3.5(a) and except for Liabilities incurred in the ordinary
course of business consistent with past practices since the date of the most
recent consolidated balance sheet included in the SEC Documents filed and
publicly available prior to the date hereof, neither the Parent nor any 

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of its Subsidiaries has any Liabilities of any nature (whether accrued, 
absolute, contingent or otherwise) required by GAAP to be set forth on a 
balance sheet or in the notes thereto.

     (b)      SCHEDULE 3.5(b) contains true, correct and complete copies of the
unaudited balance sheets of each of the Entities as of December 31, 1997 (the
"LATEST BALANCE SHEET"; and such date being the "LATEST BALANCE SHEET DATE"),
and the unaudited statements of operations, shareholders' equity and cash flows
for the twelve month period then ended, adjusted to give effect to the
consummation of the transactions contemplated by SECTION 1.2 hereof as if such
transactions were consummated at January 1, 1997 prepared in accordance with
GAAP (the "ENTITIES' FINANCIAL STATEMENTS").

     (c)      Neither of the Sellers has any knowledge of any fact, event or
circumstance that would reasonably cause it to believe that the Entities'
Financial Statements do not fairly present, in all material respects, the
financial position of the Persons referenced therein as of the dates indicated
and the results of operations and cash flows of such Persons for the periods
indicated.

     (d)      SCHEDULE 3.5(d) sets forth as of January 31, 1998, the Funded
Indebtedness owed by the Parent and each Entity to any third party (separately
identifying the portion of such Funded Indebtedness incurred in respect of each
mobile and each fixed magnetic resonance imaging unit (each, an "MRI UNIT"),
each mobile and each fixed computed axial tomography unit (each, a "CT UNIT"),
each single photon emission computed tomography unit (each a "SPECT UNIT"), each
ultrasound machine (each, an "ULTRASOUND MACHINE"), each respiratory system
(each a "RESPIRATORY SYSTEM"), and each cardiac catherization lab (each a "CATH
LAB" and together with the MRI Units, CT Units, SPECT Units, Ultrasound
Machines, Respiratory Systems, and Cath Labs, the "UNITS") owned, leased or on
order by any Entity and the Parent, if any).  As of the date hereof, the sum of
the aggregate commitments of the lenders under the DVI Revolving Credit
Agreement is $5,500,000 and as of the close of business on March 10, 1998,
the aggregate principal amount of loans and obligations outstanding thereunder
is $5,222,484.75.  

     (e)      SCHEDULE 3.5(e) sets forth as of (other than in the case of
clause (iv) below) the date which is 10 Business Days prior to the date hereof,
(i) the specifications of each Unit owned, leased, used or on order by any
Entity or the Parent, (ii) the name of the applicable Entity or the Parent,
whether such Unit is owned, leased, used or on order and, in the case of Units
used but not owned or leased by any such Person, the name of the owner or the
lessee thereof, (iii) the date that such Person purchased, commenced leasing or
using or, in the case of Units on order, has committed to purchase or lease,
such Unit, (iv) the net book value per Unit as of December 31, 1997 or, in the
case of Units on order, the price to be paid to the manufacturer thereof or that
any such Person or any source of financing has committed to pay to the
manufacturer thereof (specifying, if applicable, the price applicable to the
Unit and the price applicable to the coach or van used or to be used to
transport such Unit) and (v) a summary of whether Tax payments in respect of the
lease payments for each Unit are paid at the inception of the relevant lease or
as part of the monthly lease payment.

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     (f)      SCHEDULE 3.5(f) sets forth (i) the date and cost of each upgrade
completed in the one year period prior to the date hereof to each Unit owned,
leased or used by each Entity or the Parent and (ii) all amounts in excess of an
aggregate of $25,000 that each Entity or the Parent has committed to pay in
respect of any pending upgrade.

     (g)      SCHEDULE 3.5(g) sets forth a true and correct Schedule of all of
the accounts payable of the Entities (including payee, amount due and due date)
as of the close of business on January 31, 1998.

     (h)      SCHEDULE 3.5(h) sets forth a true and correct Schedule of (i) all
principal payments or prepayments made by the Parent and each Entity for the
year ended on the Latest Balance Sheet Date and for the one month period ending
January 31, 1998, (ii) the interest expense incurred by the Parent and each
Entity in respect of Funded Indebtedness for the year ended on the Latest
Balance Sheet Date and for the one month period ending January 31, 1998, (iii)
the revenues, cash operating expenses, and EBITDA generated per Unit for the
Parent and each Entity for the year ended on the Latest Balance Sheet Date and
for the one month period ending January 31, 1998 and (iv) the capital
expenditures made by the Parent and each Entity for the year ended on the Latest
Balance Sheet Date, and for the one month period ending January 31, 1998, in
each case, setting forth such information separately for each such Person.

3.6         INFORMATION SUPPLIED

     None of the information supplied or to be supplied by the Parent
specifically for inclusion or incorporation by reference in any documents to be
filed by the Parent with the SEC or any other Governmental Entity in connection
with the Parent Stockholder Vote and the other transactions contemplated hereby
and under the Related Documents will, on the date of its filing, or, with
respect to the Proxy Statement, as supplemented if necessary, on the date it is
sent or given to stockholders or at the time of the Parent Stockholder Vote,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; PROVIDED, that no representation or warranty is made by the Sellers
with respect to statements made or incorporated by reference therein based on
information supplied by the Purchasers specifically for inclusion or
incorporation by reference therein.  The Proxy Statement and any such other
documents filed by the Parent with the SEC or with any other Governmental Entity
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.

3.7         ABSENCE OF CHANGES.

     Since the Latest Balance Sheet Date and on or prior to the date hereof,
except as set forth on SCHEDULE 3.7, the Parent (with respect to the Business)
and each Entity have been operated in the ordinary course, consistent with past
practice, and there has not been:

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     (a)      any change or event that, individually or in the aggregate with
any other change or event, has had or can reasonably be expected to have a
material adverse effect on the assets, properties, business, financial
condition, results of operations or prospects of the Business (a "Material
Adverse Effect");

     (b)      any general uniform increase in the salaries or wages of
employees of the Parent or any Entity, or any increase in salaries or wages
payable to any officer, director or employee of any such Person whose total
salary, wages, bonus and commissions for 1997 exceeded $75,000;

     (c)      any change in the tax or other accounting methods or practices
followed by the Parent or any Entity, any change in depreciation or amortization
policies or rates previously adopted or any write-up of inventory or other
assets;

     (d)      any delivery of a notice of non-renewal or any failure to renew
any Contract by any hospitals, clinics, medical or healthcare providers, health
maintenance organizations or other customers or third party payors, which are
material, individually or in the aggregate, except that any such event shall not
be deemed material for this purpose to the extent that new or additional
Contracts as replacements thereof have been obtained;

     (e)      any loss of any employee of the Parent or any Entity who earned,
during 1997, more than $125,000 (in salary, bonus and other cash compensation);

     (f)      any sale, lease, license or other disposition of any assets with
a book value in excess of $50,000 in the aggregate; 

     (g)      any issuance, sale or transfer of any Equity Interests of any
Entity or issuance or sale of any securities convertible into, exercisable or
exchangeable for or options or warrants to purchase or rights to subscribe for,
any such Equity Interests;

     (h)      any new Contract (except for any Contract related to any Employee
Benefit Plan of the Parent for which neither Entity has assumed or has any
Liability that is not disclosed hereunder) entered into with aggregate payments
which could exceed $50,000, any incurrence of Funded Indebtedness or operating
leases (other than Funded Indebtedness or operating leases outstanding on the
date hereof and disclosed on any Schedule hereunder) or any amendment, waiver or
modification with respect to the terms of any Funded Indebtedness or operating
leases (including, without limitation, any increase in the commitments to extend
credit thereunder);

     (i)      a change in any accounting principles or policies;

     (j)      any material Tax election made or compromise of any material Tax
Liability;

     (k)      any payments made by the Parent or any Entity to or for the
benefit of GK Finance  (other than payments made on behalf of GK Finance and
reimbursed by GK Finance on a basis consistent with past practices and in the
ordinary course of business);

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     (l)      any amendment to any Organizational Document or Contracts;

     (m)      any creation or incurrence (whether or not voluntary) of any
Encumbrance other than Permitted Encumbrances and Encumbrances which exist on
the date hereof and which have been disclosed on the Schedules to this
Agreement;

     (n)      any payments made or deferred in respect of accounts payable or
any expenses in a manner which is not consistent with past practices or is not
in the ordinary course of business; or

     (o)      any agreement, whether in writing or otherwise, to take any of
the actions specified in the foregoing clauses in this SECTION 3.7.

3.8         TAX MATTERS; CERTAIN DEFINITIONS.

     (a)      Except as set forth on SCHEDULE 3.8(a), each Entity, each Seller
and every other corporation (a "CONSOLIDATED AFFILIATE") that is or has been
included (or should have been included) in the filing of a consolidated or
combined Tax Return that included any Entity or Seller, (but with respect to a
Consolidated Affiliate, only for the years that such Consolidated Affiliate was
(or should have been included) in such Tax Return (the "YEARS INCLUDED")),

               (i)    has timely paid or caused to be paid all Taxes required to
       be paid by it through the date hereof and as of the Closing Date 
       (including any Taxes shown due on any Tax Return filed by such Entity 
       or Seller);

               (ii)   has filed or caused to be filed in a timely and proper
       manner (within any applicable extension periods) all Tax Returns required
       to be filed by it with the appropriate Governmental Entities in all
       jurisdictions in which such Tax Returns are required to be filed; and

                (iii)   has not requested or caused to be requested any
       extension of time within which to file any Tax Return, which Tax Return 
       has not since been filed.

     (b)      The Sellers have previously delivered true, correct and 
complete copies of all Tax Returns filed by or on behalf of the Sellers and 
each Entity for each of the Tax years of each such Person for which the 
applicable statutes of limitation have not, as of the Closing Date, expired.  
All such Tax Returns are true, complete and correct.

     (c)      Except as set forth in SCHEDULE 3.8(c):

               (i)    no Entity, Seller or Consolidated Affiliate, for the Years
       Included, has been notified by the Internal Revenue Service or any other
       taxing authority that any issues have been raised, which issues are
       currently pending, by the Internal Revenue Service or any other taxing
       authority in connection with any Tax Return of any such Person, there are
       no pending Tax audits and no waivers of 

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       statutes of limitation have been given or requested with 
       respect to any such Person which waivers are currently in effect;

               (ii)   full and adequate provision has been made (A) on the 
       Latest Balance Sheet, and the books and records of each Entity and the 
       Sellers for all Tax Liabilities of such Person for all periods ending on 
       or prior to the Latest Balance Sheet Date, and (B) on the books and 
       records of each such Person for all Tax Liabilities of each such Person 
       for all periods beginning after the Latest Balance Sheet Date;

               (iii)  no Entity, Seller or Consolidated Affiliate has or 
       shall incur any Tax Liability from and after the Latest Balance Sheet 
       Date through the Closing Date other than Taxes attributable to the 
       transactions described herein or attributable to transactions or other 
       activities conducted in the ordinary course of business and consistent 
       with previous years and past practices;

               (iv)   no Entity or the Sellers is or has (A) made an 
       election to be treated as a "CONSENTING CORPORATION" under Section 
       341(f) of the Code or (B) been a "PERSONAL HOLDING COMPANY" within the 
       meaning of Section 542 of the Code;
       
               (v)    each Entity, Seller and Consolidated Affiliate, for the 
       Years Included, has complied in all respects with all applicable Laws 
       relating to the collection or withholding of Taxes (such as sales Taxes 
       or withholding of Taxes from the wages of employees);
       
               (vi)   CT Sub is, as of the Closing Date will be, and has been 
       from October 15, 1987 and through the Closing, a member of the affiliated
       group, as defined in Section 1504 of the Code, that included the Parent 
       (the "CONSOLIDATED GROUP").  CT Sub has been included in all consolidated
       Tax Returns filed by the Consolidated Group for all periods during which 
       CT Sub has been a member of the Consolidated Group including the taxable 
       year of the Consolidated Group that includes the Closing Date;

               (vii)  no Entity or the Sellers has incurred any 
       Liability to make or possibly make any payments either alone or in 
       conjunction with any other payments, including payments that are made in 
       connection with transactions contemplated hereunder or under the Related 
       Documents, that would constitute a "PARACHUTE PAYMENT" within the 
       meaning of, Section 280G of the Code (or any corresponding provision of 
       state, local or foreign income Tax Law);

               (viii)  no Entity has agreed with the Internal Revenue Service 
       to change its method of accounting and the Internal Revenue Service has 
       not proposed that any Entity change its method of accounting for any Tax 
       period;

               (ix)   no written claim has ever been made by any taxing 
       authority in a jurisdiction in which any Entity, Seller or Consolidated 
       Affiliate (for the Years Included) does not file Tax Returns that such 
       Person is or may be subject to taxation by that jurisdiction; and

                           11

<PAGE>

               (x)    no Entity or the Sellers is a foreign Person 
       within the meaning of Treas. Reg. Section 1.1445-2(b), and the 
       Purchasers have been furnished with a true and accurate certificate of 
       each such Person so stating which complies in all respects with Treas. 
       Reg. Section 1.1445-2(b)(1).

     (d)      SCHEDULE 3.8(d) sets forth a list of all of the states and 
localities with respect to which each Entity and the Sellers is required 
to file or be included in a consolidated or combined filing of any 
corporate, income or franchise tax returns during the three taxable 
years ended December 31, 1996.

     (e)      The Partnership, since its date of organization and for 
all years and periods thereafter up to the Closing, has been validly 
classified as a partnership for Federal, state and local income tax 
purposes and subject to the provisions of Subchapter K of the Code, the 
Partnership will have a valid Section 754 election in effect as of the 
Closing Date.

     (f)      M Sub has not engaged in any sales, transfers or 
dispositions of tangible personal property (other than the sale of the M 
Sub Partnership Interests to be sold on the Closing Date) during the 
twelve month period ending on the Closing Date.

3.9         TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS. 

     (a)      Each Entity has (or will have after the consummation of 
the Asset Contribution) good and marketable title to all of the assets, 
properties and interests in properties, real, personal or mixed, 
reflected on its Latest Balance Sheet or acquired after such Latest 
Balance Sheet Date (except accounts receivable paid in full subsequent 
to the Latest Balance Sheet Date), free and clear of all Encumbrances, 
of any kind or character, except for those Encumbrances set forth on 
SCHEDULE 3.9 and Permitted Encumbrances.  The properties and assets 
necessary or required to conduct the Business are in reasonably good 
repair and operating condition, ordinary wear and tear excepted and are 
sufficient for the conduct of the Business as presently conducted. After 
the consummation of the transactions contemplated by SECTION 1.2 hereof, 
the Parent and M Sub shall own no assets whatsoever related to the 
Business (other than the Excluded Assets) and the Partnership shall 
acquire good and marketable title to all of the Purchased Parent Assets. 
As of the Closing Date, each of the transactions contemplated by 
SECTION 1.2 hereof shall have been consummated in accordance with their 
respective terms.  Each of SCHEDULE 1.2(a), SCHEDULE 1.2(b) and SCHEDULE 
1.2(c) accurately reflects the aggregate balances of each of the assets 
and liabilities set forth therein, in each case as of the date hereof.

     (b)      Except as set forth in SCHEDULE 3.9, the Parent and each 
Entity has complied in all material respects with the terms of all 
material leases to which it is a party or under which it is in occupancy 
relating to the Business, and all such leases are in full force and 
effect.  The Parent and each Entity enjoy peaceful and undisturbed 
possession under all such material leases.

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<PAGE>


3.10        REAL PROPERTY-OWNED OR LEASED.

     No Entity owns any real property.  SCHEDULE 3.10(a) contains a list 
and brief description of all of the real property leased by each Entity 
pursuant to one or more leases (the "LEASED PROPERTY"), and sets forth 
the names of the lessor and the lessee and the basic terms thereof.  The 
Leased Property constitutes all real property used or occupied by the 
Entities in connection with the Business.

3.11        INTELLECTUAL PROPERTY. 

     (a)      Except in each case as set forth on SCHEDULE 3.11(a):

               (i)    each Entity owns, has the right to use, sell, license and 
       dispose of, and has the right to bring actions for the infringement of, 
       all Intellectual Property Rights necessary or required for the conduct 
       of the Business (collectively, the "OWNED REQUISITE RIGHTS"), other than 
       those Intellectual Property Rights for which any Entity has a valid 
       license, all of which are listed on SCHEDULE 3.11(a) (collectively, the 
       "LICENSED REQUISITE RIGHTS"; and together with the Owned Requisite 
       Rights, the "REQUISITE RIGHTS"), and such rights to use, sell, license, 
       dispose of and bring actions are exclusive with respect to the Owned 
       Requisite Rights;

               (ii)   each Entity has taken reasonable and practicable steps
       designed to safeguard and maintain (i) the secrecy and confidentiality of
       Confidential or Proprietary Information and (ii) the proprietary rights 
       of each Entity in all of its Requisite Rights;

               (iii)  no Entity has interfered with, infringed upon, 
       misappropriated or otherwise come into conflict with any Intellectual 
       Property Rights of any Person or committed any acts of unfair 
       competition, and no Entity has received from any Person in the past five 
       years any notice, charge, complaint, claim or assertion thereof, and no 
       such claim is impliedly threatened; and 

               (iv)   no Entity has sent to any Person in the past five 
       years, or otherwise communicated to any Person, any notice, charge, 
       complaint, claim or other assertion of any present, impending or 
       threatened infringement by or misappropriation of, or other conflict 
       with, any Intellectual Property Rights of any Entity by such other 
       Person or any acts of unfair competition by such other Person, nor to 
       the Best Knowledge of the Sellers, is any such infringement, 
       misappropriation, conflict or act of unfair competition occurring or 
       threatened.

     (b)      SCHEDULE 3.11(b) contains a true and complete list of all 
applications, filings and other formal actions made or taken pursuant to 
any Laws by each Entity to perfect or protect its interest in its 
Intellectual Property Rights, including, without limitation, all 
patents, patent applications, trademarks, trademark applications, 
service marks and service mark applications, copyrights and copyright 
applications.

                           13

<PAGE>

3.12        AGREEMENTS, NO DEFAULTS, ETC. 

     (a)      Except for Contracts relating to any Employee Benefit Plan 
listed on SCHEDULE 3.17(a), SCHEDULE 3.12 contains a true and complete 
list and brief description of all Contracts, to which each Entity is a 
party and (x) which were entered into or made outside the ordinary 
course of business, or (y) which were entered into or made in the 
ordinary course of business and are described in any of CLAUSES (i) 
through (xiv) of this SECTION 3.12(a).  Except as set forth on SCHEDULE 
3.12, no Entity is a party to any of the following:  (i) 
distributorship, dealer, sales, advertising, agency, manufacturer's 
representative or other Contract relating to the payment of a 
commission; (ii) Contract for the employment of any officer, employee or 
consultant or any other type of Contract or understanding with any 
officer, employee or consultant, including any agreement or 
understanding relating to severance payments, but excluding Contracts, 
agreements or understandings relating to any Employee Benefit Plan 
listed on SCHEDULE 3.17(a); (iii) indenture, mortgage, promissory note, 
loan agreement, security agreement, pledge agreement, conditional sale, 
guarantee or other Contract for the borrowing of money, for a line of 
credit or for a Capital Lease; (iv) Contract for charitable 
contributions; (v) Contract for capital expenditures in excess of 
$25,000 individually or $100,000 in the aggregate; (vi) Contract or 
arrangement for the sale of any assets, properties or rights other than 
the sale of services or products in the ordinary course of business; 
(vii) lease or other agreement pursuant to which it is a lessee of or 
holds or operates any machinery, equipment (including Units), motor 
vehicles, office furniture, fixtures, products, merchandise or other 
personal property owned by any other Person, with annual lease payments 
in excess of $20,000 individually or $50,000 in the aggregate; (viii) 
Contract with respect to the lending or investing of funds, other than 
with respect to any Employee Benefit Plan listed on SCHEDULE 3.17(a); 
(ix) Contract with respect to any form of intangible property, including 
any Intellectual Property Rights; (x) Contract which restricts any 
Entity from engaging in any aspect of the Business or any other business 
anywhere in the world; (xi) Contract or group of related Contracts with 
the same Person (excluding purchase orders entered into in the ordinary 
course of business which are to be completed within three months of 
entering into such purchase orders) for the purchase or sale of products 
or services under which the undelivered balance thereof (including the 
aggregate undelivered balance under any such Contracts between the same 
Person and such Entity) has a selling price or outstanding balance in 
excess of $10,000; (xii) agreement for the acquisition or disposition of 
a Person or a division of a Person for which either of the Entities 
shall have continuing Liabilities after the Closing Date; (xiii) 
Contract to provide MRI, CT, ultrasound or nuclear medicine services to 
a hospital, clinic or provider; and (xiv) other Contract material to the 
Business, including all franchise agreements and license agreements and 
all financing agreements related thereto, other than with respect to any 
Employee Benefit Plan listed on SCHEDULE 3.17(a).  With respect to the 
Contracts specified in SECTION 3.12(a)(vii), SCHEDULE 3.12 sets forth 
with respect to each such Contract, as of the date hereof, the aggregate 
annual rental payments (including interest factor) and the purchase 
price payable to terminate such Contract and acquire the underlying 
asset.  With respect to the Contracts specified in SECTION 
3.12(a)(xiii), SCHEDULE 3.12 sets forth the fees, as of the date hereof, 
for each scan, study or other service performed thereunder.

                           14

<PAGE>

     (b)      All items listed on SCHEDULE 3.12 are in full force and effect,
constitute legal, valid and binding obligations of the respective parties
thereto, and are enforceable in accordance with their respective terms except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in equity or at law).  Except as set forth on SCHEDULE 3.12, there
exists no default, or any event which upon the giving of notice or the passage
of time, or both, would give rise to a claim of a default in the performance by
any Entity or to the Best Knowledge of the Sellers, any other party to any of
the foregoing of their respective obligations thereunder.  The Purchasers have
been furnished with true, complete and correct copies of all items listed on
SCHEDULE 3.12.

3.13        LITIGATION, ETC. 

     (a)      Except as disclosed on SCHEDULE 3.13(a), there are no (i)
Proceedings pending or, to the Best Knowledge of the Sellers, threatened against
any Entity, whether at law or in equity, whether civil or criminal in nature or
whether before or by any Governmental Entity or arbitrator, or (ii) Orders of
any Governmental Entity or arbitrator with respect to, involving or against any
Entity.  The Sellers have delivered to the Purchasers, or made available to the
Purchasers, all material documents and correspondence relating to such matters
referred to on SCHEDULE 3.13(a).

     (b)      SCHEDULE 3.13(b) lists each matter described in SECTION 3.13(a)
that was in existence within the last 3 years that resulted in any criminal
sanctions or payments in excess of $50,000 by any Entity (whether as a result of
a judgment, civil fine, settlement or otherwise).

3.14        COMPLIANCE WITH LAWS. 

     Each Entity (a) has complied in all respects with, and is in compliance in
all respects with, all Laws, Orders and Permits applicable to it and the
Business, the noncompliance with which could reasonably be expected to have a
Material Adverse Effect and (b) has all material Permits used or necessary in
the conduct of the Business.  All of such Permits are listed on SCHEDULE 3.14,
are in full force and effect, no violations with respect to any thereof have
occurred or are or have been recorded, no Proceeding is pending or, to the Best
Knowledge of the Sellers, threatened to revoke or limit any thereof except, in
each case, such of the foregoing as could not reasonably be expected to have a
Material Adverse Effect.  No investigation or review by any Governmental Entity
with respect to any Entity is pending or, to the Best Knowledge of the Sellers,
threatened, nor has any Governmental Entity notified any Entity or any Seller of
its intention to conduct the same.

3.15        INSURANCE. 

     (a)      SCHEDULE 3.15(a) contains a true and complete list of all
policies of liability, theft, fidelity, fire, product liability, workmen's
compensation and other forms of insurance held by each Entity and/or by any
Seller for the benefit of any Entity 

                           15

<PAGE>

(specifying the insurer, amount of coverage, type of insurance, policy number 
and any pending claims thereunder) other than policies relating to any 
Employee Benefit Plan.

     (b)      Except as set forth on SCHEDULE 3.15(b), with respect to each
policy of insurance listed on SCHEDULE 3.15(a): (i) all premiums with respect
thereto are currently paid and are not subject to adjustment, and no Person is
in default in any respect with respect to its obligations under such policy, and
(ii) no Entity has received any notice that such policy has been or shall be
canceled or terminated or will not be renewed on substantially the same terms as
are now in effect or the premium on such policy shall be materially increased on
the renewal thereof.

3.16        LABOR RELATIONS: EMPLOYEES. 

     (a)      SCHEDULE 3.16(a) sets forth a list of all directors, officers and
employees of each Entity and employees of the Parent (solely with respect to the
Business) as of the date hereof whose aggregate compensation exceeded $75,000 in
1997, together with their respective titles, their rate of annual salary,
bonuses and commissions for 1997 and the respective dates on which they
commenced employment.  To the extent any such employee is on a leave of absence
as of the date hereof, SCHEDULE 3.16(a) indicates the nature of such leave of
absence and such employee's anticipated date of return to active employment. 
Except as set forth on SCHEDULE 3.16(a), no former employee whose aggregate
compensation exceeded $75,000 in 1997 has left the service of any Entity or the
Parent within the last 6 months.  The schedule of employees of the Parent and
the Entities previously provided to the Purchasers by the Parent (which sets
forth the Person (as among the Parent and the Entities) which employs each such
employee) was true and correct as of the date provided and none of such
employees who are currently employees of Parent or the Entities has become
employed by any other Person (as among Parent and the Entities) since such date.

     (b)      As of the date hereof, except as set forth on SCHEDULE 3.16(b):
(i) there is no labor strike or work stoppage actually pending against any
Entity or the Parent; (ii) no Entity or the Parent is a party to or bound by any
collective bargaining agreement or union contract; (iii) no such agreement is
currently being negotiated by any Entity or the Parent and (iv) no Entity or the
Parent has received a request for recognition from any labor organization or any
notice that a petition for election with respect to such Person has been filed
with the National Labor Relations Board.

3.17        ERISA COMPLIANCE. 

     (A)      SCHEDULE 3.17(a) contains a true, complete and correct list of
all existing Employee Benefit Plans (collectively, the "EMPLOYEE PLANS") (i)
that cover any employees, contract employees or former employees of any Entity
or any spouses, family members or beneficiaries thereof (A) that are maintained,
sponsored or contributed to by any Entity or (B) with respect to which any
Entity is obligated to contribute or has any Liability, or (ii) with respect to
which any Entity has any Liability on account of the maintenance or sponsorship
thereof or contribution thereto by any present or former ERISA Affiliate of any
Entity.

                           16

<PAGE>

     (b)      ADMINISTRATION AND COMPLIANCE.  Except as set forth on SCHEDULE
3.17(b), with respect to each Employee Plan:

               (i)    such Employee Plan has been established, maintained, 
       operated and administered in all material respects in accordance with 
       its terms and in compliance in all material respects with ERISA, the 
       Code, and other applicable Laws (including with respect to reporting and 
       disclosure);

               (ii)   all amounts withheld pursuant to such Employee 
       Plan from employees have, where applicable, been timely deposited into 
       the appropriate trust or account;
       
                      (iii)  no Entity or any ERISA Affiliate of either 
Entity has breached the fiduciary rules of ERISA or engaged in a 
prohibited transaction that could subject either Entity to any Tax or 
penalty imposed under Section 4975 of the Code or Section 502(i), (j) or 
(l) of ERISA in excess of $50,000;

               (iv)   as of the date hereof, no Proceedings (other than 
routine claims for benefits or administrative appeals with respect 
thereto) are pending against such Employee Plan;

               (v)    such Employee Plan, if intended to be "QUALIFIED", 
within the meaning of Section 401(a) of the Code, has been determined by 
the Internal Revenue Service to be so qualified to the extent addressed 
in the most recent favorable determination letter, and nothing has 
occurred that has or could reasonably be expected to adversely affect 
such qualification;

               (vi)   except as may be required under Laws of general 
application, such Employee Plan does not obligate any Entity to provide 
any employee or former employee, or their spouses, family members or 
beneficiaries, any post-employment or post-retirement health or life 
insurance, accident or other "WELFARE-TYPE" benefits;

               (vii)  if such Employee Plan is a "GROUP HEALTH PLAN" 
within the meaning of Section 5000 of the Code, such Employee Plan has 
been maintained in compliance with Section 4980B of the Code and Title 
I, Subtitle B, Part 6 of ERISA so that no Tax imposed under Section 
4980B of the Code has been or is expected to be incurred by either 
Entity in excess of $50,000;

               (viii)   all reporting and disclosure obligations imposed 
under ERISA and the Code have been satisfied in all material respects 
and no IRS Form 5500 has been filed late (after consideration of any 
applicable extension) for any of the three most recently ended plan 
years; and

               (ix)   without limiting SECTION 3.8(c), no benefit 
payable or which becomes payable by any Entity pursuant to such Employee 
Plan shall constitute an "excess parachute payment," within the meaning 
of Section 280G of the Code, which is or may be subject to the 
imposition of an excise Tax under Section 4999 

                          17

<PAGE>


       of the Code or which will not be deductible by reason of Section 280G of 
       the Code.

     (c)      Since 1988, no Entity and no ERISA Affiliate of any Entity 
is or has ever maintained or been obligated to contribute to a 
"multiemployer plan" as defined in Section 3(37) of ERISA, a "multiple 
employer plan," as defined in Section 413 of the Code, or a "defined 
benefit pension plan," as defined in Section 3(35) of ERISA;

     (d)      With respect to each Employee Plan, as of the date hereof, 
the Purchasers have been provided with true and complete copies, to the 
extent applicable, of each plan and trust document governing the terms 
of such Employee Plan, the two most recent annual reports (Form 5500 and 
attachments) and financial statements prepared therefor, the most recent 
favorable determination letter issued to Parent or either Entity (and 
pending requests therefor), and each of the foregoing documents 
accurately reflects the terms of such Employee Plan in effect at the 
time such document was prepared (including, without limitation, any 
agreement or provision which would limit the ability of any Entity to 
make any prospective amendments or terminate such Employee Plan).

3.18        CERTAIN ADDITIONAL REGULATORY MATTERS. 

     (a)      None of the Sellers, the Entities or any officer, director 
or managing employee of the Sellers or the Entities (within the meaning 
of 42 U.S.C. (Section 1320a-5(b)) have engaged in any activities which 
constitute violations of, or are cause for imposition of civil penalties 
upon any Entity or mandatory or permissive exclusion of any Entity from 
Medicare or Medicaid, under (S) 1320a-7, 1320a-7a, 1320a-7b, or 1395nn 
of Title 42 of the United States Code, the federal Civilian Health and 
Medical Plan of the Uniformed Services statute ("CHAMPUS"), or the 
regulations promulgated pursuant to such statutes or regulations or 
related state or local statutes or which constitute violations of or 
deficiencies under the standards of any private accrediting organization 
from which any Entity is accredited or seeks accreditation, including 
the following activities:

               (i)    knowingly and willfully making or causing to be 
       made a false statement or representation of a material fact in any 
       application for any benefit or payment;
       
               (ii)   knowingly and willfully making or causing to be made
       any false statement or representation of a material fact for use in 
       determining rights to any benefit or payment;
       
               (iii)  knowingly and willfully presenting or causing to be 
       presented a claim for reimbursement under CHAMPUS, Medicare, Medicaid 
       or any other State Health Care Program or Federal Health Care Program 
       that is (i) for an item or service that the Person presenting or causing
       to be presented knows or should know was not provided as claimed, or 
       (ii) for an item or service where the Person presenting knows or should 
       know that the claim is false or fraudulent;
       
               (iv)   knowingly and willfully offering, paying, soliciting or 
       receiving any remuneration (including any kickback, bribe or rebate), 
       directly or indirectly, 
       
                                           18

<PAGE>

       overtly or covertly, in cash or in kind (i) in return for referring, or 
       to induce the referral of, an individual to a Person for the furnishing 
       or arranging for the furnishing of any item or service for which payment 
       may be made in whole or in part by CHAMPUS, Medicare or Medicaid, or any 
       other State Health Care Program or any Federal Health Care Program, or 
       (iii) in return for, or to induce, the purchase, lease, or order, or the 
       arranging for or recommending of the purchase, lease, or order, of any 
       good, facility, service, or item for which payment may be made in whole 
       or in part by CHAMPUS, Medicare or Medicaid or any other State Health 
       Care Program or any Federal Health Care Program; or

               (v)    knowingly and willfully making or causing to be 
       made or inducing or seeking to induce the making of any false statement 
       or representation (or omitting to state a material fact required to be 
       stated therein or necessary to make the statements contained therein not 
       misleading) of a material fact with respect to (i) the conditions or 
       operations of a facility in order that the facility may qualify for 
       CHAMPUS, Medicare, Medicaid or any other State Health Care Program 
       certification or any Federal Health Care Program certification, or (ii) 
       information required to be provided under (S) 1124(A) of the Social 
       Security Act ("SSA") (42 U.S.C. (S) 1320a-3).

     (b)      Each Entity has a Medicare provider number, and a 
participating provider agreement in force with a Medicare Part B 
carrier, in each locale, as applicable, in which such Entity bills 
directly to Medicare for services furnished by such Entity.

     (c)      Each Entity has a Medicaid number and a participating 
provider agreement in each state, as applicable, in which such Entity 
bills directly to such states' Medicaid agency for services provided by 
such Entity.

3.19        MEDICARE/MEDICAID PARTICIPATION.

     None of the Sellers, the Entities, or any officer, director, or 
managing employee (as defined in SSA (S) 1126(b) or any regulations 
promulgated thereunder) of the Sellers or the Entities:  (1) has had a 
civil monetary penalty assessed against him, her or it under (S) 1128A 
of the SSA or any regulations promulgated thereunder; (2) has been 
excluded from participation under the Medicare program or a state health 
care program as defined in SSA (S) 1128(h) or any regulations 
promulgated thereunder ("STATE HEALTH CARE PROGRAM") or a federal health 
care program as defined in SSA (S) 1128B(f) ("FEDERAL HEALTH CARE 
PROGRAM"); or (3) has been convicted (as that term is defined in 42 
C.F.R. (S) 1001.2) of any of the following categories of offenses as 
described in SSA (S) 1128(a) and (b)(1), (2), (3) or any regulations 
promulgated thereunder:

               (i)    criminal offenses relating to the delivery of an item or
       service under Medicare or any State Health Care Program or any Federal
       Health Care Program;

               (ii)   criminal offenses under federal or state law relating to
       patient neglect or abuse in connection with the delivery of a health care
       item or service;

                                     19


<PAGE>

          (iii)  criminal offenses under federal or state law relating 
       to fraud, theft, embezzlement, breach of fiduciary responsibility, or 
       other financial misconduct in connection with the delivery of a health 
       care item or service or with respect to any act or omission in a program 
       operated by or financed in whole or in part by any federal, state or 
       local governmental agency;
       
           (iv)   federal or state laws relating to the interference with or
       obstruction of any investigation into any criminal offense; or
       
            (v)    criminal offenses under federal or state law relating to the
       unlawful manufacture, distribution, prescription or dispensing of a
       controlled substance.

3.20   ENVIRONMENTAL MATTERS. 

     (a)      Except as set forth on SCHEDULE 3.20(a), each Entity is in 
material compliance with all applicable Environmental, Health and Safety 
Laws. Each Entity has all of the Permits, licenses, authorizations, 
registrations and approvals from Governmental Entities necessary to 
operate the Business, and all such Permits, licenses, authorizations, 
registrations and approvals are valid and in effect

     (b)      Except as set forth on SCHEDULE 3.20(b),  there are no 
pending or, to the knowledge of the Sellers, threatened claims by any 
Governmental Entity concerning or alleging a violation of any 
Environmental Health and Safety Law by any Entity, nor are any pending 
or, to the knowledge of the Sellers, threatened claims under any 
Environmental Health and Safety Laws concerning any property or facility 
previously owned, leased or operated by any Seller or Entity or 
predecessor of any Seller or Entity.

     (c)      Except as set forth on SCHEDULE 3.20(c), no Entity 
presently is the subject of any ongoing administrative or judicial 
proceeding or investigation brought by any Governmental Entity under any 
Environmental, Health or Safety Law including, without limitation, any 
voluntary clean-up program or any Proceeding under the Comprehensive 
Environmental Response, Compensation and Liability Act ("CERCLA," also 
known as "SUPERFUND") or any state counterparts to CERCLA, nor is any 
Entity obligated to remediate, monitor, investigate, conduct corrective 
action or report on environmental, health and safety matters concerning 
the Business pursuant to any order, agreement, decree or mediation or 
arbitration proceeding.

     (d)      Except as set forth on SCHEDULE 3.20(d), in the five years 
preceding the date hereof, no Entity has received any written notice, 
report or other written information (i) regarding any actual or alleged 
violation of any Environmental, Health and Safety Laws, or (ii) that any 
Entity is potentially responsible under any Environmental, Health and 
Safety Laws for response costs, corrective action or natural resource 
damages, as those terms are defined under any Environmental, Health and 
Safety Laws.

     (e)      Except as set forth on SCHEDULE 3.20(e), Sellers are not aware of
impending changes in Environmental Health or Safety Laws which could reasonably
be 
                                       20

<PAGE>

expected to materialize before the one year anniversary of the 
Closing Date and which could result in a Material Adverse Effect.

     (f)      Sellers have provided to the Purchasers copies of, or 
access for purposes of review to, all documents, reports, studies or 
other non-legally privileged information concerning environmental, heath 
or safety matters relating to the Business which are in the possession 
of Sellers.  The information prepared or originated by the Sellers or 
the Entities and provided to the Purchasers is true and correct.

3.21   BROKERS. 

     No Seller or Entity has employed any broker or finder or incurred 
any Liability for any brokerage fees, commissions or finders' fees in 
connection with the transactions contemplated hereby for which any 
Purchaser or Alliance may have Liability after the Closing.

3.22   RELATED TRANSACTIONS. 

     Except as set forth on SCHEDULE 3.22 or on SCHEDULES 3.17 (a) OR 
(b) and except for compensation to bona-fide employees of any Entity for 
services rendered in the ordinary course of business, no Affiliate of 
any Entity or any "associate" (as defined in the rules promulgated under 
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")) 
thereof, is now (i) party to any transaction or Contract with any Entity 
providing for the furnishing of services by, or rental of real or 
personal property from, or otherwise requiring payments to, any such 
Affiliate or associate, or (ii) the direct or indirect owner of a 
controlling interest in any Person which is a present or potential 
competitor, supplier or customer of any Entity (other than nonaffiliated 
holdings in publicly held companies).  Except as set forth on SCHEDULE 
3.22, no Entity is a guarantor or otherwise liable for any actual or 
potential Liability of its Affiliates and their associates (other than 
with respect to any Entity, the other Entity).  Except as set forth on 
SCHEDULE 3.22, no Entity owns or pays for any social club memberships, 
whether or not for the benefit of any Entity and/or its executives.

3.23   BANK ACCOUNTS; POWERS OF ATTORNEY. 

     SCHEDULE 3.23 sets forth a true and complete list of (i) all bank 
accounts and safe deposit boxes of each Seller and Entity and all 
Persons who are signatories thereunder or who have access thereto and 
(ii) the names of all persons, firms, associations, corporations or 
business organizations holding general or special powers of attorney 
from any Seller or Entity and a summary of the terms thereof.

3.24   VOTING. 

     The affirmative vote of a majority of the outstanding shares (the 
"PARENT STOCKHOLDER APPROVAL") of the Parent's common stock, par value 
$0.01 per share (the "PARENT COMMON STOCK") is the only vote of the 
holders of any class or series of the Parent's capital stock which is 
necessary to approve this Agreement and the transactions contemplated 
hereby.

                                      21

<PAGE>

3.25   OPINION OF FINANCIAL ADVISOR.

     The Board of Directors of the Parent has received the oral opinion 
of Paine Webber Incorporated to the effect that, as of the date hereof, 
the consideration to be received in respect of Shares pursuant to this 
Agreement is fair from a financial point of view to the Parent.

3.26   PHYSICIAN RELATIONSHIPS.

     (a)      Except as set forth in SCHEDULE 3.26 the Entities do not 
have any "financial relationship" with any "referring physician" or an 
immediate family member of such physician, within those terms' meanings 
under 42 U.S.C. Section 1395nn.

     (b)      To the Best Knowledge of each of the Sellers, no 
"referring physician" (within the meaning of 42 U.S.C. Section 1395nn) 
owns any securities of the Sellers.

3.27   OTHER HOSPITAL RELATIONSHIPS. 

     Except as set forth in SCHEDULE 3.27 other than with respect to reading
radiologists, the Entities do not have any lease or other arrangement with any
hospital or other entity whereby the Entities pay the hospital or other entity
rent or any other fee the amount of which is dependent in whole or in part on
the gross or net revenues, net income, or cash flow of any segment of the
business of the Entities.
                                
                             ARTICLE IV        
                                
            REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS 

     Each Purchaser represents and warrants, severally as to itself, as of the
date hereof and as of the Closing Date as follows:

4.1    ORGANIZATION; CORPORATE AUTHORITY.

     Such Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted.  Such Purchaser is duly
qualified and in good standing to transact business as a foreign Person in those
jurisdictions set forth on SCHEDULE 4.1, which, as of the date hereof,
constitute all the jurisdictions in which the character of the property owned,
leased or operated by such Purchaser or the nature of the business or activities
conducted by such Purchaser makes such qualification necessary.

4.2    CORPORATE ACTION; AUTHORITY; NO CONFLICT. 

     Such Purchaser has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions 

                                       22

<PAGE>

contemplated hereby and thereby.  The execution, delivery and 
performance by such Purchaser of this Agreement and each Related 
Document to which it is or will be a party, and performance of its 
obligations hereunder and thereunder have been duly and validly 
authorized by all necessary corporate action on the part of such 
Purchaser.  This Agreement and each Related Document to which it is or 
will be a party has been or upon the execution thereof will be, duly and 
validly executed and delivered by such Purchaser, and constitutes, or 
upon its execution and delivery will constitute, a valid and binding 
obligation of such Purchaser, enforceable against it in accordance with 
its terms except as such enforceability may be limited by applicable 
bankruptcy, insolvency, reorganization, moratorium or other similar laws 
affecting creditors' rights generally and by general principles of 
equity (regardless of whether enforcement is sought in equity or at 
law).  Neither such Purchaser's execution and delivery of, and/or 
performance of its obligations under, this Agreement and each Related 
Document to which it is or will be a party, nor the consummation of the 
transactions contemplated hereby and thereby shall (i) conflict with or 
result in any violation or breach of, any of the terms, conditions or 
provisions of, or constitute (with due notice or lapse of time, or both) 
a default under, or give rise to any right of termination, cancellation 
or acceleration or result in the creation of any Encumbrance upon any of 
the assets or properties of such Purchaser under provision of such 
Purchaser's Organizational Documents or any Contract to which such 
Purchaser is a party (other than security documents relating to 
financing arrangements existing for the benefit of the Purchasers' 
Affiliates) or bywhich it or any of its assets or properties is or may 
be bound which, in the case of such Contracts, would reasonably be 
expected to have a material adverse effect on any Purchaser or prevent 
the consummation of the transactions contemplated hereby or under the 
Related Documents and other than with respect to the foregoing for which 
consents have been obtained or (ii) violate, or result in the creation 
of an Encumbrance upon any of such Purchaser's assets as a result of, 
any Law's applicable to such Purchaser or any of its properties or 
assets, in each case, which would prohibit the such Purchaser from 
consummating the transactions contemplated hereby.

4.3    BROKERS.

     Such Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby for which any Seller may have any
Liability after the Closing.

4.4    CONSENTS.

     Except as contemplated by this Agreement or as set forth on SCHEDULE 4.4,
and the Related Documents, no consent, approval, Order or authorization of, or
registration, declaration or filing with or notification to, any Governmental
Entity or any third party is required in connection with the execution, delivery
and performance by such Purchaser of this Agreement or the Related Documents to
which such Purchaser is or will be a party or the consummation of the
transactions contemplated hereby or thereby except for those consents,
approvals, Orders, authorizations, registrations, declarations, filings or
notifications the failure to obtain could not reasonably be expected to have a
material 

                                       23

<PAGE>

adverse effect on such Purchaser or except for those consents, 
approvals, Orders, authorizations, registrations, declarations or 
filings which have been obtained.

4.5    INVESTMENT REPRESENTATIONS.

     Each of the Purchasers are acquiring the Shares to be purchased by 
it, for its own account, for investment and not with a view to the 
distribution thereof in violation of the Securities Act.

4.6    INFORMATION SUPPLIED.

     None of the written information supplied or to be supplied by any 
Purchaser specifically for inclusion or incorporation by reference in 
the Proxy Statement, as supplemented if necessary, and any other 
documents to be filed by the Parent with the SEC or any Governmental 
Entity in connection with the transactions contemplated hereby will, on 
the date of its filing or, with respect to the Proxy Statement, as 
supplemented if necessary, on the date it is sent or given to 
stockholders or at the time of the Stockholders Meeting, contain any 
untrue statement of a material fact or omit to state any material fact 
required to be stated therein or necessary in order to make the 
statements therein, in light of the circumstances under which they are 
made, not misleading.
                                
                           ARTICLE V      
                                
                REPRESENTATIONS AND WARRANTIES OF ALLIANCE

     Alliance represents and warrants, as to itself, as of the date hereof
and as of the Closing Date as follows:

5.1    ORGANIZATION; CORPORATE AUTHORITY.

     Alliance is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently proposed to be conducted.

5.2    CORPORATE ACTION; AUTHORITY; NO CONFLICT. 

     Alliance has all requisite power and authority (corporate and 
otherwise) to execute, deliver and perform its obligations under this 
Agreement and each Related Document to which it is or will be a party 
and to consummate the transactions contemplated hereby and thereby.  The 
execution, delivery and performance by Alliance of this Agreement and 
each Related Document to which it is or will be a party, and performance 
of its obligations hereunder and thereunder have been duly and validly 
authorized by all necessary corporate action on the part of Alliance.  
This Agreement and each Related Document to which Alliance is or will be 
a party has been or upon the execution thereof will be, duly and validly 
executed and delivered by it, and constitutes, or upon its execution and 
delivery will constitute, a valid and binding obligation of it, 

                                       24

<PAGE>

enforceable against it in accordance with its terms except as such 
enforceability may be limited by applicable bankruptcy, insolvency, 
reorganization, moratorium or other similar laws affecting creditors' 
rights generally and by general principles of equity (regardless of 
whether enforcement is sought in equity or at law).  Neither Alliance's 
execution and delivery of, and/or performance of its obligations under, 
this Agreement and each Related Document to which it is or will be a 
party, nor the consummation of the transactions contemplated hereby and 
thereby shall (i) conflict with or result in any violation or breach of, 
any of the terms, conditions or provisions of, or constitute (with due 
notice or lapse of time, or both) a default under, or give rise to any 
right of termination, cancellation or acceleration or result in the 
creation of any Encumbrance upon any of the assets or properties of 
Alliance under provision of its Organizational Documents or any Contract 
to which it is a party or by which it or any of its assets or properties 
is or may be bound which, in the case of such Contracts, would 
reasonably be expected to have a material adverse effect on it or 
prevent the consummaton of the transactions contemplated hereby or under 
the Related Documents and other than with respect to the foregoing for 
which consents have been obtained or (ii) violate, or result in the 
creation of an Encumbrance upon any of its assets as a result of, any 
Law's applicable to it or any of its properties or assets, in each case, 
which would prohibit it from consummating the transactions contemplated 
hereby.

5.3    DESIGNATION OF PURCHASERS.

     Alliance has duly designated the Purchasers to acquire the Shares
hereunder, and will cause the Purchasers to perform each and every obligation
undertaken by them herein.
                                
                            ARTICLE VI        
                                
                   COVENANTS AND AGREEMENTS  

6.1    ACCESS TO RECORDS AND PROPERTIES OF THE ENTITIES. 

     From and after the date hereof until the Closing, the Sellers shall, and
shall cause each Entity to afford, (i) to the Purchasers, their respective
lenders and Affiliates and each of their respective authorized representatives,
including accountants, consultants and attorneys, free and full access at all
reasonable times to the assets, business, facilities, properties, books, records
(including tax returns filed and in preparation), customers, consultants, and
employees of or relating to each Entity and the Parent in order that the
Purchasers have full opportunity to make such investigation as they shall
reasonably desire to make of the affairs of each Entity and the Parent and in
order that the Purchasers may integrate the Business into the business currently
being conducted by the Purchasers' Affiliates, and (ii) to the respective
independent certified public accountants of the Purchasers, free and full access
at all reasonable times to the records of the independent certified public
accountants of each Entity and the Parent.  The Sellers shall cause their
employees to actively cooperate and assist Purchasers and such other Persons in
effecting such integration.  From and after the date hereof until the Closing,
(i) the Sellers shall provide to the Purchasers promptly but in any event no
later than the 25th day after the 

                                       25

<PAGE>

last day of each calendar month, a copy of the consolidated and 
consolidating balance sheets, statements of operations, shareholders 
equity and cash flows of the Parent and its Subsidiaries for each such 
calendar month, together with a copy of the Parent's "white book" and 
"blue book" (and any supporting information with respect thereto), and 
(ii) such other information regarding the Parent and its Subsidiaries as 
may be reasonably requested by the Purchasers.  The investigation 
contemplated by this SECTION 5.1 shall not affect or otherwise diminish 
or obviate in any respect any of the representations and warranties or 
the indemnification obligations contained in this Agreement.

6.2    CONDUCT PENDING CLOSING. 

     From and after the date hereof until the earlier of the Closing or 
the termination of this Agreement pursuant to ARTICLE 8, each of the 
Sellers shall, and shall cause each Entity to (unless otherwise 
consented to in writing by the Purchasers):

     (a)      not sell, lease, license or otherwise dispose of any 
assets with a book value in excess of $50,000 in the aggregate;

     (b)      not issue, sell or in any way transfer any Equity 
Interests of the Entities or issue or sell any securities convertible 
into, exercisable or exchangeable for or options or warrants to purchase 
or rights to subscribe for, any such Equity Interests;

     (c)      not change the number of authorized shares of the Equity 
Interests of the Entities or reclassify, combine, split, subdivide or 
redeem or otherwise repurchase any of such Equity Interests, or issue, 
deliver, pledge or encumber any additional Equity Interests of the 
Entities or other securities equivalent to, or exchangeable for, Equity 
Interests of the Entities or enter into any Contract to do any of the 
foregoing;

     (d)      not incur or issue any securities evidencing any Funded 
Indebtedness or enter into any operating leases (other than Funded 
Indebtedness of a Seller for which no Entity (or its assets) is liable 
or obligated (whether contractually, by applicable Law, as a guarantor 
or through the incurrence or grant of any Encumbrances), Funded 
Indebtedness related to money advanced from Sellers or GK Finance to an 
Entity on a basis consistent with past practice and in the ordinary 
course of business, provided that the amounts so advanced are repaid 
prior to the Closing Date, Funded Indebtedness or operating leases 
outstanding on the date hereof and disclosed on any Schedules 
hereunder), or amend, modify or agree to a waiver of the terms of any 
Funded Indebtedness or operating leases (including, without limitation 
increasing any commitments to extend credit thereunder);

     (e)      not enter into any Contract with aggregate payments which 
could exceed $50,000 (except for any Contract related to any Employee 
Benefit Plan of the Parent or any Subsidiary other than the Entities, 
and for which Contract neither Entity assumes or has any Liability not 
disclosed hereunder) or any Contract in respect of the rental of any 
Unit;

     (f)      not enter into any employment agreement, or in any manner 
change the Person (as among the Parent and the Entities) which is the 
employer of the employees of the Parent and the Entities from the Person 
disclosed on the schedule referenced in the 

                                       26

<PAGE>

last sentence of SECTION 3.16(a) as such employee's employer, or 
terminate the employment of any employees in a manner which is 
inconsistent with past practices or policies, or except as required by 
applicable Law, effect any increase in the rate or terms of compensation 
payable or to become payable to officers or employees of any Entity or 
the Parent (solely as relating to the Business) other than increases in 
compensation under Employee Benefit Plans which are available to all 
employees generally;

     (g)      not create or suffer to exist any Encumbrance on any of its
assets or properties other than Permitted Encumbrances, Encumbrances on Equity
Interests or assets of GK Finance or any assets of Subsidiaries of the Parent
other than the Entities, and Encumbrances which exist on the date hereof and
which have been disclosed on the Schedules to this Agreement;

     (h)      not change its tax or accounting principles, policies or
practices, change any depreciation or amortization policies or rates previously
adopted or write-up inventory or any other assets;

     (i)      not make any material Tax election or compromise any material Tax
Liability;

     (j)      not make any payments to or for the benefit of GK Finance (other
than payments made on behalf of GK Finance and reimbursed by GK Finance on a
basis consistent with past practices and in the ordinary course of business);

     (k)      not amend any of its Organizational Documents or any Contracts
(other than Contracts related to any Employee Plan);

     (l)      not enter into any transaction other than in the ordinary course
of business, or any transaction which is not at arms-length with unaffiliated
third Persons; 

     (m)      not take or omit to take any action which would result in the
representations and warranties contained in this Agreement and the Related
Documents being untrue on the Closing Date, other than such action as shall have
been previously agreed to in writing by the parties hereto;

     (n)      not make any material change in the manner in which such Person
extends discounts or credits to customers or any material change in the manner
or terms by which such Person collects its accounts receivable or otherwise
deals with customers;

     (o)      not agree or otherwise commit to take any of the actions set
forth above;

     (p)      promptly provide the Purchasers with at least five Business Days
notice of (i) the terms and conditions with respect to renewals of any existing
Contracts to be renewed by the Entities, (ii) any intention to not renew any
existing Contracts and (iii) the actual nonrenewal of any existing Contract; 

                                    27

<PAGE>

     (q)      conduct its business substantially as presently conducted and
only in the ordinary course consistent with past practice; 

     (r)      use commercially reasonable efforts to (i) maintain its business,
assets, relations with present employees, customers, suppliers, partners,
licensees and operations as an ongoing business and preserve its goodwill, in
accordance with past custom and practice and (ii) to satisfy each of the closing
conditions to be satisfied by it set forth in ARTICLE 6 hereof; and

     (s)      pay and continue to defer all accounts payable and all expenses
in a manner which is consistent with past practices and in the ordinary course
of business.

6.3    EFFORTS TO CONSUMMATE. 

     Subject to the terms and conditions of this Agreement, each party shall use
commercially reasonable efforts to take or cause to be taken all actions and do
or cause to be done all things required under all applicable Laws, in order to
consummate the transactions contemplated hereby.

6.4    NO SOLICITATION. 

     (a)      The Parent shall, shall cause M Sub and each Entity to and shall
direct and cause its and each such Person's officers, directors, employees,
representatives and agents to, immediately cease any discussions or negotiations
with any parties (other than the Purchasers and Alliance) that may be ongoing
with respect to an Alternative Transaction.  The Parent shall not, shall cause M
Sub and each Entity not to and shall not authorize or permit any of its or any
such Person's officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative representing any
such Person to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal that may lead to an
Alternative Transaction or (ii) participate in any discussions or negotiations
regarding any proposed Alternative Transaction; PROVIDED, HOWEVER, that if, at
any time prior to the Closing Date, the Board of Directors of the Parent
determines in good faith, based on written advice from outside counsel, that
action is required by reason of such Board of Directors' fiduciary duties to the
Parent's stockholders under applicable law, the Parent may (subject to
compliance with SECTION 5.4(c)), in response to an unsolicited Third Party
Proposal, (A) furnish information with respect to the Parent and the Entities to
the Person making such Third Party Proposal pursuant to a confidentiality
agreement that is at least as protective of the Parent's and its Subsidiaries'
interests as is the Confidentiality Agreement and (B) participate in
negotiations regarding such a Third Party Proposal.  Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any director, officer or employee of the Parent, M Sub
or any Entity or any investment banker, financial advisor, attorney, accountant
or other representative acting on behalf of any such Person shall be deemed to
be a breach of this SECTION 5.4(a).

                                     28

<PAGE>

     (b)      Neither the Board of Directors of the Parent nor any committee
thereof shall (i) withdraw or modify the approval or recommendation by such
Board of Directors or such committee of this Agreement, the Related Documents or
any of the transactions contemplated hereby or thereby, (ii) approve or
recommend any Alternative Transaction or (iii) cause or permit the Parent, M Sub
or any Entity to enter into any letter of intent, agreement in principle,
acquisition agreement or other agreement (an "ACQUISITION AGREEMENT") with
respect to an Alternative Transaction unless the Board of Directors of the
Parent shall have previously terminated this Agreement pursuant to SECTION
8.1(f).

     (c)      In addition to the obligations of the Parent set forth in
paragraphs (a) and (b) of this SECTION 5.4, the Parent shall immediately advise
the Purchasers orally and in writing of any request for information or of any
proposal or any inquiry regarding any Alternative Transaction, the material
terms and conditions of such request, proposal or inquiry and the identity of
the Person making such request, proposal or inquiry.  The Parent will keep the
Purchasers fully informed of the status and details (including amendments or
proposed amendments) of any such request, proposal or inquiry.

     (d)      Nothing contained in this SECTION 5.4 shall prohibit the Parent
from at any time taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Parent's stockholders, in each case with
respect to any Third Party Proposal, if the Parent shall have provided the
Purchasers with as much advance notice of its position and proposed disclosure
as is possible under the circumstances; PROVIDED, HOWEVER, that neither the
Parent nor its Board of Directors nor any Committee thereof shall, except as
permitted by SECTION 5.4(b), withdraw or modify, or propose to withdraw or
modify, its position with respect to this Agreement, the Related Documents or
any of the transactions contemplated hereby or thereby or approve or recommend,
or propose to approve or recommend, an Alternative Transaction.

6.5    CONFIDENTIALITY. 

     The Sellers and the Purchasers agree that, through and including the
Closing Date, they shall comply with that certain letter agreement relating to
matters of confidentiality dated as of July 24, 1997 (as amended, modified or
supplemented, the "CONFIDENTIALITY AGREEMENT").

6.6    NOTICE OF PROSPECTIVE BREACH. 

     Each party shall immediately notify the other parties in writing upon the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause any representation or warranty of such
party that is contained in this Agreement or any Related Document to be untrue
or inaccurate in any material respect at any time from the date of this
Agreement to the Closing.

6.7    PUBLIC ANNOUNCEMENTS. 

     Each party agrees that, except (i) as otherwise required by Law or Order
and (ii) for disclosure to its respective directors, officers, employees,
financial advisors, potential 

                                      29

<PAGE>

financing sources, legal counsel, independent certified public 
accountants or other agents, advisors or representatives on a 
need-to-know basis and with whom such party has a confidential 
relationship, it will not issue any reports, statements or releases, in 
each case pertaining to this Agreement or any Related Document to which 
it is a party or the transactions contemplated hereby or thereby, 
without consulting in advance with the other parties hereto.

6.8    COOPERATION REGARDING TAX FILINGS; SECTION 338(h)(10). 

     (a)      After the Closing, the Purchasers and the Sellers shall 
act in good faith and cooperate with one another for the purpose of 
filing all Tax Returns and reports required to be filed by any of them.  
Parent shall join Purchaser A in a timely election pursuant to Section 
338(h)(10) of the Code (and under any comparable provision of any state 
or local law) with respect to the CT Shares (the "338(h)(10) ELECTION"). 
 The parties hereto recognize that the 338(h)(10) Election will result 
in the purchase of the CT Shares hereunder being treated as a sale of 
assets by CT Sub for Federal income Tax purposes and for applicable 
state and local tax purposes and that any Tax Liability arising with 
respect to the 338(h)(10) Election (other than a Liability for Transfer 
Taxes described in SECTION 9.14) shall be deemed a Covered Tax.  None of 
the parties hereto shall make any Tax Return or other filing that is 
inconsistent with the foregoing.

     (b)      The Purchasers shall be responsible for the preparation 
and filing of all 338(h)(10) Election forms and the Sellers shall 
execute and deliver to Purchasers such documents as are reasonably 
requested to properly complete such forms at least twenty (20) days 
prior to the date such 338(h)(10) Election is required to be filed.  The 
Sellers agree that the Purchasers shall be entitled to determine the 
allocation of the Modified Aggregate Deemed Sales Price (as defined in 
the treasury regulations promulgated under Section 338 of the Code) 
among the assets of CT Sub in their sole discretion, and in accordance 
with Section 338 of the Code and the regulations thereunder (including 
the allocation of any adjustment to the Modified Aggregate Deemed Sales 
Price by reason of any purchase price adjustment or indemnification 
payment under this Agreement), and shall notify the Sellers of such 
determination as soon as possible after making such determination.  The 
Purchasers and the Sellers agree to act in accordance with any such 
allocation in all relevant Tax Returns and filings.

     (c)      Parent shall cause to be prepared and cause to be timely 
filed all consolidated, combined or unitary federal, state, local or 
foreign Tax Returns required to be filed with respect to Parent for all 
taxable periods ending before or including the Closing Date and shall 
include CT Sub in all such returns in which it is eligible to be 
included.  The Purchasers agree to cooperate with Parent and its 
Affiliates in the preparation of the portions of such Tax Returns 
pertaining to CT Sub.  The Parent shall permit the Purchasers to review 
and comment on the portion of all Tax Returns prepared by Parent 
pursuant to this SECTION 5.8(c) pertaining to CT Sub, or the Partnership 
prior to the filing of such Tax Returns.  Parent shall cause to be 
timely paid all Taxes to which such Tax Returns relate for all periods 
covered by such Tax Returns.

                                       30

<PAGE>

     (d)      The extent to which Taxes of CT Sub and the Partnership for a
taxable period that includes but does not end on the Closing Date are treated as
Taxes for the period ending on or prior to the Closing Date shall be determined
for all purposes, including for purposes of calculating Covered Taxes, as
follows: (i) Taxes measured in whole or in part by net or gross income and Taxes
relating to specific transactions shall be apportioned on the basis of a closing
of the books of the Entity liable for such Tax at the close of business on the
Closing Date; provided, however, that all transactions not in the ordinary
course of business and not contemplated in this Agreement that occur on the
Closing Date after Purchaser A's purchase of the CT Shares shall be reported on
Purchaser A's federal income tax return to the extent permitted by Treas. Reg.
Section 1502-76(b((1)(3); and (ii) all other Taxes shall be prorated according
to the ratio of the number of days in such taxable period prior to and including
the Closing Date to the number of days in such taxable period.

     (e)      The Sellers shall cause to be prepared all required federal,
state, local and foreign Tax Returns of CT Sub and the Partnership for any
period which ends on or before the Closing Date, for which Tax Returns have not
been filed as of the Closing Date (other than Tax Returns to be filed by Parent
pursuant to SECTION 5.8(c)).  The Purchasers shall cause to be prepared and
cause to be timely filed all required federal, state, local and foreign Tax
Returns of CT Sub and the Partnership (other than Tax Returns to be filed by
Parent pursuant to SECTION 5.8(c)) for taxable periods beginning before and
ending after the Closing Date.  The Sellers and Purchasers agree to cooperate
with each other in the preparation of such Tax Returns.  The Purchasers shall
permit Sellers to review and comment on all Tax Returns prepared by the
Purchasers pursuant to this SECTION 5.8(e) and such Tax Returns shall be subject
to the prior approval of the Sellers which approval shall not be unreasonably
withheld.  The Sellers shall permit the Purchasers to review and comment on all
Tax Returns prepared by the Sellers pursuant to this SECTION 5.8(e).  Prior to
the date such Tax Returns are due, the Parent will provide the Purchasers with
amounts equal to the Covered Taxes, as shown on the Tax Returns to be filed
under this SECTION 5.8(e), after taking into account any Tax or estimated Tax
paid with respect to such Covered Taxes prior to the Closing Date.  Promptly
after receipt by the Purchasers of the amounts in respect of the Covered Taxes
from the Parent, the Purchasers will cause the applicable Tax Returns prepared
by the Seller to be filed.

     (f)      Parent shall be entitled to any refund of Taxes paid by or with
respect to CT Sub that is attributable to taxable periods ending on or prior to
the Closing Date, and the Purchasers shall cause CT Sub to pay over to Parent
any such refunds (net of any Tax Liability attributable thereto and any expenses
incurred in the collection of such refund) within fifteen (15) days after
receipt thereof.  If the amount of such refund that is paid over by Parent is
subsequently reduced by a Governmental Entity, Parent shall pay to Purchasers an
amount necessary to reflect such adjustment.

     (g)      The Parent shall not file any claim for a refund or credit, or an
amended return claiming a refund or credit, after the Closing Date, for any Tax
paid by CT Sub without the prior written consent of the Purchasers, which
consent shall not be unreasonably withheld.

                                      31

<PAGE>

     (h)      Each of the Purchasers and the Sellers shall promptly notify the
other party upon receipt of a notice of any pending or threatened Tax audit or
assessment (a "TAX CLAIM") that may affect the Tax Liabilities of CT Sub, or the
Partnership and for which any Seller would be liable under this Agreement;
PROVIDED, HOWEVER, that no delay on the part of either party in so notifying the
other party shall relieve the other party from any liability or obligation
hereunder (unless, and then solely to the extent) that the other party is
materially and irrevocably prejudiced by such delay.  Such notice shall be
accompanied by copies of all relevant documentation with respect to such Tax
Claim.

     (i)      If the Sellers shall acknowledge in a writing delivered to the
Purchasers that such Tax Claim is properly subject to their indemnification
obligations hereunder and the Sellers shall have the financial resources to meet
such indemnification obligations, then subject to the further provisions of this
SECTION 5.8(i), the Sellers shall have the right to assume the defense of such
Tax Claim at their own expense and by their own counsel and other advisers,
which counsel and other advisors shall be reasonably satisfactory to the
Purchasers; provided, however, that the Sellers shall not have the right to
assume the defense of any Tax Claim, notwithstanding the giving of such written
acknowledgment, if the Sellers shall not have assumed the defense of such Tax
Claim in a timely fashion.  Notwithstanding anything to the contrary contained
herein, if a Tax Claim involves, or could have a material effect on any material
matter beyond the scope of the indemnification obligations of the Sellers, the
Sellers and Purchasers shall jointly assume the defense of such Tax Claim at
their own expense.  If the Sellers exercise their right to assume the defense of
a Tax Claim pursuant to and in accordance with this SECTION 5.8(i), (i) the
Purchasers shall be entitled to participate in such defense with their own
counsel and other advisors at their own expense, (ii) the Purchasers will
reasonably cooperate with the Sellers and their counsel and advisors in the
defense of such Tax Claim, and (iii) the Sellers shall not make any settlement
of such Tax Claim without the written consent of the Purchasers, which consent
shall not be unreasonably withheld, provided that consent may be withheld if any
Losses to be incurred by the Purchasers pursuant to such settlement are not
indemnified pursuant to the indemnification provisions set forth in ARTICLE VII
hereunder.

     (j)      If the Sellers shall assume the defense of a Tax Claim pursuant
to and in accordance with SECTION 5.8(i), the Sellers shall not be responsible
for any legal or other defense costs subsequently incurred by the Purchasers in
connection with the defense thereof.  If the Sellers do not exercise their right
to assume the defense of a Tax Claim or are otherwise restricted from doing so
pursuant to SECTION 5.8(i), the Sellers shall nevertheless be entitled to
participate in such defense with their own counsel and other advisors at their
own expense.  If the defense of a Tax Claim is retained by the Purchasers, the
Purchasers shall not be entitled to settle such Tax Claim without the prior
written consent of the Sellers, which consent shall not be unreasonably
withheld.

     (k)      After the Closing Date, the Sellers and the Purchasers shall make
available to the other, as reasonably requested, all information, records or
documents relating to Tax Liabilities or potential Tax Liabilities of CT Sub or
the Partnership for all periods ending on or prior to the Closing Date, and
shall preserve all such information, 

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<PAGE>

records and documents until the expiration of any applicable statute of 
limitations or extensions thereof.

     (l)      All Tax Returns which are required to be prepared by Sellers
pursuant to SECTIONS 5.8(c) AND (e) shall be prepared and filed in a manner
consistent with past practice and applicable Law and, on such Tax Returns, no
position shall be taken, elections made or method adopted that is inconsistent
with positions taken, elections made or methods used in preparing and filing
similar Tax Returns in prior periods.

6.9    EXCHANGE PROCEEDS.

     If, between the date hereof and the Closing, any Entity or any Seller
receives any proceeds in consideration for the exchange of any of its assets
(solely, in the case of the Parent as it relates to the Purchased Parent
Assets), whether from the sale of any such assets, from insurance proceeds
payable on account of any loss or casualty to such assets, any proceeds from the
taking of such assets pursuant to the power of eminent domain, or any other
proceeds from whatever source relating to the disposition of such assets (the
"EXCHANGE PROCEEDS"), the Sellers shall immediately notify the Purchasers of the
receipt of such Exchange Proceeds and shall consult with the Purchasers with
respect to the application of any such Exchange Proceeds.  The Sellers shall
ensure that any Exchange Proceeds received by any Entity shall either be used to
purchase replacement assets or shall be retained by the applicable Entity.

6.10   NON-COMPETE; NON-SOLICITATION.

     (a)      During the Non-Compete Period, the Parent shall not, and cause
its Affiliates not to, directly or indirectly, own, manage, control, participate
in, consult with, render services for, or in any manner engage in or represent
any business within any Restricted Territory that is competitive with the
Business or any product or services of the Business as such Business is
conducted or proposed to be conducted from and after the Closing Date; PROVIDED,
HOWEVER, that nothing herein shall be deemed to prevent the Parent or any of its
Affiliates from engaging in any activities presently conducted or proposed to be
conducted by GK Finance or from providing any imaging modality as part of its
"Operating Room of the Twenty First Century" business.

     (b)      During the Non-Compete Period, none of the Parent nor any
Affiliate shall directly or indirectly through another Person (i) induce or
attempt to induce any employee of any Purchaser or any Affiliate of such
Purchaser to leave the employ of such Purchaser or such Affiliate or in any way
interfere with the relationship between such Purchaser or any such Affiliate, on
the one hand, and any employee thereof, on the other hand, or (ii) induce or
attempt to induce any customer, supplier, licensee or other business relation of
any Purchaser or any Affiliate of such Purchaser to cease doing business with
such Person or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation, on the one hand, and such
Person, on the other hand.

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<PAGE>

     (c)      If, at the time of enforcement of this SECTION 5.10, a 
court holds that the restrictions stated herein are unreasonable under 
the circumstances then existing, the parties agree that the maximum 
period, scope or geographical area reasonable under such circumstances 
shall be substituted for the stated period, scope or area.  The parties 
hereto acknowledge that money damages would be an inadequate remedy for 
any breach of this SECTION 5.10. Therefore, in the event of a breach or 
threatened breach of this SECTION 5.10, the Purchasers or their 
successors or assigns may, in addition to other rights and remedies 
existing in their favor, apply to any court of competent jurisdiction 
for specific performance and/or injunctive or other relief in order to 
enforce, or prevent any violations of, the provisions of this SECTION 
5.10.

6.11   CERTAIN TAX MATTERS.

     From the date hereof until the Closing Date, (i) the Parent shall 
and shall cause each Entity to file all tax returns and reports 
("POST-SIGNING RETURNS") required to be filed in a manner consistent 
with past practices; (ii) the Parent shall and shall cause each Entity 
to timely pay all Taxes shown as due and payable on the Post-Signing 
Returns; (iii) the Parent shall and shall cause each Entity to make 
provision for all Taxes payable for which no Post-Signing Return is due 
prior to the Closing Date; (iv) the Parent shall allow the Purchasers an 
opportunity to review and comment on any Post-Signing Return prior to 
the due date of such Post-Signing Return; and (v) the Parent will 
promptly notify the Purchasers of any action, suit, proceeding, claim or 
audit pending against or with respect to the Parent or any Entity in 
respect of any Tax where there is a possibility of a determination or 
decision which could have an adverse effect on the Parent's or any 
Entity's Tax Liabilities or Tax attributes.

6.12   ADVICE OF CHANGES; FILINGS.

     The Parent shall confer with the Purchasers on a regular and 
frequent basis as reasonably requested by the Purchasers, report on 
operational matters and promptly advise the Purchasers orally and, if 
requested by the Purchasers, in writing of any change with respect to 
the Parent or any Entity.  The Parent shall promptly provide to the 
Purchasers (or their counsel) copies of all filings made by the Parent 
or any Entity with any Governmental Entity in connection with this 
Agreement and the transactions contemplated hereby.

     (a)      The Parent will, as soon as practicable following the date 
hereof, duly call, give notice of, convene and hold a meeting of its 
stockholders (the "STOCKHOLDERS MEETING") for the purpose of obtaining 
the approval of this Agreement, the Related Documents, and the 
transactions contemplated hereby and thereby.  The Parent will, through 
its Board of Directors, recommend to its stockholders that the Parent 
Stockholder Approval be given.

     (b)      The Parent will, as soon as practicable following the date 
hereof, prepare and file a preliminary proxy or information statement 
(as amended, modified or supplemented, the "PROXY STATEMENT") with the 
SEC and will use its best efforts to respond to any comments of the SEC 
or its staff and to cause the Proxy Statement to be 

                                     34

<PAGE>

mailed to its stockholders as promptly as practicable after responding 
to all such comments to the satisfaction of the SEC staff.  The Proxy 
Statement shall contain the written opinion of Paine Webber 
Incorporated, opining as to the matters set forth in SECTION 3.25.  The 
Parent will afford the Purchasers opportunity to review and comment upon 
any description of the Purchasers or their Affiliates, this Agreement, 
the Related Documents or the transactions contemplated hereby and 
thereby set forth in the Proxy Statement (including all drafts or 
amendments thereto).  Each Purchaser shall provide the Parent with all 
necessary information reasonably requested with respect to itself and 
Alliance solely for inclusion by the Parent in the Proxy Statement.  The 
Parent will notify the Purchasers promptly of the receipt of any 
comments from the SEC or its staff and of any request by the SEC or its 
staff for amendments or supplements to the Proxy Statement or for 
additional information and will supply the Purchasers with copies of all 
correspondence between the Parent or any of its representatives, on the 
one hand, and the SEC or its staff, on the other hand, with respect to 
the Proxy Statement.  If at any time prior to the Stockholders Meeting 
there shall occur any event that should be set forth in an amendment or 
supplement to the Proxy Statement, the Parent will promptly prepare and 
mail to its stockholders such an amendment or supplement.

6.13   MAINTENANCE OF CASH AND CASH EQUIVALENTS.

     During the period commencing on the Closing Date and ending on April 15,
1999, the Parent shall at all times hold cash or Cash Equivalents of not less
than $1,000,000 in the aggregate in an investment account at a financial
institution reasonably satisfactory to the Purchasers which shall not be subject
to any Encumbrance other than Permitted Encumbrances.  During such period, the
Parent shall provide copies of all notices or reports delivered to it in respect
of such account to the Purchasers within 5 Business Days of the receipt thereof.

6.14   FURTHER ASSURANCES.

     The Sellers shall and shall cause the Entities to take such further actions
or execute such further documents or instruments as shall be reasonably
requested by the Purchasers to further implement the transactions contemplated
by SECTION 1.2 including, without limitation, discharging or disposing of any
Excluded Liability which may be a Liability of any Entity on terms reasonably
satisfactory to the Purchasers.

6.15   AUDITED FINANCIAL STATEMENTS.  

     The Parent shall, and shall cause each of its Subsidiaries to, provide
the Purchasers and their advisors with such information (including, without
limitation, consolidating balance sheets and statements of operations as at
December 31, 1997 and for the fiscal year then ended; such consolidating
financial statements to incorporate the Entities in such form as presented in
SCHEDULE 3.5(b) as well as individual columns for each of GK Finance, Parent and
each other Subsidiary of the Parent, in each case, as adjusted to give effect to
the transactions contemplated by SECTION 1.2 hereof), and access to its books
and records (including, without limitation, access to its management employees),
to permit them or their advisors to prepare audited balance sheets of the

                                     35

<PAGE>

Entities as of December 31, 1997, and related audited statements of 
operations, shareholders' equity and cash flows for the period then 
ended, in each case in accordance with GAAP and adjusted to give effect 
to the consummation of the transactions contemplated by SECTION 1.2 as 
if such transactions were consummated at January 1, 1997.

6.16   DVI FUNDED INDEBTEDNESS.

     At the request of the Purchasers, on the Closing Date, the Parent 
shall and shall cause its Subsidiaries to repay all Funded Indebtedness 
held by DVI Financial Services, Inc. and DVI Business Credit Receivables 
Corp. ("DVI") under agreements relating to Funded Indebtedness provided 
by DVI to the Parent and its Subsidiaries upon payment by the Purchasers 
in full of all amounts due on the Closing Date to DVI in respect of 
principal, accrued interest thereon and prepayment premiums not to 
exceed $75,000 in the aggregate.  On the Closing Date, Parent shall 
deliver all instruments and documents reasonably requested by the 
Purchasers to evidence the repayment in full of such Funded Indebtedness 
including reasonably satisfactory pay-off letters, releases of 
Encumbrances, releases of pledges of Equity Interests and UCC-3 
financing statements.

6.17   TRANSFER OF PARENT PARTNERSHIP INTERESTS.

     Upon the request of the Purchasers, the Parent shall, on or 
immediately prior to the Closing Date, assign the Parent Partnership 
Interests to a newly organized wholly-owned corporate Subsidiary (which 
shall conduct no business whatsoever) and shall cause such Subsidiary to 
assign the Parent Partnership Interests to Purchaser A in accordance 
with SECTION 1.1 hereof.

6.18   CERTAIN EMPLOYEE MATTERS.

     (a)      On the Closing Date, the Purchasers shall or shall cause 
the Entities or an Affiliate of the Purchasers, to continue the 
employment of or offer employment, as applicable, to the employees of 
the Entities and Parent to be identified by the Purchasers prior to the 
Closing Date in accordance with the terms of a letter, dated of even 
date herewith, delivered by Purchaser A to the Parent (any such 
employees who so continue or accept such offer of employment being 
referred to herein as the "HIRED EMPLOYEES").  Such employment shall be 
in a substantially similar position as such Hired Employee held while 
employed by the applicable Entity or Parent prior to the Closing, and 
the Purchasers shall have no Liability or obligation to any other 
employees of the Parent or any of its Subsidiaries (other than the 
Entities as set forth herein).  Prior to the Closing, Parent and the 
Entities shall take such actions and, after the Closing Date, Parent and 
the Purchasers shall take, and the Purchasers shall cause the Entities 
to take, such actions as are necessary so that each Hired Employee shall 
cease to be entitled to participate in or accrue benefits under any of 
Parent's Employee Benefit Plans, programs, policies and arrangements 
except to the extent required by applicable Law.  The Purchasers shall, 
or shall cause the Entities or an Affiliate of the Purchasers, to take 
such actions as may be necessary such that, subject to the provisions of 
this SECTION 5.18, on and after the Closing Date, each Hired Employee 
shall be eligible to participate in, and be subject to 

                                     36

<PAGE>

the provisions of, the Employee Benefit Plans (including a 401(k) plan 
and a flexible benefits plan), programs, personnel policies and 
guidelines sponsored or maintained by Alliance, and applicable for 
employees of Alliance or its Affiliates in a similar position, subject 
to the satisfaction of all the eligibility criteria for participation 
thereunder (except as otherwise provided in this SECTION 5.18).

     (b)      With respect to the Alliance Employee Benefit Plans, 
programs, personnel policies and guidelines, Alliance shall grant all 
Hired Employees from and after the Closing Date credit for all service 
with the Entities and Parent prior to the Closing Date for all purposes. 
 Alliance shall take such actions as are necessary to provide that on 
the Closing Date all Hired Employees and their spouses and dependents 
shall be immediately covered by the group health plan maintained by 
Alliance which shall (i) provide immediate coverage as of the Closing 
Date without any waiting period, (ii) waive any pre-existing condition 
exclusions or limitations, and (iii) provide that any amounts paid by 
Hired Employees through the Closing Date for medical expenses that are 
treated as deductible, co-insurance and out-of-pocket payments under the 
Parent's health plan shall reduce the amount of any deductible, 
co-insurance or out-of-pocket payments required to be paid for a similar 
period under the Alliance health plan; provided, however, that the 
Sellers shall provide Alliance with a list of all current and former 
employees participating in the Parent's health plan along with a listing 
of each employee's deductible and co-insurance payments through the 
Closing Date.

     (c)      Effective as of the Closing, the Purchasers shall assume 
the Parent's or Entities' obligations with respect to accrued sick pay, 
personal holidays and vacation pay for Hired Employees, provided that 
the vacation pay costs as of the Latest Balance Sheet Date have been 
accrued and reflected on the Latest Balance Sheet.

     (d)      (dm) Parent shall take such actions as are necessary to 
provide that the Hired Employees are fully vested in their benefits 
under the Retirement Plan for Employees of Parent and CT Sub (the "ASHS 
401(k) PLAN").  Parent shall also take such actions as are necessary to 
provide that the Hired Employees will be eligible to receive 
distributions from the ASHS 401(k) Plan that will be eligible for 
rollover to the Alliance "401(k)" plan.  The Purchasers shall take such 
action as is necessary after the Closing Date to provide that the 
Alliance "401(k)" plan will allow rollovers of distributions from the 
ASHS 401(k) Plan.

     (e)      After the Closing Date, the Purchasers and the Sellers 
agree to take such actions as are necessary to provide for the transfer 
of the account balances of the flexible spending accounts of each Hired 
Employee from Parent's "Section 125" plan to the Alliance "Section 125" 
plan and the Purchasers shall provide for the reimbursement from the 
Alliance "Section 125" plan of medical and childcare expenses incurred 
by Hired Employees during 1998.

     (f)      After the Closing Date, the Purchasers shall be 
responsible for providing health care continuation coverage pursuant to 
the requirements of the Consolidated Omnibus Budget Reconciliation Act 
of 1985, as amended ("COBRA"), to the extent required by COBRA, for all 
former employees of the Entities and/or their 

                                     37

<PAGE>

"qualified beneficiaries" (as such term is defined in Part 6 of Title I 
of ERISA) who were receiving health care continuation coverage under 
COBRA prior to the Closing Date or who are or become eligible to receive 
such coverage on or after the Closing Date.  As of the date hereof, 
there were 2 former employees of the Entities and/or their "qualified 
beneficiaries" who were receiving health care continuation coverage 
under COBRA and 8 former employees who experienced a "qualifying event" 
under COBRA.
                                
                             ARTICLE VII      
                                
                      CLOSING CONDITIONS  

7.1    CONDITIONS TO EACH PARTY'S OBLIGATIONS.

     The respective obligations of each party to consummate the transactions
contemplated hereby is subject to the satisfaction prior to the Closing Date of
the following conditions unless waived (to the extent such conditions can be
waived) by the Parent (on behalf of the Sellers) or the Purchasers and Alliance,
as applicable:

     (a)      APPROVALS.  The authorizations, consents, Orders or approvals of,
or declarations or filings with, or expiration of waiting periods of any
Governmental Entity required to consummate the transactions contemplated hereby
shall have been obtained or made.

     (b)      STOCKHOLDER APPROVAL.  The Parent Stockholder Approval shall have
been obtained. 

     (c)      NO INJUNCTIONS OR RESTRAINTS.  No temporary restraining order,
preliminary or permanent injunction or other Order issued by any court or
Governmental Entity of competent jurisdiction nor other legal restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.

     (d)      ACTIONS AND STATUTES.  No Proceeding shall have been taken or
threatened, and no Law or Order shall have been enacted, promulgated or issued
or deemed applicable to the transactions contemplated by this Agreement or the
Related Documents by any Governmental Entity that could (i) make the
consummation of the transactions contemplated hereby or thereby illegal or
substantially delay the consummation of any material aspect of the transactions
contemplated hereby or thereby or (ii) render any party unable to consummate the
transactions contemplated hereby or thereby.

7.2    CONDITIONS TO OBLIGATIONS OF THE PURCHASERS AND ALLIANCE.

     The obligations of the Purchasers and Alliance under this Agreement are
subject to the satisfaction of the following conditions unless waived (to the
extent such conditions can be waived) by the Purchasers and Alliance:

     (a)      ACCURACY OF REPRESENTATIONS AND WARRANTIES.  All representations
and warranties made by the Sellers in this Agreement and the Related Documents
shall be 

                                     38

<PAGE>

true and correct, individually or in the aggregate, in all material 
respects (except for such representations and warranties which are 
qualified by their terms by a reference to materiality, or "Material 
Adverse Effect" which representations and warranties as so qualified 
shall be true and correct, individually or in the aggregate, in all 
respects) as of the date hereof and as of the Closing Date (unless such 
representations and warranties relate to a specific date other than the 
Closing Date, in which case such representations and warranties shall be 
true and correct, individually or in the aggregate, in all material 
respects, or in all respects, as the case may be, on such date) with the 
same effect as if such representations and warranties had been made at 
and as of the Closing Date (including, after giving effect to the 
transactions contemplated by SECTION 1.2).

     (b)      PERFORMANCE OF OBLIGATIONS OF THE SELLERS.  The Sellers 
shall have performed in all material respects all obligations, 
agreements and covenants required to be performed by them under this 
Agreement and the Related Documents prior to or as of the Closing Date.

     (c)      CERTIFICATES.  At the Closing, in consideration of the 
delivery of the Purchase Price pursuant to SECTION 1.3 hereof, (a) the 
Parent shall deliver or cause to be delivered to Purchaser A, the 
certificates representing the Shares (other than the M Sub Partnership 
Interests) and the Parent shall deliver or cause to be delivered to 
Purchaser B, a certificate representing the M Sub Partnership Interests, 
in each case, duly endorsed in blank for transfer or accompanied by 
stock and partnership transfer powers duly executed in blank, sufficient 
in form and substance to convey to each Purchaser good and marketable 
title to all of the Shares purchased by such Purchaser, free and clear 
of all Encumbrances.

     (d)      CONSENTS AND APPROVALS.  The Purchasers shall have 
received duly executed copies of all consents and approvals required for 
or in connection with the execution and delivery by the Sellers of this 
Agreement and each of the Related Documents to which any of them may be 
parties (including, without limitation, the assumption of any Funded 
Indebtedness and any consents or approvals necessary to be obtained in 
connection with the transactions contemplated by SECTION 9.4(b)), the 
consummation of the transactions contemplated hereby and thereby, and 
the continued conduct of the Business as previously conducted 
(including, without limitation, the transfer of any necessary regulatory 
Permits currently in the name of the Parent or any Subsidiary other than 
the Entities), in form and substance reasonably satisfactory to the 
Purchasers and their counsel.  The Sellers shall obtain all Permits 
required to conduct the Business which have not been obtained on or 
prior to the date hereof in the name of the Entities.  The Parent shall 
cause each of the Encumbrances designated to be terminated on or prior 
to the Closing Date on SCHEDULE 3.9 to be so terminated on or prior to 
the Closing Date (unless such Encumbrances cease to be effective under 
applicable Law).

     (e)      ASSET CONTRIBUTION AND ASSET DISPOSITION.  The Asset 
Contribution, Asset Disposition and the other transactions contemplated 
by SECTION 1.2 shall each be consummated in accordance with SECTION 1.2 
hereof.

                                      39


<PAGE>

     (f)      ABSENCE OF MATERIAL ADVERSE EFFECT.  Since the Latest 
Balance Sheet Date, there shall have been no change in respect of the 
Business that has had or is reasonably likely to have a Material Adverse 
Effect.

     (g)      RELATED DOCUMENTS. Each of the agreements attached hereto 
as EXHIBIT A-1 and EXHIBIT A-2, respectively (each as amended, modified 
or supplemented, a "RELATED DOCUMENT" or a "STOCKHOLDER AGREEMENT") 
shall have been executed and delivered by the parties thereto and the 
transactions contemplated thereby to be completed at or prior to the 
Closing substantially consummated or effected, as the case may be, in 
accordance with the terms thereof.

     (h)      PARTNERSHIP AGREEMENT AMENDMENT.  The Partnership 
Agreement shall be amended and restated in its entirety by the Sellers 
on such terms and conditions as shall be satisfactory to the Sellers and 
the Purchasers.

     (i)      SELLERS' CERTIFICATES.  Each of the following certificates 
shall have been executed and delivered, as the case may be, by the 
Person who or which is the subject thereof:

                 (i)    a certificate of the Sellers, dated as of the 
       Closing Date, certifying, in each case, (i) that true and complete 
       copies of the Organizational Documents of each Entity and the Sellers as 
       in effect on the Closing Date are attached thereto, (ii) as to the 
       incumbency and genuineness of the signatures of each officer of such 
       Seller executing this Agreement and the Related Documents, (iii) the 
       genuineness of the resolutions (attached thereto) of the board of 
       directors of the Sellers authorizing the execution, delivery and 
       performance of this Agreement and the Related Documents to which the 
       Sellers are a party and the consummation of the transactions 
       contemplated hereby and thereby and (iv) the genuineness of the 
       resolutions (attached thereto) of the management committee or similar 
       governing body of each Entity authorizing such Entity to consent to the 
       transactions contemplated by this Agreement;

                 (ii)   certificates of the secretaries of state of the 
       states (or other applicable office) in which each Seller and each Entity 
       is organized and qualified to do business, dated as of a date not more 
       than five days prior to the Closing Date, certifying as to the good 
       standing and non-delinquent tax status of such Seller and Entity;

                 (iii)  a certificate signed by the principal executive 
       officer of each Seller, dated as of the Closing Date, and certifying as 
       to (A) the accuracy of the representations and warranties of the Sellers 
       contained herein, as contemplated by SECTION 6.2(a) hereof, and (B) the 
       performance of the obligations, covenants and agreements of the Sellers 
       contained herein, as contemplated in SECTION 6.2(b) hereof; and

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<PAGE>

                 (iv)   a certificate of the Sellers dated as of the 
       Closing Date, certifying that no Entity is a foreign person within the 
       meaning of Section 1445 of the Code.

     (j)      RESIGNATION OF OFFICERS AND DIRECTORS.  The Purchasers 
shall have received letters from all of the officers and directors of 
the Entities, resigning their respective positions as officers and 
directors of such Entities, respectively, immediately upon the Closing.

     (k)      OFFICER'S CERTIFICATE.  The Purchasers shall have received 
a certificate of a duly authorized officer of the Parent certifying as 
to the matters set forth in SECTION 6.2(e).

7.3    CONDITIONS TO OBLIGATIONS OF THE SELLERS.

     The obligations of the Sellers under this Agreement are subject to 
the satisfaction of the following conditions unless waived (to the 
extent such conditions can be waived) by the Sellers:

     (a)      ACCURACY OF REPRESENTATIONS AND WARRANTIES.  All 
representations and warranties made by Alliance and the Purchasers in 
this Agreement and the Related Documents shall be true and correct, 
individually or in the aggregate, in all material respects (except for 
such representations and warranties which are qualified by their terms 
by a reference to materiality, or "Material Adverse Effect" which 
representations and warranties as so qualified shall be true and 
correct, individually or in the aggregate, in all respects) as of the 
date hereof and at and as of the Closing Date (unless such 
representations and warranties relate to a specific date other than the 
Closing Date, in which case, such representations and warranties shall 
be true and correct, individually or in the aggregate, in all material 
respects, or in all respects, as the case may be, on such date)  with 
the same effect as if such representations and warranties had been made 
at and as of the Closing Date.

     (b)      PERFORMANCE OF OBLIGATIONS OF THE PURCHASERS AND ALLIANCE. 
Alliance and the Purchasers shall have performed in all material 
respects all obligations, agreements and covenants required to be 
performed by them under this Agreement and the Related Documents prior 
to or as of the Closing Date.

     (c)      CERTIFICATES.   Each of the following certificates shall 
have been executed and delivered, as the case may be, by the Person who 
or which is the subject thereof:

                 (i)    a certificate of the secretary of Alliance and 
       each Purchaser, dated as of the Closing Date, certifying, in each case, 
       (i) that true and complete copies of its Organizational Documents as in 
       effect on the Closing Date are attached thereto, (ii) as to the 
       incumbency and genuineness of the signatures of each officer of Alliance 
       and such Purchaser executing this Agreement and the Related Documents, 
       and (iii) the genuineness of the resolutions (attached thereto) of the 
       board of directors of Alliance and such Purchaser (or committee thereof) 

                                      41

<PAGE>

       authorizing the execution, delivery and performance of this Agreement 
       and the Related Documents to which Alliance or such Purchaser is a party 
       and the consummation of the transactions contemplated hereby and thereby;

                 (ii)   certificates of the secretaries of state of the 
       states in which Alliance and each of the Purchasers is organized, dated 
       a date not more than five days prior to the Closing Date as of the 
       Closing Date, certifying as to the good standing and non-delinquent tax 
       status of Alliance and the Purchasers; and

                 (iii)  a certificate signed by a principal executive 
       officer of Alliance and each Purchaser, dated as of the Closing Date, 
       and certifying as to (A) the accuracy of the representations and 
       warranties of Alliance and such Purchaser contained herein, as 
       contemplated by SECTION 6.3(a) hereof and (B) the performance of the 
       obligations, agreements and covenants of Alliance and such Purchaser 
       contained herein, as contemplated in SECTION 6.3(b) hereof.
                                
                            ARTICLE VIII     
                                
                          INDEMNIFICATION 

8.1    INDEMNIFICATION GENERALLY; ETC. 

     (a)      Subject to the further terms of this ARTICLE 7, the 
Sellers agree, jointly and severally, to indemnify the Purchaser 
Indemnified Persons for, and hold them harmless from and against, any 
and all Purchaser Losses arising from or in connection with any of the 
following:

                 (i)    the untruth, inaccuracy or breach of any 
       representation or warranty (without regard to whether such 
       representation or warranty is qualified by reference to materiality or 
       "Material Adverse Effect") of the Sellers contained herein, in any 
       Related Document, or in any certificate delivered by any Seller relating 
       thereto delivered in connection herewith (or any facts or circumstances 
       constituting any such untruth, inaccuracy or breach);

                 (ii)   the breach of any agreement or covenant of the Sellers
       contained in this Agreement or in any Related Document;

                 (iii)  any Liability of any Entity in any manner related to a
       claim asserted under the Agreement for Purchase and Sale of Assets, dated
       as of December 30, 1994 among Vencor, Inc., CT Sub and Parent; 

                 (iv)   for any Liability with respect to Covered Taxes 
       and for 50% of any Liability with respect to all transfer, documentary, 
       sales, use, stamp, registration and other such Taxes and fees ("TRANSFER 
       TAXES") with respect to the transactions contemplated by SECTION 1.2; and
       
                 (v)    any Liability of any Entity for Taxes attributable to 
       the inclusion of an adjustment in taxable income of an Entity under 
       Section 481 of the 

                                      42

<PAGE>

       Code for any Tax period beginning on or after the Closing Date as a
       result of a required or optional change in method of accounting with
       respect to a Tax period ending on or prior to the Closing Date.

     (b)      Subject to the further terms of this ARTICLE 7, each of 
Alliance and the Purchasers agree jointly and severally to indemnify the 
Seller Indemnified Persons for, and hold them harmless from and against, 
any and all Seller Losses arising from or in connection with any of the 
following:

                 (i)    the untruth, inaccuracy or breach of any representation 
       or warranty (without regard to whether such representation or warranty 
       is qualified by reference to materiality or "Material Adverse Effect") 
       of Alliance or such Purchaser contained herein, any Related Document, or 
       any certificate delivered by Alliance or such Purchaser in connection 
       herewith at or before the Closing (or any facts or circumstances 
       constituting any such untruth, inaccuracy or breach);

                 (ii)   the breach of any agreement or covenant of Alliance or
       either Purchaser contained in this Agreement or in any Related Document;

                 (iii)  any failure to comply after the Closing Date 
       with the Worker Adjustment and Retraining Act of 1988, as amended, or 
       any similar state law arising out of, or relating to, any actions taken 
       by Alliance or the Purchasers with respect to Hired Employees after the 
       Closing Date; and

                 (iv)   any Liability for Transfer Taxes to be borne by 
       Purchasers or Alliance pursuant to SECTION 9.14.

     (c)      Notwithstanding the foregoing the Purchasers shall not be 
entitled to indemnification hereunder for any Losses arising as a result 
of the untruth or inaccuracy of any representation or warranty to the 
extent that a Liability arising as a result of such untruth or 
inaccuracy is reflected as a Liability in the financial statements 
delivered on the date hereof pursuant to SECTION 3.5 hereof.

     (d)      Absent fraud, the rights of the parties for 
indemnification relating to this Agreement and the transactions 
contemplated hereby and under the Related Documents shall be strictly 
limited to those contained in this ARTICLE VII, and such indemnification 
rights shall be the exclusive remedies of the parties subsequent to the 
Closing Date with respect to any matter relating to this Agreement or 
arising in connection herewith.

8.2    ASSERTION OF CLAIMS.

     No claim shall be brought for a breach of a representation or warranty
under SECTION 7.1 hereof unless the Indemnified Persons, or any of them, at any
time prior to the applicable Survival Date, give the Indemnifying Persons (a)
written notice of the existence of any such claim, specifying the nature and
basis of such claim and the amount thereof, to the extent known or (b) written
notice pursuant to SECTION 7.3 of any Third Party Claim, the existence of which
might give rise to such a claim.  Upon the giving of 

                                      43

<PAGE>

such written notice as aforesaid, the Indemnified Persons, or any of 
them, shall have the right to commence legal proceedings prior to or 
subsequent to the Survival Date for the enforcement of their rights 
under SECTION 7.1.

8.3    NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.

     The obligations and liabilities of an Indemnifying Person with 
respect to Losses resulting from the assertion of claim or Liability by 
third parties other than in respect of Tax Claims (each, a "THIRD PARTY 
CLAIM") shall be subject to the following terms and conditions:

     (a)      The Indemnified Persons shall promptly give written notice 
to the Indemnifying Persons of any Third Party Claim which might give 
rise to any Loss by the Indemnified Persons, stating the nature and 
basis of such Third Party Claim, and the amount thereof to the extent 
known; PROVIDED, HOWEVER, that no delay on the part of the Indemnified 
Persons in notifying any Indemnifying Persons shall relieve the 
Indemnifying Persons from any liability or obligation hereunder unless 
(and then solely to the extent) the Indemnifying Person thereby is 
materially and irrevocably prejudiced by the delay.  Such notice shall 
be accompanied by copies of all relevant documentation with respect to 
such Third Party Claim, including any summons, complaint or other 
pleading which may have been served, any written demand or any other 
document or instrument.

     (b)      If the Indemnifying Persons shall acknowledge in a writing 
delivered to the Indemnified Persons that such Third Party Claim is 
properly subject to their indemnification obligations hereunder, then 
the Indemnifying Persons shall have the right to assume the defense of 
any Third Party Claim at their own expense and by their own counsel, 
which counsel shall be reasonably satisfactory to the Indemnified 
Persons; PROVIDED, HOWEVER, that the Indemnifying Persons shall not have 
the right to assume the defense of any Third Party Claim, 
notwithstanding the giving of such written acknowledgment, if (i) the 
Indemnified Persons shall have been advised by counsel that there are 
one or more legal or equitable defenses available to them which are 
different from or in addition to those available to the Indemnifying 
Persons, and, in the opinion of the Indemnified Persons, counsel for the 
Indemnifying Persons could not adequately represent the interests of the 
Indemnified Persons because such interests could be in conflict with 
those of the Indemnifying Persons, or (ii) the Indemnifying Persons 
shall not have assumed the defense of the Third Party Claim in a timely 
fashion.

     (c)      If the Indemnifying Persons shall assume the defense of a 
Third Party Claim (under circumstances in which the proviso to the first 
sentence of SECTION 7.3(b) is not applicable), the Indemnifying Persons 
shall not be responsible for any legal or other defense costs 
subsequently incurred by the Indemnified Persons in connection with the 
defense thereof.  If the Indemnifying Persons do not exercise their 
right to assume the defense of a Third Party Claim by giving the written 
acknowledgment referred to in SECTION 7.3(b), or are otherwise 
restricted from so assuming by the proviso to the first sentence of 
SECTION 7.3(b), the Indemnifying Persons shall nevertheless be entitled 
to participate in such defense with their own counsel and at their own 
expense.  If the 

                                       44

<PAGE>

defense of a Third Party Claim is assumed by the Indemnified Persons, 
the Indemnified Persons shall not be entitled to settle such Third Party 
Claim without the prior written consent of the Indemnifying Persons, 
which shall not be unreasonably withheld.

     (d)      If the Indemnifying Persons exercise their right to assume 
the defense of a Third Party Claim, (i) the Indemnified Persons shall be 
entitled to participate in such defense with their own counsel at their 
own expense and (ii) the Indemnifying Persons shall not make any 
settlement of any claims without the written consent of the Indemnified 
Persons, which shall not be unreasonably withheld.

8.4    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     (a)      Subject to the further provisions of this SECTION 7.4, the 
representations and warranties contained in this Agreement, the Related 
Documents, or in any certificate or other writing delivered in 
connection with this Agreement shall survive the Closing Date until 
April 15, 1999; PROVIDED, HOWEVER, that (i) the representations and 
warranties contained in SECTIONS 3.1, 3.2, 3.3, 3.4, 3.21, 4.1, 4.2, 
4.3, 4.4, 4A.1, 4A.2 AND 4A.3 (other than the covenant set forth therein 
which shall survive in accordance with the second sentence of this 
SECTION 7.4(a)) of this Agreement shall survive indefinitely and (ii) 
the representations and warranties contained in SECTIONS 3.8 AND 3.20 of 
this Agreement shall survive the Closing Date until the expiration of 
any applicable statue of limitations (those representations and 
warranties referenced in the foregoing clauses (i) and (ii), being the 
"Excluded Representations and Warranties") for Third Party Claims 
applicable to the matters covered thereby.  The covenants and other 
agreements of the parties contained in this Agreement and the Related 
Documents (including the indemnity provided for in SECTION 7.1(a)(iii) 
of this Agreement) shall survive the Closing Date until they are 
otherwise terminated by their terms.  The obligations of the Sellers 
under SECTION 7.1(a)(iv) AND (a)(v) shall survive the Closing Date until 
the expiration of any applicable statute of limitations with respect to 
the matters set forth therein.  The obligations of Alliance and the 
Purchasers under SECTION 7.1(b)(iv) shall survive the Closing Date until 
the expiration of any applicable statute of limitations with respect to 
the matters set forth therein.

     (b)      For convenience of reference, the date upon which any 
representation or warranty contained herein shall terminate, if any, is 
referred to herein as the "SURVIVAL DATE".

8.5    LIMITATIONS ON INDEMNIFICATION.

     (a)      INDEMNITY BASKETS FOR THE SELLERS.  The Purchaser 
Indemnified Persons shall not have the right to be indemnified for 
breaches of representations and warranties pursuant to SECTION 7.1(a)(i) 
unless and until the Purchaser Indemnified Persons shall have incurred 
on a cumulative basis aggregate Losses (without giving effect, in 
determining whether and to what extent representations and warranties 
were breached or Losses were incurred, to qualifications therein 
relating to materiality or "Material Adverse Effect") in an amount of 
$500,000, in which event the right to be indemnified shall apply in 
respect of all Losses; PROVIDED, HOWEVER, that in no event shall 

                                       45

<PAGE>

the limitations set forth in this SECTION 7.5(a) apply with respect to 
the Excluded Representations and Warranties.

     (b)      INDEMNITY LIMITATIONS FOR THE SELLERS.  The sum of all Losses
(without giving effect, in determining whether and to what extent
representations and warranties were breached or Losses were incurred, to
qualifications therein relating to materiality or "Material Adverse Effect")
pursuant to which indemnification is payable by the Sellers pursuant to SECTION
7.1(a)(i) shall not exceed $2,000,000; PROVIDED, HOWEVER, that in no event shall
the limitations set forth in this SECTION 7.5(b) apply with respect to the
Excluded Representations and Warranties.

8.6    LIMITATIONS ON INDEMNIFICATION.

     (a)      INDEMNITY BASKETS FOR THE PURCHASERS AND ALLIANCE.  The Seller
Indemnified Persons shall not have the right to be indemnified for breaches of
representations and warranties pursuant to SECTION 7.1(b)(i) unless and until
the Seller Indemnified Persons shall have incurred on a cumulative basis
aggregate Losses (without giving effect, in determining whether and to what
extent representations and warranties were breached or Losses were incurred, to
qualifications therein relating to materiality or "Material Adverse Effect") in
an amount of $500,000, in which event the right to be indemnified shall apply in
respect of all Losses; PROVIDED, HOWEVER, that in no event shall the limitations
set forth in this SECTION 7.6(a) apply with respect to the Excluded
Representations and Warranties.

     (b)      INDEMNITY LIMITATIONS FOR THE PURCHASERS AND ALLIANCE.  
The sum of all Losses (without giving effect, in determining whether and 
to what extent representations and warranties were breached or Losses 
were incurred, to qualifications therein relating to materiality or 
"Material Adverse Effect") pursuant to which indemnification is payable 
by the Purchasers and Alliance pursuant to SECTION 7.1(b)(i) shall not 
exceed $2,000,000; PROVIDED, HOWEVER, that in no event shall the 
limitations set forth in this SECTION 7.6(b) apply with respect to the 
Excluded Representations and Warranties.

8.7    ALLOCATION OF INDEMNIFICATION PAYMENTS.

     The parties hereto agree that any indemnification payment shall be 
treated as an adjustment to the Purchase Price.
                                
                           ARTICLE IX        
                                
              TERMINATION; EFFECT OF TERMINATION 

9.1    TERMINATION.

     This Agreement may be terminated at any time prior to the Closing by:

     (a)      the mutual written consent of the parties hereto; or


                                       46

<PAGE>

     (b)      the Purchasers or Alliance, if there has been a breach by 
any Seller of any of the representations or warranties in this Agreement 
or in any Related Document, individually or in the aggregate, in any 
material respect (except for representations and warranties which are 
qualified by their terms by a reference to materiality or "Material 
Adverse Effect" in which case, such representations or warranties as so 
qualified shall have been breached in any respect), covenant, obligation 
or agreement set forth in this Agreement or in any Related Document and 
such breach shall not have been cured within 10 Business Days after 
notice thereof is given by any Purchaser or Alliance (except that no 
cure period shall be provided for a breach which by its nature cannot be 
cured); or

     (c)      the Sellers, if there has been a breach by Alliance or any 
Purchaser of any of the representations or warranties in this Agreement 
or in any Related Document, individually or in the aggregate, in any 
material respect (except for representations and warranties which are 
qualified by their terms by a reference to materiality or "Material 
Adverse Effect" in which case, such representations or warranties as so 
qualified shall have been breached in any respect), covenant, obligation 
or agreement set forth in this Agreement or in any Related Document and 
such breach shall not have been cured within 10 Business Days after 
notice thereof is given by any Seller (except that no cure period shall 
be provided for a breach which by its nature cannot be cured); or

     (d)      either the Purchasers, Alliance or the Sellers, if the 
Closing shall not have been consummated by September 15, 1998; or

     (e)      either the Purchasers, Alliance or the Sellers, if any 
permanent injunction or Order of a Governmental Entity preventing the 
Closing shall have become final and nonappealable;

     (f)      By either Parent or the Purchasers if, prior to the 
Closing Date, (i) the Board of Directors of the Parent determines that a 
Third Party Proposal for an Alternative Transaction constitutes a 
Superior Proposal, (ii) the Parent promptly notifies the Purchasers of 
its determination in writing, which writing shall set forth the terms 
and conditions of the Third Party Proposal and the identity of the 
Person making the Third Party Proposal, (iii) ten days have elapsed 
following receipt by the Purchasers of such written notice, (iv) during 
such ten day period the Parent cooperates with the Purchasers with the 
intent of enabling, but not obligating, the Purchasers to agree to a 
modification of the terms and conditions of this Agreement so that the 
transactions contemplated hereby may be effected, and (v) at the end of 
such ten day period, the Board of Directors of the Parent continues to 
believe that such Third Party Proposal constitutes a Superior Proposal 
and the Parent pays to the Purchasers the amounts specified under 
SECTION 9.5(b) pursuant to the terms thereof.  For purposes of this 
Agreement, a "SUPERIOR PROPOSAL" means any Third Party Proposal to 
effect an Alternative Transaction; PROVIDED that (i) the Board of 
Directors of the Parent determines in its good faith judgment (following 
the consultation with, and the receipt of the advice of, the Parent's 
financial advisor) that such Third Party Proposal is on terms that are 
more favorable to the Parent's stockholders than the transactions 
contemplated by this Agreement (taking into account all relevant 
factors, including the amount and form of consideration to be received, 
the relative value of any non-cash consideration, and the timing and 
certainty of closing) and 

                                       47

<PAGE>

(ii) the Board of Directors of the Parent determines in its good faith 
judgment (based on the written advice of outside counsel) that the 
failure to recommend or accept such Third Party Proposal would violate 
the fiduciary duties of the Board of Directors of the Parent under 
applicable Law;

     PROVIDED, HOWEVER, in each case, that none of the Sellers, Alliance 
nor the Purchasers shall be entitled to terminate this Agreement if such 
party's breach of this Agreement has prevented the satisfaction of a 
condition.  Any termination pursuant to this SECTION 8.1 shall be 
effected by written notice from the party or parties so terminating to 
the other parties hereto, which notice shall specify the Section of this 
Agreement pursuant to which this Agreement is being terminated.

9.2    EFFECT OF TERMINATION.

     In the event of the termination of this Agreement as provided in 
SECTION 8.1, this Agreement shall be of no further force or effect, 
except for SECTION 5.7, SECTION 9.5 and this SECTION 8.2, each of which 
shall survive the termination of this Agreement; PROVIDED, HOWEVER, that 
the Liability of any party for any intentional, willful or knowing 
breach by such party of the representations, warranties, covenants, 
obligations or agreements of such party set forth in this Agreement 
occurring prior to the termination of this Agreement shall survive the 
termination of this Agreement and, in addition, in the event of any 
action for breach of contract in the event of a termination of this 
Agreement, the prevailing party shall be reimbursed by the other party 
to the action for reasonable attorneys' fees and expenses relating to 
such action.
                                
                            ARTICLE X      
                                
                   MISCELLANEOUS PROVISIONS 

10.1   AMENDMENT. 

     This Agreement shall not be altered or otherwise amended except 
pursuant to an instrument in writing signed by the parties hereto.  No 
waiver by any party of any default, misrepresentation, or breach of 
representation or warranty or covenant hereunder, whether intentional or 
not, shall be deemed to extend to any prior or subsequent default, 
misrepresentation, or breach of warranty or covenant hereunder or affect 
in any way any rights arising by virtue of any prior or subsequent such 
occurrence.

10.2   ENTIRE AGREEMENT.

     This Agreement and the other agreements and documents referenced 
herein (including, but not limited to, the schedules and the exhibits 
(in their executed form) attached hereto) and any other document or 
agreement contemporaneously entered into with this Agreement (including 
the Related Documents) contain all of the agreements among the parties 
hereto with respect to the transactions contemplated hereby and 
supersede all prior agreements or understandings among the parties with 
respect thereto (including, but not limited to, the letter agreement 
dated September 15, 1997 (as amended to the date hereof) between the 
Parent and Apollo Management, L.P.

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<PAGE>

10.3   SEVERABILITY.

     It is the desire and intent of the parties that the provisions of 
this Agreement be enforced to the fullest extent permissible under the 
Law and public policies applied in each jurisdiction in which 
enforcement is sought. Accordingly, in the event that any provision of 
this Agreement would be held in any jurisdiction to be invalid, 
prohibited or unenforceable for any reason, such provision, as to such 
jurisdiction, shall be ineffective, without invalidating the remaining 
provisions of this Agreement or affecting the validity or enforceability 
of such provision in any other jurisdiction.  Notwithstanding the 
foregoing, if such provision could be more narrowly drawn so as not to 
be invalid, prohibited or unenforceable in such jurisdiction, it shall, 
as to such jurisdiction, be so narrowly drawn, without invalidating the 
remaining provisions of this Agreement or affecting the validity or 
enforceability of such provision in any other jurisdiction.

10.4   BENEFITS OF AGREEMENT.

     All the terms and provisions of this Agreement shall be binding 
upon and inure to the benefit of the parties and their respective 
successors and permitted assigns.  Except as expressly provided herein, 
this Agreement shall not confer any rights or remedies upon any Person 
other than the foregoing; PROVIDED, HOWEVER, that anything contained 
herein to the contrary notwithstanding, the Purchasers may (a) 
collaterally assign this Agreement and the Related Documents, without 
the prior consent of any other party, to a financial or lending 
institutions providing financing to such Persons or their Affiliates, 
(b) assign the rights to acquire any and all assets (including interests 
under leases, Permits and Contracts with third parties) related to 
certain MRI Units to be designated by the Purchasers to the Sellers to 
any Affiliate of the Purchasers, pursuant to Conveyance Instruments 
reasonably satisfactory to the Purchasers on the Closing Date and (c) 
assign this Agreement to any wholly-owned Subsidiary of Alliance.

10.5   FEES AND EXPENSES

     (a)      Except as otherwise provided herein and as provided below 
in this SECTION 9.5, all fees and expenses incurred in connection with 
this Agreement, the Related Documents and the transactions contemplated 
hereby and thereby shall be paid by the party incurring such fees or 
expenses, whether or not such transactions are consummated; PROVIDED, 
HOWEVER, that the Purchasers shall pay the reasonable fees and expenses 
of Ernst & Young, LLP in connection with the preparation of the 
financial statements referenced in SECTION 3.5(b) and SECTION 5.15.

     (b)      If this Agreement is terminated pursuant to SECTION 
8.1(f), the Sellers shall pay to the Purchasers promptly upon such 
termination $1,350,000 plus all Expenses.  

     (c)      If this Agreement is terminated by any Purchaser or 
Alliance pursuant to SECTION 8.1(d) as a result of a failure to be 
satisfied of the condition precedent set forth in SECTION 6.1(b), and, 
if, within 180 days of such termination either an Alternative 
Transaction shall be consummated or any Seller or Entity shall enter 
into an Acquisition Agreement providing for an Alternative Transaction, 
then the Sellers shall pay the 

                                       49

<PAGE>

Purchasers, upon the closing of such transaction, if and whenever it 
occurs, $1,350,000 plus all Expenses.  No amounts whatsoever shall be 
payable to the Purchasers under this SECTION 9.5(c) if, at the 
Stockholders Meeting or any adjournments or postponements thereof, the 
Purchasers or their Affiliates fail to vote or cause to be voted, or 
fail to grant or cause the granting of consent or approval with respect 
to, any shares of Parent Common Stock owned by them or as to which they 
have voting rights, in favor of this Agreement and the transactions 
contemplated hereby.

     (d)           The Sellers acknowledge that the agreements contained 
in this SECTION 9.5 are an integral part of the transactions 
contemplated by this Agreement, and that, without these agreements, the 
Purchasers and Alliance would not enter into this Agreement.  
Accordingly, if the Sellers fail promptly to pay any amount due pursuant 
to this SECTION 9.5, and, in order to obtain such payment, the 
Purchasers or Alliance commence a suit which results in a judgment 
against the Sellers for the amounts set forth in this SECTION 9.5, the 
Sellers shall pay the Purchasers and Alliance all costs and expenses 
(including attorney's fees and expenses) in connection with such suit, 
together with interest on such amounts (excluding the Purchaser's and 
Alliance's costs and expenses) at the prime rate of the Bankers Trust 
Company in effect on the date such payment was required to be made.  If 
such a suit results in a judgment against the Purchasers or Alliance, 
the Purchasers and Alliance shall pay to the Sellers all costs and 
expenses (including attorney's fees and expenses) in connection with 
such suit.  "EXPENSES" shall mean all reasonably documented 
out-of-pocket expenses incurred by the Purchasers and Alliance in 
connection with this Agreement, the Related Documents and the 
transactions contemplated hereby and thereby, including fees and 
expenses of its consultants, attorneys, accountants, and other advisors; 
PROVIDED, HOWEVER, that unless the Parent has previously agreed in 
writing to increase such amount, the aggregate amount of such Expenses 
reimbursable under this SECTION 9.5 shall not exceed $350,000.

10.6   HEADINGS. 

     Descriptive headings are for convenience only and shall not control 
or affect in any way the meaning or construction of any provision of 
this Agreement.

10.7   NOTICES. 

     All notices or other communications pursuant to this Agreement 
shall be in writing and shall be deemed to be sufficient if delivered 
personally, telecopied, sent by nationally-recognized, overnight courier 
or mailed by registered or certified mail (return receipt requested), 
postage prepaid, to the parties at the following addresses (or at such 
other address for a party as shall be specified by like notice):     

                                       50

<PAGE>


   (a) if to any Seller, to:

       American Shared Hospital Services
       Four Embarcadero Center
       Suite 3620
       San Francisco, California  94111
       Attention:  Ernest A. Bates, M.D.
       Telephone No.:  (415) 788-5300
       Facsimile No.:  (415) 788-5660

   with a copy to:

       Sidley & Austin
       875 Third Avenue
       14th Floor
       New York, New York  10022
       Attention:  Daniel Kelly
       Telephone No.:  (212) 906-2000
       Facsimile No.:  (212) 906-2021

   (b) if to the Purchasers or Alliance, to:

       Alliance Imaging, Inc.
       1065 PacifiCenter Drive
       Suite 200
       Anaheim, California  92806
       Attention:  Richard N. Zehner
       Telephone No.:  (714) 688-7100
       Facsimile No.:  (714) 688-3388

   with a copy to:

       O'Sullivan Graev & Karabell, LLP
       30 Rockefeller Plaza
       New York, New York  10112
       Attention: John J. Suydam, Esq.
       Telephone No.:  (212) 408-2400
       Facsimile No.:  (212) 408-2420.

     All such notices and other communications shall be deemed to have been
given and received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of delivery by telecopier, on the date of such
delivery, (iii) in the case of delivery by nationally-recognized, overnight
courier, on the Business Day following dispatch, and (iv) in the case of
mailing, on the third Business Day following such mailing.

                                     51

<PAGE>


10.8   COUNTERPARTS.

     This Agreement may be executed in any number of counterparts, and 
each such counterpart shall be deemed to be an original instrument, but 
all such counterparts together shall constitute one agreement.

10.9   GOVERNING LAW. 

     THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH 
THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY 
CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF 
NEW YORK, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY 
JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED.  IN 
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK 
WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN 
IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, 
THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.  
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY 
RELATED DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK 
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY 
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY 
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY AND 
ASSETS, GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID 
COURTS.

10.10  INCORPORATION OF EXHIBITS AND SCHEDULES. 

     The ANNEXES, EXHIBITS and SCHEDULES identified in this Agreement 
are incorporated herein by reference and made a part hereof.

10.11  INTERPRETATION; CONSTRUCTION.

     The term "AGREEMENT" means this agreement together with all 
schedules, annexes and exhibits hereto, as the same may from time to 
time be amended, modified, supplemented or restated in accordance with 
the terms hereof.  Unless the context otherwise requires, words 
importing the singular shall include the plural, and vice versa.  In 
this Agreement, the term "BEST KNOWLEDGE" of any Person means (i) the 
actual knowledge of such Person and (ii) that knowledge which should 
have been acquired by such Person after making such due inquiry and 
exercising such due diligence as a prudent businessperson would have 
made or exercised in the management of his or her business affairs, 
including due inquiry of those officers, directors, employees and 
professional advisers (including attorneys, accountants and consultants) 
of the Person who could reasonably be expected to have actual knowledge 
of the matters in question. When used in the case of the Sellers, the 
term "BEST KNOWLEDGE" shall include the Best Knowledge of each Seller 
and each Entity.  The use in this Agreement of the term "INCLUDING" 
means 

                                       52

<PAGE>

"INCLUDING, WITHOUT LIMITATION."  The words "HEREIN", "HEREOF", 
"HEREUNDER", "HEREBY", "HERETO", "HEREINAFTER", and other words of 
similar import refer to this Agreement as a whole, including the 
schedules, annexes and exhibits, as the same may from time to time be 
amended, modified, supplemented or restated, and not to any particular 
article, section, subsection, paragraph, subparagraph or clause 
contained in this Agreement.  All references to articles, sections, 
subsections, clauses, paragraphs, schedules and exhibits mean such 
provisions of this Agreement and the schedules and exhibits attached to 
this Agreement, except where otherwise stated.  The title of and the 
article, section and paragraph headings in this Agreement are for 
convenience of reference only and shall not govern or affect the 
interpretation of any of the terms or provisions of this Agreement.  The 
use herein of the masculine, feminine or neuter forms shall also denote 
the other forms, as in each case the context may require.  Where 
specific language is used to clarify by example a general statement 
contained herein, such specific language shall not be deemed to modify, 
limit or restrict in any manner the construction of the general 
statement to which it relates.  The language used in this Agreement has 
been chosen by the parties to express their mutual intent, and no rule 
of strict construction shall be applied against any party.  Accounting 
terms used but not otherwise defined herein shall have the meanings 
given to them under GAAP. Unless expressly provided otherwise, the 
measure of a period of one month or year for purposes of this Agreement 
shall be that date of the following month or year corresponding to the 
starting date, provided that if no corresponding date exists, the 
measure shall be that date of the following month or year corresponding 
to the next day following the starting date.  For example, one month 
following February 18 is March 18, and one month following March 31 is 
May 1.

10.12  REMEDIES.

     The parties shall each have and retain all rights and remedies 
existing in their favor under this Agreement, the Related Documents, at 
law or equity, including rights to bring actions for specific 
performance and injunctive and other equitable relief (including, 
without limitation, the remedy of rescission) to enforce or prevent a 
breach or any violation of this Agreement or the Related Documents.  All 
such rights and remedies shall, to the extent permitted by applicable 
Law, be cumulative.

10.13  APPOINTMENT OF REPRESENTATIVE.

     M Sub hereby irrevocably appoints the Parent to be its 
attorney-in-fact and representative for the purpose of administering 
this Agreement on behalf M Sub. The Purchasers shall be entitled to deal 
exclusively with the Parent, as the representative of M Sub.  Purchaser 
B hereby irrevocably appoints Purchaser A to be its attorney-in-fact and 
representative for the purpose of administering this Agreement on behalf 
of Purchaser B.  The Sellers shall be entitled to deal exclusively with 
Purchaser A as the representative of Purchaser B.

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10.14  SALE AND TRANSFER TAXES.

     All Transfer Taxes incurred in connection with the consummation of the
transactions contemplated herein (other than the Transfer Taxes referenced in
SECTION 7.1(a)(iv) to be borne by the Sellers) shall be paid 100% by Alliance
and the Purchasers.

10.15  WAIVER OF JURY TRIAL.

     EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY RELATED DOCUMENT.
                                     
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     IN WITNESS WHEREOF, the parties hereto have executed this 
Securities Purchase Agreement as of the date first written above.

                                ALLIANCE IMAGING, INC.
       

                                By:   /s/ Richard N. Zehner   
                                     --------------------------
                                     Name:   Richard N. Zehner
                                     Title:  Chief Executive Officer

                                     EMBARCADERO HOLDING CORP. I
       

                                By:   /s/ Joshua J. Harris    
                                     --------------------------
                                     Name:   Joshua J. Harris
                                     Title:  Vice President

                                     EMBARCADERO HOLDING CORP. II


                                By:    /s/ Joshua J. Harris    
                                     --------------------------
                                     Name:   Joshua J. Harris
                                     Title:  Vice President

                                AMERICAN SHARED HOSPITAL SERVICES
       

                                By:  /s/ Earnest A. Bates, MD     
                                     --------------------------
                                     Name:   Earnest A. Bates, MD
                                     Title:  Chairman and President

                                MMRI, INC.
       

                                By:   /s/ Earnest A. Bates, MD
                                     --------------------------
                                     Name:   Earnest A. Bates, MD
                                     Title:  Chairman and President

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                                                          ANNEX I
                                     
                               DEFINITIONS

     "ACQUISITION AGREEMENT" has the meaning ascribed thereto in SECTION 
5.4.

     "AFFILIATE" means, with respect to any Person, (i) a director, 
officer or greater than 10% shareholder of such Person, (ii) a spouse, 
parent, sibling or descendant of such Person (or spouse, parent, sibling 
or descendant of any director or executive officer of such Person), or 
(iii) any other Person that, directly or indirectly through one or more 
intermediaries, Controls, or is Controlled by, or is under common 
Control with, such Person.

     "ALLIANCE" has the meaning ascribed thereto in the preamble.

     "ALTERNATIVE TRANSACTION" means any (i) acquisition or purchase of 
any material portion of the Business or any material assets of either 
Entity outside the ordinary course of business, (ii) acquisition or 
purchase of any Equity Securities of any Entity, any tender offer or 
exchange offer that if consummated would result in any Person 
beneficially owning more than 50% of any class of Equity Securities of 
the Parent or any Equity Securities of either Entity or (iii) any 
merger, consolidation, business combination, recapitalization, 
liquidation, dissolution or similar transaction involving any Entity, 
other than the transactions contemplated to be effected with the 
Purchasers by this Agreement.

     "ASHS 401(k) PLAN" has the meaning ascribed thereto in SECTION 5.18.

     "ASSET CONTRIBUTION" has the meaning ascribed thereto in SECTION 
1.2.

     "ASSET DISPOSITION" has the meaning ascribed thereto in SECTION 1.2.

     "BUSINESS" has the meaning ascribed thereto in the first WHEREAS 
clause.

     "BUSINESS DAY" means any day that is not a Saturday, Sunday or a 
day on which banking institutions in New York, New York are not required 
to be open.

     "CAPITAL LEASE" means any obligation to pay rent or other amounts 
under any lease of (or other arrangement conveying the right to use) 
real or personal property, or a combination thereof, which obligations 
are required to be classified and accounted for as capital leases on a 
balance sheet of such Person as of such date computed in accordance with 
GAAP.

     "CASH EQUIVALENTS" means any of the following:  (a) securities 
issued, or that are directly and fully guaranteed or insured, by the 
United States Government or any agency or instrumentality thereof having 
maturities of not more 

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than 12 months from the date of acquisition, (b) time deposits and 
certificates of deposit having maturities of not more than 12 months 
from the date of acquisition of any domestic commercial bank having 
capital and surplus in excess of $500,000,000, (c) repurchase agreements 
with a term of not more than seven days for underlying securities of the 
types described in clauses (a) and (b) above entered into with any bank 
meeting the qualifications specified in clause (b) above or with 
securities dealers of recognized national standing, and (d) commercial 
paper rated (as of the date of acquisition thereof) at least A-1 or the 
equivalent thereof by Moody's Investors Service, Inc. and at least P-1 
or the equivalent thereof by Standard & Poor's Corporation and maturing 
within six months after the date of its acquisition.

     "CATH LAB" has the meaning ascribed thereto in SECTION 3.5.

     "CERCLA" has the meaning ascribed thereto in SECTION 3.20.

     "CHAMPUS" has the meaning ascribed thereto in SECTION 3.18.

     "CLOSING" has the meaning ascribed thereto in ARTICLE II.

     "CLOSING DATE" has the meaning ascribed thereto in ARTICLE II.

     "COBRA" has the meaning ascribed thereto in SECTION 5.18.

     "CODE" means the Internal Revenue Code of 1986, as amended.

     "CONFIDENTIAL OR PROPRIETARY INFORMATION" means all information 
disclosed (i) by or on behalf of any Entity or any Seller to the 
Purchasers, Alliance or to employees, consultants or others in a 
confidential relationship with any of them, or (ii) by or on behalf of 
the Purchasers or Alliance to any Seller or any Entity, or to employees, 
consultants or others in a confidential relationship with any of them, 
in each case other than such information which (A) becomes generally 
available to the public (other than as a result of a breach of this 
Agreement), (B) was known to the party to whom such information was 
disclosed prior to its disclosure to such party, (C) is hereafter 
available to the party to whom such information was disclosed on a 
non-confidential basis from a source (other than the party disclosing or 
on whose behalf such information was disclosed) which was, to the 
knowledge of the receiving party, entitled to disclose the same or (D) 
is compelled by Law or Order to be disclosed by the party to whom such 
information was disclosed.

     "CONFIDENTIALITY AGREEMENT" has the meaning ascribed thereto in 
SECTION 5.5.

     "CONSOLIDATED AFFILIATE" has the meaning ascribed thereto in 
SECTION 3.8.

     "CONSOLIDATED GROUP" has the meaning ascribed thereto in SECTION 
3.8.

     "CONTRACT" means any agreement, contract, or license (i) for 
purposes of SECTION 3.7(l) and SECTION 5.2(k), relating to payments by 
any Person of a dollar amount 

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<PAGE>

in excess of $25,000 and (ii) for purposes of all other Sections of this 
Agreement, relating to payments by any Person of a dollar amount in 
excess of $10,000.

     "CONTROL" means, with respect to any Person, the possession, 
directly or indirectly, of the power to direct or cause the direction of 
the management or policies of a Person, whether through the ownership of 
securities, by contract or otherwise.

     "CONVEYANCE INSTRUMENTS" has the meaning ascribed thereto in 
SECTION 1.2.

     "COVERED TAXES" means, all Taxes of CT Sub and/or the Partnership 
with respect to periods ending on or prior to the Closing Date other 
than those Taxes that are to be paid by Purchasers and Alliance pursuant 
to SECTION 9.14.

     "CT SHARES" has the meaning ascribed thereto in the second WHEREAS 
clause.

     "CT SUB" means CuraCare, Inc., a Delaware corporation.

     "CT UNIT" has the meaning ascribed thereto in SECTION 3.5.

     "DVI" has the meaning ascribed thereto in SECTION 5.16.

     "DVI REVOLVING CREDIT AGREEMENT" means the Loan and Security 
Agreement dated as of January 31, 1996 among MRI Sub and CT Sub, as 
borrowers, the Parent and Ernest A. Bates, M.D., as guarantors, and DVI, 
as lender, as amended by Amendment No. 1 dated March 26, 1996, as 
amended by Amendment No. 2 dated January 31, 1997, as amended by 
Amendment No. 3 dated April 30, 1997, as amended by Amendment No. 4 
dated as of July 31, 1997 and as amended by Amendment No. 5 dated as of 
December 1, 1997.

     "EBITDA" means, for any period with respect to any Unit, net income 
(or net loss) from operations PLUS, to the extent deducted in 
calculating such net income (or net loss), the sum of (a) interest 
expense, (b) income tax expense, (c) depreciation expense and (d) 
amortization expense, in each case determined and as properly allocated 
to such Unit in accordance with GAAP.

     "EMPLOYEE BENEFIT PLAN"  means (i) any qualified or non-qualified 
"employee pension benefit plan," as defined in Section 3(2) of ERISA, 
including any "multiemployer plan," as defined in Section 3(37) of 
ERISA, or "multiple employer plan," as defined in Section 413 of the 
Code, (ii) any "employee welfare benefit plan," as defined in Section 
3(1) of ERISA, or (iii) any severance, employment, incentive, bonus, 
profit-sharing, stock option, stock purchase or other pension, welfare 
or fringe plan, program or arrangement, whether or not subject to ERISA 
and whether or not funded.

     "EMPLOYEE PLANS" has the meaning ascribed thereto in SECTION 3.17.

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     "ENCUMBRANCES" shall mean any security interest, mortgage, lien, 
pledge or charge or any option or right of first refusal.

     "ENTITIES" means CT Sub and the Partnership.

     "ENTITIES' FINANCIAL STATEMENTS" has the meaning ascribed thereto in
SECTION 3.5.

     "ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means all Laws, Permits, 
Orders and Contracts and all common Law relating to or addressing 
pollution or protection of the environment, public health and safety, or 
employee health and safety, including, but not limited to, all those 
relating to the presence, use, production, generation, handling, 
transportation, treatment, storage, disposal, distribution, labeling, 
testing, processing, discharge, release, threatened release, control or 
cleanup of any hazardous materials, substances or wastes, chemical 
substances or mixtures, pesticides, pollutants, contaminants, toxic 
chemicals, petroleum products or byproducts, asbestos, polychlorinated 
biphenyls, noise or radiation.

     "EQUITY INTERESTS" means (i) with respect to a corporation, any and 
all shares, interests, participation or other equivalents (however 
designated) of corporate stock, including all common stock and preferred 
stock, or warrants, options or other rights to acquire any of the 
foregoing and (ii) with respect to a partnership, limited liability 
company or similar Person, any and all units, interests, rights to 
purchase, warrants, options or other equivalents of, or other ownership 
interests in, any such Person.

     "ERISA" means the Employment Retirement Income Security Act of 
1974, as amended.

     "ERISA AFFILIATE" means, with respect to any Person, any other 
Person that is a member of a "CONTROLLED GROUP OF CORPORATIONS" with, or 
is under "COMMON CONTROL" with, or is a member of the same "AFFILIATED 
SERVICE GROUP" with such Person as defined in Section 414(b), 414(c), 
414(m) or 414(o) of the Code.

     "EXCHANGE ACT" has the meaning ascribed thereto in SECTION 3.22.

     "EXCHANGE PROCEEDS" has the meaning ascribed thereto in SECTION 5.9.

     "EXCLUDED ASSETS" has the meaning ascribed thereto in SECTION 1.2.

     "EXCLUDED LIABILITIES" has the meaning ascribed thereto in SECTION 
1.2.

     "EXCLUDED REPRESENTATIONS AND WARRANTIES" has the meaning ascribed 
thereto in SECTION 7.4.

     "EXPENSES" has the meaning ascribed thereto in SECTION 9.5.

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<PAGE>

     "FEDERAL HEALTH CARE PROGRAM" has the meaning ascribed thereto in
SECTION 3.19.

     "FUNDED INDEBTEDNESS" means, without duplication, with respect to any
Person the aggregate amount (including the current portions thereof) of all (i)
indebtedness for money borrowed from others and purchase money indebtedness
(other than accounts payable in the ordinary course) of such Person; (ii)
indebtedness of the type described in clause (i) above guaranteed, directly or
indirectly, in any manner by such Person, through an agreement, contingent or
otherwise, to supply funds to, or in any other manner invest in, the relevant
debtor, or to purchase indebtedness, or to purchase and pay for property if not
delivered or pay for services if not performed, primarily for the purpose of
enabling such debtor to make payment of the indebtedness or to assure the owners
of the indebtedness against loss (any such arrangement being hereinafter
referred to as a "GUARANTY"), but excluding endorsements of checks and other
instruments in the ordinary course; (iii) indebtedness of the type described in
clause (i) above secured by any Encumbrances upon property owned by such Person,
even though such Person has not in any manner become liable for the payment of
such indebtedness; (iv) interest expense accrued but unpaid, and all prepayment
premiums, on or relating to any of such indebtedness; (v) obligations in respect
of leases which would be required to be capitalized under GAAP; and (vi)
obligations under operating leases for Units.

     "GAAP" means United States generally accepted accounting principles,
consistently applied.

     "GK FINANCE" means GK Financing, LLC, a California limited liability
company.

     "GOVERNMENTAL ENTITY" means any federal, state, local or foreign
government and any court, tribunal, administrative agency, commission or other
governmental or regulatory authority or agency, domestic, foreign or
supranational.

     "GUARANTY" has the meaning ascribed thereto in the definition of
Funded Indebtedness.

     "HIRED EMPLOYEES" has the meaning ascribed thereto in SECTION 5.18.

     "INDEMNIFIED PERSONS" means and includes the Seller Indemnified
Persons and/or the Purchaser Indemnified Persons,  as the case may be.

     "INDEMNIFYING PERSONS" means and includes the Seller Indemnifying
Persons and/or the Purchaser Indemnifying Persons, as the case may be.

     "INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights,
including, without limitation, patents, patent applications, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
trade dress, logos and designs and the goodwill connected with the foregoing,
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, instructions, marketing materials and all 

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documentation and media constituting, describing or relating to the 
foregoing, including, without limitation, manuals, memoranda and records.

     "LATEST BALANCE SHEET" has the meaning ascribed thereto in SECTION
3.5.

     "LATEST BALANCE SHEET DATE" has the meaning ascribed thereto in
SECTION 3.5.

     "LAW" means any applicable foreign, federal, state or local law,
statute, treaty, rule, directive, regulation, ordinance and similar provision
having the force or effect of law or an Order of any Governmental Entity
(including all Environmental, Health and Safety Laws).

     "LEASED PROPERTY" has the meaning ascribed thereto in SECTION 3.10.

     "LIABILITY" means any liability whether fixed or unfixed or liquidated
or unliquidated.

     "LICENSED REQUISITE RIGHTS" has the meaning ascribed thereto in
SECTION 3.11.

     "LOSSES" means any and all losses, claims, damages, Liabilities,
expenses (including reasonable attorneys' and accountants' and other
professionals' fees), assessments and Taxes, (including interest or penalties
thereon) that are the subject of indemnification under ARTICLE 7, in each case,
(i) net of any cash insurance benefits actually received and (ii) net of any Tax
benefits realized in respect of the Losses for which the indemnification
payments are being made.  For purposes of this definition, Tax benefits realized
shall mean the sum of all reductions in federal, state, local and foreign Taxes
(including estimated Taxes) payable by the Indemnified Person solely as a result
of the Losses for which the indemnification payments are being made.  All
calculations shall be made using reasonable assumptions agreed upon by the
Purchasers, Alliance and the Sellers including the timing of the utilization of
any such Tax benefits, and any such Tax benefits shall be assumed to be utilized
in a given Tax year only after all other Tax benefits available in such year
have first been taken into account.  If a Tax benefit that has been taken into
account for purposes of calculating Losses hereunder is wholly or partially
disallowed by a taxing authority, the Indemnifying Person shall pay the
Indemnified Person the amount that would have been paid originally with respect
to such Losses had such disallowed Tax benefit not been taken into account.

     "M SUB" has the meaning ascribed thereto in the preamble.

     "M SUB PARTNERSHIP INTERESTS" means the 50% general partnership
interests in the Partnership held or owned by M Sub.

     "MATERIAL ADVERSE EFFECT" has the meaning ascribed thereto in SECTION
3.7.

     "MRI UNIT" has the meaning ascribed thereto in SECTION 3.5.

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     "NON-COMPETE PERIOD" means the period ending on the fifth anniversary
of the Closing Date.

     "ORDERS" means judgments, writs, decrees, compliance agreements,
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.

     "ORGANIZATIONAL DOCUMENTS" means (i) any certificate or articles filed
with any state which filing forms a Person and (ii) all agreements, documents or
instruments governing the internal affairs of a Person, including such Person's
by-laws, codes of regulations, partnership agreements, limited liability company
agreements, joint venture agreements and operating agreements.

     "OWNED REQUISITE RIGHTS" has the meaning ascribed thereto in SECTION
3.11.

     "PARENT" has the meaning ascribed thereto in the preamble.

     "PARENT COMMON STOCK" has the meaning ascribed thereto in SECTION
3.24.

     "PARENT PARTNERSHIP INTERESTS" means the 50% general partnership
interest in the Partnership held or owned by the Parent.

     "PARENT STOCKHOLDER APPROVAL" has the meaning ascribed thereto in
SECTION 3.24.

     "PARTNERSHIP" means American Shared-CuraCare, a California general
partnership.

     "PARTNERSHIP AGREEMENT" means the Joint Venture Agreement, between M
Sub and the Parent, dated March 7, 1985, as modified by the Modification to
Joint Venture Agreement dated April 5, 1985, the Modification to Joint Venture
Agreement dated May 20, 1985, the First Supplement to the Joint Venture
Agreement dated as of October 14, 1987, the Second Supplement to the Joint
Venture Agreement dated as of May 15, 1995, and as further amended, modified or
supplemented from time to time including, without limitation, as amended and
restated pursuant to SECTION 6.2 hereunder.

     "PARTNERSHIP INTERESTS" means the M Sub Partnership Interests and the
Parent Partnership Interests.

     "PERMITS" means all permits, certificates of need, licenses,
authorizations, registrations, franchises, approvals, certificates, variances
and similar rights obtained, or required to be obtained, from Governmental
Entities.

     "PERMITTED ENCUMBRANCES" means with respect to any Person, (i)
Encumbrances for Taxes not yet due and payable or being contested in good faith
by appropriate proceedings and for which there are adequate reserves on the
books and records of such Person, (ii) workers or unemployment compensation
liens arising in the 

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ordinary course of business, (iii) statutory lessor liens arising under 
leases, and (iv) mechanic's, materialman's, supplier's, vendor's or 
similar liens arising in the ordinary course of business securing 
amounts that are not delinquent.

     "PERSON"  shall be construed broadly and shall include an individual,
a partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization or
a Governmental Entity (or any department, agency or political subdivision
thereof).

     "POST SIGNING RETURNS" has the meaning ascribed thereto in SECTION
5.11.

     "PROCEEDINGS" means any action, suit, investigation or proceedings
before any Governmental Entity or arbitrator other than the review by Internal
Revenue Service of an application for a favorable determination letter regarding
any Employee Plan.

     "PROXY STATEMENT" has the meaning ascribed thereto in SECTION 5.12.

     "PURCHASE PRICE" has the meaning ascribed thereto in SECTION 1.3.

     "PURCHASED PARENT ASSETS" has the meaning ascribed thereto in SECTION
1.2.

     "PURCHASER A" has the meaning ascribed thereto in the preamble.

     "PURCHASER B" has the meaning ascribed thereto in the preamble.

     "PURCHASER INDEMNIFIED PERSONS" means and includes the Purchasers,
their Affiliates (including, without limitation, Alliance), their successors and
assigns, and the respective officers, directors, employees and agents of each of
the foregoing.

     "PURCHASER INDEMNIFYING PERSONS" means Alliance and each Purchaser
(jointly and severally) and their successors and assigns.

     "PURCHASER LOSSES" means any and all Losses sustained, suffered or
incurred by any Purchaser Indemnified Person arising from or in connection with
any such matter which is the subject of indemnification under ARTICLE 7.

     "PURCHASERS" has the meaning ascribed thereto in the preamble.

     "RELATED DOCUMENTS" has the meaning ascribed thereto in SECTION 6.2

     "REQUISITE RIGHTS" has the meaning ascribed thereto in SECTION 3.11.

     "RESPIRATORY SYSTEM" has the meaning ascribed thereto in SECTION 3.5.

     "RESTRICTED TERRITORY" means any portion of the United States in which
the Business has operated during the three years preceding the Closing Date.

     "SEC" means the United States Securities and Exchange Commission and
any successor agency.

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     "SEC DOCUMENTS" has the meaning ascribed thereto in SECTION 3.5.

     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "SELLER INDEMNIFIED PERSONS" means and includes the Sellers and their
respective successors and assigns.

     "SELLER INDEMNIFYING PERSONS" means and includes the Sellers (jointly
and severally) and their respective successors and assigns.

     "SELLER LOSSES" shall mean any and all Losses sustained, suffered or
incurred by any Seller Indemnified Person arising from or in connection with any
matter which is the subject of indemnification under ARTICLE 7.

     "SELLERS" means the Parent and M Sub.

     "SHARES" means the CT Shares and the Partnership Interests.

     "SPECT UNIT" has the meaning ascribed thereto in SECTION 3.5.

     "SSA" has the meaning ascribed thereto in SECTION 3.18.

     "STATE HEALTH CARE PROGRAM" has the meaning ascribed thereto in
SECTION 3.19.

     "STOCKHOLDERS AGREEMENT" has the meaning ascribed thereto in SECTION
6.2.

     "STOCKHOLDERS MEETING" has the meaning ascribed thereto in SECTION
5.12.

     "SUBSIDIARY" means any Person with respect to which a specified Person
(or a Subsidiary thereof) has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors or other governing
body.

     "SUPERFUND" has the meaning ascribed thereto in SECTION 3.20.

     "SUPERIOR PROPOSAL" has the meaning ascribed thereto in SECTION 8.1.

     "SURVIVAL DATE" has the meaning ascribed thereto in SECTION 7.4.

     "TAX CLAIM" has the meaning ascribed thereto in SECTION 5.8.

     "TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

     "TAXES" means, with respect to any Person, (i) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, 

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<PAGE>

sales, use, ad valorem, transfer, franchise, license, withholding, 
payroll, employment, excise, severance, stamp, occupation, premium, 
property or windfall profits taxes, alternative or add-on minimum taxes, 
customs duties and other taxes, fees, assessments or charges of any kind 
whatsoever, together with all interest and penalties, additions to tax 
and other additional amounts imposed by any taxing authority (domestic 
or foreign) on such Person (if any) and (ii) any liability for the 
payment of any amount of the type described in CLAUSE (i) above as a 
result of (A) being a "TRANSFEREE" (within the meaning of Section 6901 
of the Code or any other applicable Law) of another Person, (B) being a 
member of an affiliated, combined or consolidated group or (C) a 
contractual arrangement or otherwise.

     "THIRD PARTY CLAIM" has the meaning ascribed thereto in SECTION 7.3.

     "THIRD PARTY PROPOSAL" means a bona fide proposal from a third party,
which proposal did not result from a breach of SECTION 5.4(a) and which third
party the Board of Directors of the Parent determines in good faith has the
capacity and is reasonably likely to consummate a Superior Proposal. 

     "338(h)(10) ELECTION" has the meaning ascribed thereto in SECTION 5.8.

     "TRANSFER TAXES" has the meaning ascribed thereto in SECTION 7.1.

     "ULTRASOUND MACHINE" has the meaning ascribed thereto in SECTION 3.5.

     "UNITS" has the meaning ascribed thereto in SECTION 3.5.   

     "YEARS INCLUDED" has the meaning ascribed thereto in SECTION 3.8.
















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