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<SEC-DOCUMENT>0000950149-03-001024.txt : 20030505
<SEC-HEADER>0000950149-03-001024.hdr.sgml : 20030505
<ACCEPTANCE-DATETIME>20030502175327
ACCESSION NUMBER:		0000950149-03-001024
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20030612
FILED AS OF DATE:		20030505
EFFECTIVENESS DATE:		20030505

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERICAN SHARED HOSPITAL SERVICES
		CENTRAL INDEX KEY:			0000744825
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MEDICAL LABORATORIES [8071]
		IRS NUMBER:				942918118
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08789
		FILM NUMBER:		03680621

	BUSINESS ADDRESS:	
		STREET 1:		FOUR EMBARCADERO CENTER
		STREET 2:		SUITE 3700
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94111-4170
		BUSINESS PHONE:		415-788-5300

	MAIL ADDRESS:	
		STREET 1:		FOUR EMBARCADERO CENTER
		STREET 2:		SUITE 3700
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94111-4170
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>f89779adef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>SCHEDULE 14A<BR>
(Rule&nbsp;14a-101)<BR>
INFORMATION REQUIRED IN PROXY STATEMENT<BR>
SCHEDULE 14A INFORMATION<BR>
Proxy Statement Pursuant to Section&nbsp;14(a) of the Securities<BR>
Exchange Act of 1934</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><FONT size="2">Filed by the Registrant&nbsp;&nbsp;<FONT face="Wingdings">&#120;</FONT><br>
Filed by a Party other than the Registrant&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT><br>
Check the appropriate box:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Preliminary Proxy Statement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Confidential, For Use of the Commission Only (as permitted by Rule&nbsp;14a-6(e)(2)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#120;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Definitive Proxy Statement</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Definitive Additional Materials</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Soliciting Material Pursuant to Rule&nbsp;14a-11(c) or Rule&nbsp;14a-12</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">American Shared Hospital Services<BR>
(Name of Registrant as Specified in Its Charter)<BR>
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
 <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><FONT size="2">Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#120;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
No fee required</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Title of each class of securities to which transaction applies:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Aggregate number of securities to which transactions applies:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Per unit price or other underlying value of transaction computed to
Exchange Act Rule&nbsp;0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Proposed maximum aggregate value of transaction:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Total fee paid:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fee paid previously with preliminary materials:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Check box if any part of the fee is offset as provided by Exchange Act
Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Amount previously paid:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Form, Schedule or Registration Statement no.:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(3)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Filing Party:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Date Filed:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="center">
<B><FONT size="4">AMERICAN SHARED HOSPITAL SERVICES</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Four Embarcadero Center,
Suite&nbsp;3700</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San Francisco, California 94111</FONT></B>
</DIV>

<P align="center">
<B>NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS</B>

<DIV align="center">
<B>To be held on June&nbsp;12, 2003</B>
</DIV>

<P align="left">
<FONT size="2">TO THE SHAREHOLDERS OF AMERICAN SHARED HOSPITAL
SERVICES:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOTICE IS HEREBY GIVEN that, pursuant to a call
of the Board of Directors, the 2003 Annual Meeting of
Shareholders (the &#147;Meeting&#148;) of American Shared
Hospital Services, a California corporation (the
&#147;Company&#148;), will be held at the Ritz Carlton Hotel,
600 Stockton Street (corner of California Street), San
Francisco, California 94111 at 9:00&nbsp;am (Pacific time), on
Thursday, June&nbsp;12, 2003 to consider and to act upon the
following matters, all as set forth in the Proxy Statement.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;ELECTION OF DIRECTORS.&nbsp;To elect the
    following five nominees to the Board of Directors to serve until
    the next Annual Meeting of Shareholders and until their
    successors are elected and have qualified.
    </FONT></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="62%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="35%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Ernest A. Bates, M.D.<BR>
    Willie R. Barnes<BR>
    Olin C. Robison
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">John F. Ruffle<BR>
    Stanley S. Trotman, Jr.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;RATIFICATION OF INDEPENDENT
    ACCOUNTANTS.&nbsp;To ratify the appointment of Moss Adams LLP as
    the Company&#146;s independent accountants for the year ending
    December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;OTHER BUSINESS.&nbsp;To transact such
    other business and to consider and take action upon any and all
    matters that may properly come before the Annual Meeting and any
    and all adjournments thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors knows of no matters, other
than those set forth in paragraphs&nbsp;(1) and (2) above, that
will be presented for consideration at the Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has fixed the close of
business on May&nbsp;2, 2003 as the Record Date for the
determination of shareholders entitled to vote at the Meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING
IN PERSON, PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED AS PROMPTLY AS POSSIBLE. THE PROXY IS
REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING. IN ORDER TO FACILITATE THE PROVISION OF
ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER
YOU PLAN TO ATTEND THE MEETING IN PERSON.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ WILLIE R. BARNES
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Willie R. Barnes
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Corporate Secretary</FONT></I></TD>
</TR>

</TABLE>

<DIV align="left">
<FONT size="2">Dated: May&nbsp;5, 2003
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">San Francisco, California
</FONT>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">PROXY STATEMENT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">INTRODUCTION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">PROPOSAL NO. 1 ELECTION OF DIRECTORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">CERTAIN ADDITIONAL INFORMATION</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">1984, 1995 AND 2001 STOCK OPTION PLANS AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">PERFORMANCE GRAPH, TOTAL RETURN TO SHAREHOLDERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">AUDIT COMMITTEE REPORT</A></TD></TR>
<TR><TD colspan="9"><A HREF="#008">INDEPENDENT AUDITORS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">SHAREHOLDER PROPOSALS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#010">ANNUAL REPORT</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">AMERICAN SHARED HOSPITAL SERVICES</FONT></B>

<DIV align="center">
<B><FONT size="2">Four Embarcadero Center,
Suite&nbsp;3700</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">San Francisco, California 94111</FONT></B>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<DIV>&nbsp;</DIV>

<!-- link1 "PROXY STATEMENT" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center">
<B>PROXY STATEMENT</B>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="center">
<B>2003 ANNUAL MEETING OF SHAREHOLDERS</B>

<DIV align="center">
<B>June&nbsp;12, 2003</B>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<DIV>&nbsp;</DIV>

<!-- link1 "INTRODUCTION" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center">
<B><FONT size="2">INTRODUCTION</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Proxy Statement is being furnished to
shareholders of American Shared Hospital Services, a California
corporation (the &#147;Company&#148;), in connection with the
solicitation of proxies by the Company&#146;s Board of Directors
for use at the 2003 Annual Meeting of Shareholders scheduled to
be held at the Ritz Carlton Hotel, 600 Stockton Street (corner
of California Street), San Francisco, California 94111 at
9:00&nbsp;am (Pacific time) on Thursday, June&nbsp;12, 2003 and
at any adjournment or adjournments thereof (the
&#147;Meeting&#148;). It is anticipated that this Proxy
Statement and the Proxy will first be sent to shareholders on or
about May&nbsp;7, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The matters to be considered and voted upon at
the Meeting will be:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;To elect five persons to the Board of
    Directors to serve until the next Annual Meeting of Shareholders
    and until their successors are elected and have qualified.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;To ratify the appointment of Moss Adams
    LLP as the Company&#146;s independent accountants for the year
    ending December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;To transact such other business as may
    properly be brought before the Meeting and any and all
    adjournments thereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only shareholders of record at the close of
business on May&nbsp;2, 2003 (the &#147;Record Date&#148;) are
entitled to notice of and to vote at the Meeting.
</FONT>

<P align="left">
<B><FONT size="2">Revocability of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A proxy for use at the Meeting is enclosed. Any
shareholder who executes and delivers such proxy may revoke it
at any time prior to its use by filing with the Secretary of the
Company either written instructions revoking such proxy or a
duly executed proxy bearing a later date. Written notice of the
death of the person executing a proxy, before the vote is
counted, is tantamount to revocation of such proxy. A proxy may
also be revoked by attending the Meeting and voting in person.
</FONT>

<P align="left">
<B><FONT size="2">Solicitation of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This proxy solicitation is being made by the
Board of Directors of the Company. The expense of the
solicitation will be paid by the Company. To the extent
necessary to assure sufficient representation at the Meeting,
proxies may be solicited by any appropriate means by directors,
officers, regular employees of the Company and the stock
transfer agent for the Common Shares, who will not receive any
additional compensation therefor. The Company will request that
banks, brokers and other fiduciaries solicit their customers who
own beneficially the Common Shares listed of record in names of
nominees and, although there is no formal arrangement to do so,
the Company will reimburse such persons the reasonable expenses
of such solicitation. In addition, the Company may pay for and
utilize the services of individuals or companies not regularly
employed by the Company in connection with the solicitation of
proxies, if the Board of Directors of the Company determines
that this is advisable.
</FONT>

<P align="center"><FONT size="2">1
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Outstanding Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has fixed May&nbsp;2, 2003
as the Record Date for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. At the close
of business on the Record Date, there were outstanding and
entitled to vote 3,818,203 Common Shares. The Common Shares are
the only class of securities entitled to vote at the Meeting.
</FONT>

<P align="left">
<B><FONT size="2">Vote Required and Voting Procedures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each holder of Common Shares will be entitled to
one vote, in person or by proxy, for each share standing in its
name on the books of the Company as of the Record Date for the
Meeting on each of the matters duly presented for vote at the
Meeting, except as indicated below in connection with the
election of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the election of directors,
shares are permitted to be voted cumulatively, if (i)&nbsp;a
shareholder present at the Meeting has given notice at the
Meeting, prior to the voting, of such shareholder&#146;s
intention to vote its shares cumulatively and (ii)&nbsp;the
names of the candidates for whom such shareholder desires to
cumulate votes have been placed in nomination prior to the
voting. If a shareholder has given such notice, all shareholders
may cumulate their votes for candidates in nomination.
Cumulative voting allows a shareholder to give one nominee as
many votes as is equal to the number of directors to be elected,
multiplied by the number of shares owned by such shareholder or
to distribute votes on the same principle between two or more
nominees. Discretionary authority to cumulate votes is hereby
solicited by the Board of Directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All outstanding shares of the Company&#146;s
Common Stock represented by properly executed and unrevoked
proxies received in time for the Meeting will be voted. A
shareholder may, with respect to the election of directors
(i)&nbsp;vote for the election of all five nominees named herein
as directors, (ii)&nbsp;withhold authority to vote for all such
director nominees or (iii)&nbsp;vote for the election of all
such director nominees other than any nominee(s) with respect to
whom the shareholder withholds authority to vote by so
indicating in the appropriate space on the proxy. Withholding
authority to vote for a director nominee will not prevent such
director nominee from being elected. A shareholder may, with
respect to the proposal to ratify the appointment of the
Company&#146;s independent accountants, (i)&nbsp;vote for the
ratification, (ii)&nbsp;vote against the ratification, or
(iii)&nbsp;abstain.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A proxy submitted by a shareholder may indicate
that all or a portion of the shares represented by such proxy
are not being voted by such shareholder with respect to a
particular matter. This could occur, for example, when a broker
is not permitted to vote stock held in street name on certain
matters in the absence of instructions from the beneficial owner
of the stock. The shares subject to any such proxy which are not
being voted with respect to a particular matter (the
&#147;non-voted shares&#148;) will be considered shares not
present and entitled to vote on such matter, although such
shares may be considered present and entitled to vote for other
purposes and will count for purposes of determining the presence
of a quorum. In the election of directors, the five nominees
receiving the highest number of votes of shares of Common Stock
represented in person or by proxy at the Meeting and entitled to
vote on such matter will be elected directors of the Company.
Accordingly, non-voted shares will not affect the outcome of the
election of directors. Non-voted shares also will not affect the
outcome of the proposal to ratify the appointment of independent
accountants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the solicitation by the Board
of Directors of proxies for use at the Meeting, the Board of
Directors has designated Ernest A. Bates, M.D. and Craig K.
Tagawa as proxies. Common Shares represented by properly
executed proxies will be voted at the Meeting in accordance with
the instructions specified thereon. If no instructions are
specified, the Common Shares represented by any properly
executed proxy will be voted FOR the (1) election of the five
nominees for the Board of Directors named herein and (2)
ratification of the appointment of the Company&#146;s
independent auditors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors is not aware of any
matters that will come before the Meeting other than as
described above. However, if such matters are presented, the
named proxies will, in the absence of instructions to the
contrary, vote such proxies in accordance with the judgment of
such named proxies with respect to any such other matter
properly coming before the Meeting.
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A majority of the Common Shares outstanding on
the Record Date must be represented in person or by proxy at the
Annual Meeting in order to constitute a quorum for the
transaction of business. In the election of directors, the five
candidates receiving the highest number of votes will be elected
directors of the Company. The proposal to ratify the appointment
of the Company&#146;s independent auditors require that a
majority of those voting in person or by proxy to vote FOR this
proposal, in order for this proposal to be approved.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors has appointed Geraldine
Zarbo of American Stock Transfer &#38; Trust Company, the
registrar and transfer agent for the Common Shares, or her
designee, as the Inspector of Elections for the Annual Meeting.
The Inspector of Elections will determine the number of Common
Shares represented in person or by proxy at the Annual Meeting,
whether a quorum exists, the authenticity, validity and effect
of proxies and will receive and count the votes. The election of
directors will not be by ballot unless a shareholder demands
election by ballot at the Annual Meeting before the voting
begins.
</FONT>

<!-- link1 "PROPOSAL NO. 1 ELECTION OF DIRECTORS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center">
<B><FONT size="2">PROPOSAL NO. 1</FONT></B>

<P align="center">
<B><FONT size="2">ELECTION OF DIRECTORS</FONT></B>

<P align="left">
<B><FONT size="2">Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s Bylaws provide that there
shall be no less than five nor more than nine directors and that
the exact number shall be fixed from time to time by a
Resolution of the Board of Directors. The number of directors
currently is fixed at five.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors is proposing the persons
named below for election to the Board of Directors. Each of the
persons identified below will be nominated for election to serve
until the next Annual Meeting of Shareholders and until their
successors shall be elected and qualified. Votes will be cast
pursuant to the enclosed proxy in such a way as to effect the
election of each of the persons named below or as many of them
as possible under applicable voting rules. If a nominee shall be
unable or unwilling to accept nomination for election as a
director, it is intended that the proxy holders will vote for
the election of such substitute nominee, if any, as shall be
designated by the Board of Directors. Each of the nominees named
below has notified the Board of Directors that, if elected, he
is willing to serve as a Director.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth below is certain information regarding
each of the nominees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE
&#147;FOR&#148; THE ELECTION OF THE NOMINEES NAMED BELOW.
PROXIES RETURNED TO THE COMPANY WILL BE VOTED &#147;FOR&#148;
THE NOMINEES NAMED BELOW UNLESS OTHERWISE INSTRUCTED.</FONT></B>

<P align="left">
<B><FONT size="2">Nominees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ERNEST A. BATES, M.D., founder of the Company,
has served as Chairman of the Board of Directors and Chief
Executive Officer since the incorporation of the Company. He is
currently a member of the Board of Trustees of The Johns Hopkins
University and a Senior Trustee at the University of Rochester,
a member of the Board of Overseers of the University of
California at San Francisco School of Nursing, a member of the
State of California High Speed Rail Authority, and a member of
the Board of Directors of Salzburg Seminar. Dr.&nbsp;Bates is a
graduate of The Johns Hopkins University and the University of
Rochester School of Medicine. Dr.&nbsp;Bates is 66&nbsp;years
old.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WILLIE R. BARNES has been a director and
Corporate Secretary of the Company since 1984. He has been a
partner in the law firm of Musick Peeler&nbsp;&#38; Garrett LLP
since June 1992. He is a graduate of UCLA and received his law
degree from the UCLA Law School. Mr.&nbsp;Barnes was appointed
as the Commissioner of Corporations for the State of California
in 1975. He was a director of Franchise Finance Corporation of
America until its acquisition in mid 2001. Mr.&nbsp;Barnes is
71&nbsp;years old.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">OLIN C. ROBISON has been nominated for election
to the Company&#146;s Board of Directors. He has been President
and Chief Executive Officer of the Salzburg Seminar since 1991.
Mr.&nbsp;Robison was President of Middlebury College from 1975
to 1990 and is currently President Emeritus and Professor
Emeritus of this
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<DIV align="left">
<FONT size="2">institution. He is a Director of The Investment
Company of America, American Mutual Fund and AMCAP (all of the
American Funds Group) and is on the Council (Board) of the Royal
Institute of International Affairs in London. He received his
undergraduate degree from Baylor University and holds the Doctor
of Philosophy degree from Oxford University. Mr.&nbsp;Robison is
66&nbsp;years old.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">JOHN F. RUFFLE has been a director of the Company
since 1995. He retired in 1993 as Vice-Chairman of the Board and
a Director of J.P. Morgan&nbsp;&#38; Co. Incorporated and Morgan
Guaranty Trust Co. of New York. He also is a Director of
Bethlehem Steel Corporation; a member of the Boards of Managers
of North Moore Fund, LLC and JP Morgan Global Emerging Markets
Fund, LLC; a Trustee of JPM Series&nbsp;Trust II; and a Trustee
of The Johns Hopkins University. He is a graduate of The Johns
Hopkins University, with an MBA in finance from Rutgers
University, and is a Certified Public Accountant.
Mr.&nbsp;Ruffle is 66&nbsp;years old.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">STANLEY S. TROTMAN, JR., has been a director of
the Company since 1996. He retired in 2000 as a Managing
Director with the Health Care Group of PaineWebber Incorporated,
an investment banking firm. Mr.&nbsp;Trotman had been with
PaineWebber Incorporated since 1995 following the consolidation
of Kidder, Peabody, also an investment banking firm, with
PaineWebber. He had previously co-directed Kidder,
Peabody&#146;s Health Care Group since April 1990. Formerly he
had been head of the Health Care Group at Drexel Burnham
Lambert, Inc. where he had been employed for approximately
22&nbsp;years. He received his undergraduate degree from Yale
University in 1965 and holds an MBA from Columbia Business
School in 1967. Mr.&nbsp;Trotman is 59&nbsp;years old.
</FONT>

<P align="left">
<B><FONT size="2">Meetings of the Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors of the Company held four
regular meetings and one telephonic meeting during 2002. All
Directors attended at least 75% of the aggregate number of
meetings of both the Board of Directors and of the Committees of
the Board on which such Director served during the year.
</FONT>

<P align="left">
<B><FONT size="2">Committees of the Board of Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company has standing Compensation, Stock
Option, Nominating and Audit Committees, each of which is
described below. All Directors serve on each standing Committee,
except the Audit Committee which consists of Mr.&nbsp;Ruffle and
Mr.&nbsp;Trotman.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The function of the Compensation Committee is to
recommend to the Board of Directors the compensation of the
Company&#146;s executive officers. The Compensation Committee
did not meet during 2002. Mr.&nbsp;Trotman is Chair of the
Compensation Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Stock Option Committee is to
administer the Company&#146;s 1995 Stock Option Plan and 2001
Stock Option Plan, and to determine recipients of awards
pursuant to such plans and the terms of such awards. No member
of the Stock Option Committee received a discretionary grant or
award under an option plan of the Company while serving on such
committee or during the year preceding such service. The Stock
Option Committee did not meet during 2002. Mr.&nbsp;Ruffle is
Chair of the Stock Option Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Nominating Committee is to
recommend candidates for election to the Board of Directors. The
Nominating Committee did not meet during 2002. In 2003, the
Nominating Committee met and nominated Dr.&nbsp;Bates,
Mr.&nbsp;Barnes, Mr.&nbsp;Robison, Mr.&nbsp;Ruffle and
Mr.&nbsp;Trotman for election to the Board. Mr.&nbsp;Trotman is
Chair of the Nominating Committee. A shareholder who wishes to
nominate a person for Director must provide the nomination in
writing to the Secretary at the Company&#146;s principal offices
pursuant to the notice provisions in the By-laws. Such notice
must be received not less than 60 nor more than 90&nbsp;days
prior to the Annual Meeting or, if less than 70&nbsp;days&#146;
notice of the date of such meeting has been given, then within
10 business days following the first public disclosure of the
meeting date or the mailing of the Company&#146;s notice. Any
such notice must contain information regarding the nominee and
the proponent. Details concerning the nature of such information
are available without charge from the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purpose of the Audit Committee is to review
the financial reporting and internal controls of the Company, to
appoint the independent auditors, and to review the reports of
such auditors. During the year
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<FONT size="2">2002 the Audit Committee held four meetings and
one telephonic meeting. For further information concerning the
Audit Committee, refer to the &#147;Audit Committee Report.&#148;
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Director Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In 2002, non-employee directors were paid an
annual retainer of $20,000, payable quarterly. In addition,
non-employee directors are entitled to receive an automatic
grant of options on the date of the Company&#146;s Annual
Shareholder Meeting each year to acquire up to 4,000&nbsp;shares
of the Company&#146;s common stock at the market price on the
date of grant, until a Director has received options for a total
of 12,000&nbsp;shares. There were no such grants to non-employee
directors during 2002 as each current non-employee director has
previously been granted options for a total of
12,000&nbsp;shares of the Company&#146;s stock. During 2002, the
Board of Directors held four regular meetings and one telephonic
meeting. Non-employee directors also received reimbursement of
expenses incurred in attending meetings. No payment is made for
attendance at meetings by any director who is a full time
employee of the Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Non-employee directors will receive in 2003 a
$20,000 annual retainer fee payable quarterly, and reimbursement
of expenses incurred in attending meetings. Each current
non-employee director already holds options for a total of
12,000 shares of the Company&#146;s common stock. The election
of Olin&nbsp;C. Robison will result in annual automatic option
grants to Mr.&nbsp;Robison, as described in the preceding
paragraph.
</FONT>

<!-- link1 "CERTAIN ADDITIONAL INFORMATION" -->
<DIV align="left"><A NAME="003"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN ADDITIONAL INFORMATION</FONT></B>

<P align="left">
<B><FONT size="2">Security Ownership of Certain Beneficial
Owners and Management</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth certain
information regarding the beneficial ownership of the
Company&#146;s Common Shares as of April&nbsp;5, 2003, of
(i)&nbsp;each person known to the Company to own beneficially 5%
or more of the Common Shares, (ii)&nbsp;each nominee for
director of the Company, (iii)&nbsp;the chief executive officer
and the chief operating and financial officer named in the
Summary Compensation Table, and (iv)&nbsp;all directors and
executive officers as a group.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="59%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">Common Shares Owned Beneficially</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Amount and Nature</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">of Beneficial</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Address of Beneficial Owner</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ownership(2)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Class(3)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ernest A. Bates, M.D.(1)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,811,332</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Willie R. Barnes(1)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Olin C. Robison(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John F. Ruffle(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200,411</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Stanley S. Trotman, Jr.(1)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">142,762</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Craig K. Tagawa(1)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Senior Vice President&nbsp;&#151; Chief Operating
    and Financial Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">138,100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All Directors &#38; Executive Officers as a Group
    (6&nbsp;people)(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,305,605</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The address of each such individual is c/o
    American Shared Hospital Services, Four Embarcadero Center,
    Suite&nbsp;3700, San Francisco, California&nbsp;94111.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each person directly or indirectly has sole
    voting and investment power with respect to the shares listed
    under this column as being owned by such person.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Shares that any person or group of persons is
    entitled to acquire upon the exercise of options or warrants
    within 60&nbsp;days after April&nbsp;5, 2003, are treated as
    issued and outstanding for the purpose of computing the percent
    of the class owned by such person or group of persons but not
    for the purpose of computing the percent of the class owned by
    any other person.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes shares underlying options that are
    currently exercisable or which will become exercisable within
    60&nbsp;days following April&nbsp;5, 2003: Dr. Bates,
    1,210,000&nbsp;shares; Mr.&nbsp;Barnes, 12,000&nbsp;shares;
    Mr.&nbsp;Trotman, 2,667&nbsp;shares; Mr.&nbsp;Tagawa, 110,000
    shares; and Directors and Executive Officers as a group,
    1,334,667&nbsp;shares.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Compensation of Executive Officers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the compensation
paid by the Company for the fiscal years ending
December&nbsp;31, 2000, December&nbsp;31, 2001 and
December&nbsp;31, 2002 paid in those years for services rendered
in all capacities during 2000, 2001 and 2002, respectively, to
the Chief Executive Officer and each executive officer other
than the Chief Executive Officer who served as an officer at
December&nbsp;31, 2002 and earned cash compensation of $100,000
or more during 2002.
</FONT>

<P align="center">
<B><FONT size="2">Summary Compensation Table</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="47%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Annual Compensation</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Other Annual</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name and Principal Position</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Year</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Salary(1)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Bonus</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Compensation(3)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ernest A. Bates, M.D.
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">432,630</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chairman of the Board,
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">432,250</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">55,770</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Executive Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">397,501</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">60,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Craig K. Tagawa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2002</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">274,459</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(4)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Operating Officer and
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2001</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">305,837</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(5)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30,745</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Chief Financial Officer
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">252,214</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(6)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Each amount under this column includes amounts
    accrued in 2000, 2001, and 2002, that would have been paid to
    such persons in such years, except that such amounts were
    instead deferred pursuant to the Retirement Plan for Employees
    of American Shared Hospital Services, a defined contribution
    plan and ASHS&#146; Flexible Benefit Plan, a defined
    contribution plan. Both plans are available to employees of the
    Company generally.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company&#146;s Board of Directors approved
    year end performance bonuses for 2000 and 2001 which were
    accrued in the year indicated and were paid in the first quarter
    of the following year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Company has determined that, with respect to
    the executive officers named in the Summary Compensation Table,
    the aggregate amount of other benefits does not exceed the
    lesser of $50,000 or 10% of the total annual salary and bonus
    reported in the Summary Compensation Table as paid to such
    executive officer in the relevant year.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes sales commissions of approximately
    $24,000 earned and paid in 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes sales commissions of approximately
    $63,000 earned and paid in 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes sales commissions of approximately
    $39,000 earned and paid in 2000.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Long Term Compensation Awards</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;Long Term Compensation Awards&#148;
Table has been omitted because no long term compensation awards
were made during the relevant years to the Company&#146;s
executive officers named in the Summary Compensation Table.
</FONT>

<P align="left">
<B><FONT size="2">Option Grants in Last Fiscal Year</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;Option Grants&#148; table has been
omitted because no option grants were made during 2002 to the
Company&#146;s executive officers named in the summary
compensation table.
</FONT>

<P align="left">
<B><FONT size="2">Shares Authorized for Issuance Under Equity
Compensation Plans</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table summarizes the total shares
of our common stock that may be received by holders of options
upon the vesting and exercise of currently outstanding options,
the weighted average exercise price of
</FONT>

<P align="center"><FONT size="2">6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">those outstanding options and the number of
shares of our common stock that are still available for future
issuance under our equity compensation plans after considering
the stock options currently outstanding.
</FONT>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="44%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Weighted</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares to</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Average Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">be Issued Upon</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Price of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise of</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Outstanding</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Options, Warrants</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Warrants and</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Remaining Available</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Plan Category</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">and Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Rights</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">for Future Issuance</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1995 and 2001 Stock Option Plans (the only
    current equity compensation plans approved by our shareholders)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">187,817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1995 options granted to Company&#146;s Chairman
    and Chief Executive Officer (approved by shareholders)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Any equity compensation plans not approved by
    security holders
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">N/A</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Total
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,422,817</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">325,850</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<B><FONT size="2">Long-Term Incentive Plan Awards in Last Fiscal
Year</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The &#147;Long-term Incentive Plan Awards&#148;
(&#147;LTIP Awards&#148;) table has been omitted because no LTIP
Awards were made during 2002 to the Company&#146;s executive
officers named in the Summary Compensation Table.
</FONT>

<P align="left">
<B><FONT size="2">Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth the number of
shares acquired on exercise of stock options and the aggregate
gains realized upon exercise of such options during 2002, by the
Company&#146;s executive officers named in the Summary
Compensation Table. The following table also sets forth the
number of shares underlying exercisable and unexercisable
options held by such executive officers on December&nbsp;31,
2002.
</FONT>

<!-- link1 "1984, 1995 AND 2001 STOCK OPTION PLANS AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES" -->
<DIV align="left"><A NAME="004"></A></DIV>

<P align="center">
<B><FONT size="2">1984, 1995 AND 2001 STOCK OPTION
PLANS</FONT></B>

<DIV align="center">
<B><FONT size="2">AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">AND FISCAL YEAR-END OPTION VALUES</FONT></B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="31%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="10%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Securities</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Underlying</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value of Unexercised</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Unexercised Options</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">In-the-Money Options</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">At Fiscal Year-End</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">At Fiscal Year-End(1)</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Acquired on</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value($)</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercise</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Realized</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Exercisable/Unexercisable</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Ernest A. Bates, M.D.&nbsp;</FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">260,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">812,800</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,235,000/&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5,063,500/&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Craig K. Tagawa
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34,125</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&nbsp;&nbsp;110,000/&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&nbsp;&nbsp;<FONT size="2">245,850/&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<HR size="1" width="18%" align="left" noshade>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">This amount is calculated by multiplying the
    number of Common Shares underlying the options at
    December&nbsp;31, 2002 by the market price per Common Share on
    such date less the option exercise price.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Employment Agreements</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company had no employment contracts with its
directors or executive officers named in the Summary
Compensation Table in 2002.
</FONT>

<P align="left">
<B><FONT size="2">Board of Directors Report on Executive
Compensation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following Report of the Board of Directors
shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into
any filing under the Securities Act or under the Exchange Act,
except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed
filed under such Acts.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Report of the Board of Directors describes
the Company&#146;s method of compensating its executive
officers, and describes the basis on which 2002 compensation was
paid to such executive officers, including those named in the
Summary Compensation Table.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Board of Directors determined that
compensation paid in 2002 by the Company to its Chief Executive
Officer and other executive officers would be based on policies
in effect in recent prior years. As a result, it was unnecessary
for the Compensation Committee to meet, and it did not meet,
during 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s compensation program seeks to
establish compensation that is competitive in both the
healthcare industry and among entrepreneurial, growth-oriented
companies in order to attract and retain high quality employees.
Compensation is linked to each employee&#146;s level of
responsibility and personal achievements with respect to
operational and financial goals established by the Chief
Executive Officer and the Board of Directors. Depending on the
individual officer&#146;s area of responsibility, such goals may
include new business and revenue acquisition, operating expense
reduction and control, operating efficiencies, etc. In addition,
the compensation system seeks to develop and encourage employee
ownership of the Company&#146;s stock through stock options.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The primary component of executive compensation
for the Company in 2002 was base salary, except in the case of
the Chief Operating and Financial Officer (who also is CEO of
the Company&#146;s Gamma Knife subsidiary) where sales
commissions were a substantial component of compensation and are
included under &#147;salary&#148; in the table above.
Discretionary bonuses may be paid, based on a formula, if
financial and other results of the individual executive&#146;s
area of responsibility meet or exceed financial and operational
targets established at the beginning of the fiscal year. No
bonuses for Ernest A. Bates, M.D. or Craig K. Tagawa were paid
for the year 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to base compensation, the Company has
used grants of stock options to retain senior executives and to
motivate them to improve long-term stock market performance. The
number of options granted in the past was determined by
reference to the level of responsibility of the particular
executive in the Company and such executive&#146;s proposed role
in the Company&#146;s future operations. In addition, during
1995 the Shareholders approved a grant of options to acquire
1,495,000 Common Shares at an initial exercise price of $0.01
per share to the Company&#146;s Chairman and Chief Executive
Officer, in consideration of his continued service to the
Company and his personal guarantee of $6,500,000 of indebtedness
of the Company. The Company&#146;s Chairman and Chief Executive
Officer exercised options to acquire 260,000 Common Shares in
2002.
</FONT>

<P align="left">
<B><FONT size="2">Board of Directors</FONT></B>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="33%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT size="2">Ernest A. Bates, M.D. Chairman<BR>
    Willie R. Barnes<BR>
    John F. Ruffle
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stanley S. Trotman,&nbsp;Jr.<BR>
    Charles B. Wilson, M.D.
    </FONT></TD>
</TR>

</TABLE>
</CENTER>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->
<DIV align="left"><A NAME="005"></A></DIV>

<P align="center">
<B><FONT size="2">CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Willie&nbsp;R. Barnes, the Secretary and a
director of the Company, is a partner in the law firm of Musick,
Peeler&nbsp;&#38; Garrett LLP. That law firm performed legal
services for the Company in 2002. The management of the Company
is of the opinion that the fees paid to Mr.&nbsp;Barnes&#146;
law firm are comparable to those fees that would have been paid
for comparable legal services from a law firm not affiliated
with the Company. Mr.&nbsp;Barnes served during 2002 on the
Compensation Committee, Audit Committee and Nominating Committee
of the Board of Directors.
</FONT>

<P align="center"><FONT size="2">8
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Compliance with Section&nbsp;16(a) under the
Securities Exchange Act of 1934</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Reports filed under the Exchange Act and received
by the Company on or after January&nbsp;1, 2002, indicate that
during 2002 directors, officers and 10% shareholders of the
Company filed all required reports within the periods
established by applicable rules, with the following exceptions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">On February&nbsp;13, 2003, Charles&nbsp;B.
    Wilson, M.D., sold 12,000&nbsp;shares of the Company&#146;s
    stock on the open market. This sale was not reported to the
    Securities and Exchange Commission until April&nbsp;1, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">On March&nbsp;19, 2003, Ernest&nbsp;A. Bates,
    M.D., sold 4,000&nbsp;shares of the Company&#146;s stock on the
    open market. This sale was not reported to the Securities and
    Exchange Commission until March&nbsp;24, 2003.
    </FONT></TD>
</TR>

</TABLE>

<!-- link1 "PERFORMANCE GRAPH, TOTAL RETURN TO SHAREHOLDERS" -->
<DIV align="left"><A NAME="006"></A></DIV>

<P align="center">
<B><FONT size="2">PERFORMANCE GRAPH, TOTAL RETURN TO
SHAREHOLDERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following graph and table compares cumulative
total shareholder return on the Company&#146;s Common Shares
(&#147;ASHS total return&#148;) (i)&nbsp;with the cumulative
total return of the Standard&nbsp;&#38; Poor&#146;s 500 Stock
Index (&#147;S&#38;P500&#148;) and (ii)&nbsp;with the Standard
&#38; Poors SmallCap 600 Stock Index (&#147;S&#38;P
SmallCap600&#148;), in each case during the five years ended
December&nbsp;31, 2002.
</FONT>

<P align="center">
<IMG src="f89779af8977901.gif" alt="(PERFORMANCE GRAPH)">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="24%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="25"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Base</FONT></B></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Period</FONT></B></TD>
    <TD></TD>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="center" nowrap><FONT size="1">&nbsp;Company / Index</FONT></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;97</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;98</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;99</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;00</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;01</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Dec&nbsp;02</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="25"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="25" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;American Shared Hsptl Serv
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">67.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">242.86</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">179.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">253.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;S&#38;P 500 Index
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">128.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">155.63</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">141.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">97.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;S&#38;P Smallcap 600 Index
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">100</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">98.69</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">110.94</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">124.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">132.13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">112.80</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="25" align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>

</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">9
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "AUDIT COMMITTEE REPORT" -->
<DIV align="left"><A NAME="007"></A></DIV>

<P align="center">
<B><FONT size="2">AUDIT COMMITTEE REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following Report of the Audit Committee does
not constitute soliciting material and should not be deemed
filed or incorporated by reference into any other filing of the
Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company
specifically incorporates the Report by reference therein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee of the Board of Directors
consists of two directors, both of whom are
&#147;independent&#148; as defined in the listing standards of
the American Stock Exchange. The primary purpose of the Audit
Committee is to review the financial reporting and internal
controls of the Company, to appoint independent auditors, to
review the reports of such auditors, and to review annually the
Audit Committee charter. During 2002, the Audit Committee held
five meetings, one of which was held telephonically.
Mr.&nbsp;Ruffle is Chair of the Audit Committee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee reviewed and held discussions
with management and the independent auditors regarding the
financial statements of the Company for the fiscal year ended
December&nbsp;31, 2002. These discussions included the quality
of the Company&#146;s internal controls, the audit plans, audit
scope and identification of audit risks. In addition, the
Committee assured that the independent auditors reviewed and
discussed with management the interim financial reports prior to
each quarterly earnings announcement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s independent auditors provided
a formal written statement that described all relationships
between the auditors and the Company with respect to the
auditors&#146; independence as required by Independence
Standards Board Standard No.1, &#147;Independence Discussions
with Audit Committees,&#148; and the Audit Committee satisfied
itself as to the auditors independence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Audit Committee discussed with the
independent accountants all matters required to be discussed by
Statement on Auditing Standards No.&nbsp;61, as amended,
&#147;Communication with Audit Committees&#148; and, with and
without the presence of management, reviewed and discussed the
results of the independent auditors examination of the
Company&#146;s financial statements. Management, being
responsible for the Company&#146;s financial statements,
represented that the Company&#146;s consolidated financial
statements were prepared in accordance with generally accepted
accounting principles. The independent auditors are responsible
for the examination of those statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on the Audit committee&#146;s discussions
with management and the independent auditors, and the Audit
Committee&#146;s review as described previously, The Audit
Committee recommended to the Board of Directors that the
Company&#146;s audited financial statements be included in its
Annual Report on Form&nbsp;10-K for the fiscal year ended
December&nbsp;31, 2002, as filed with the Securities and
Exchange Commission.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Submitted by the Audit Committee of the Board of
Directors:
</FONT>

<P align="center">
<FONT size="2">John F. Ruffle <I>(chairman)</I>
</FONT>

<DIV align="center">
<FONT size="2">Stanley S. Trotman, Jr.
</FONT>
</DIV>

<!-- link1 "INDEPENDENT AUDITORS" -->
<DIV align="left"><A NAME="008"></A></DIV>

<P align="center">
<B><FONT size="2">INDEPENDENT AUDITORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s consolidated financial
statements for the years ended December&nbsp;31, 2002, 2001 and
2000 have been audited by Moss Adams LLP. The Audit Committee
has appointed Moss Adams LLP to be the Company&#146;s
independent auditors for the fiscal year ending
December&nbsp;31, 2003, subject to Shareholder ratification at
the Meeting (see Proposal No.&nbsp;2).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Representatives of Moss Adams LLP are expected to
be present at the Annual Meeting to respond to appropriate
questions and will be given an opportunity to make a statement
if they so desire.
</FONT>

<P align="left">
<B><FONT size="2">Audit Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The aggregate fees billed by Moss Adams LLP for
the audit of the Company&#146;s annual consolidated financial
statements for fiscal year 2002 and the review of each of the
Company&#146;s quarterly reports on Form&nbsp;10-Q during 2002
were $67,250.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="left">
<B><FONT size="2">Financial Information Systems Design and
Implementation Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">There were no fees billed by Moss Adams LLP for
financial information systems design and implementation fees for
fiscal 2002.
</FONT>

<P align="left">
<B><FONT size="2">All Other Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company paid Moss Adams LLP an aggregate of
$66,645 for professional services, other than those described
above, provided during fiscal year ended 2002. These fees were
primarily for tax return preparation and other tax services.
</FONT>

<!-- link1 "SHAREHOLDER PROPOSALS" -->
<DIV align="left"><A NAME="009"></A></DIV>

<P align="center">
<B><FONT size="2">SHAREHOLDER PROPOSALS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under certain circumstances, shareholders are
entitled to present proposals at shareholders&#146; meetings. To
be eligible for inclusion in the Proxy Statement for the
Company&#146;s next Annual Meeting of Shareholders, a
shareholder proposal must be received at the Company&#146;s
principal executive offices prior to February&nbsp;1, 2004. A
Shareholder&#146;s notice should list each proposal and contain
a brief description of the business to be brought before the
meeting; the name and address of the shareholder proposing such
business; the number of shares held by the shareholder; and any
material interest of the shareholder in the business.
</FONT>

<!-- link1 "ANNUAL REPORT" -->
<DIV align="left"><A NAME="010"></A></DIV>

<P align="center">
<B><FONT size="2">ANNUAL REPORT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The Company&#146;s 2002 Annual Report, which
includes financial statements, but which does not constitute a
part of the proxy solicitation material, accompanies this proxy
statement.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="36%"></TD>
    <TD width="64%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">/s/ WILLIE R. BARNES
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Willie R. Barnes
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Corporate Secretary</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Dated: May&nbsp;5, 2003
</FONT>

<DIV align="left">
<FONT size="2">San Francisco, California
</FONT>
</DIV>

<P align="center"><FONT size="2">11
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2">AMERICAN SHARED HOSPITAL SERVICES
</FONT>

<P align="center"><FONT size="2">For the Annual Meeting of Shareholders to be held June&nbsp;12, 2003
</FONT>

<P align="center"><FONT size="2">THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
</FONT>

<P align="left"><FONT size="2">THE UNDERSIGNED HEREBY NOMINATE(S), CONSTITUTE(S) AND APPOINT(S) ERNEST A.
BATES, M.D. AND CRAIG K. TAGAWA, AND EACH OF THEM, ATTORNEYS, AGENTS, AND
PROXIES OF THE UNDERSIGNED, WITH FULL POWERS OF SUBSTITUTION TO EACH, TO ATTEND
AND TO ACT AS PROXY OR PROXIES OF THE UNDERSIGNED AT THE ANNUAL MEETING OF
SHAREHOLDERS OF AMERICAN SHARED HOSPITAL SERVICES TO BE HELD ON JUNE 12, 2003
AT 9:00 AM PACIFIC TIME AT THE RITZ CARLTON HOTEL, 600 STOCKTON STREET, SAN
FRANCISCO, CALIFORNIA, OR ANY ADJOURNMENTS THEREOF, AND TO VOTE AS SPECIFIED
HEREIN THE NUMBER OF SHARES THAT THE UNDERSIGNED, IF PERSONALLY PRESENT, WOULD
BE ENTITLED TO VOTE.
</FONT>
<P align="left"><FONT size="2">THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; THE ELECTION OF THE FIVE PERSONS
NOMINATED FOR ELECTION TO THE BOARD OF DIRECTORS, AND &#147;FOR&#148; THE RATIFICATION OF
MOSS ADAMS LLP AS THE COMPANY&#146;S INDEPENDENT ACCOUNTANTS FOR 2003. YOU ARE
ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
MADE, IT WILL BE VOTED, SUBJECT TO THE PROXYHOLDER&#146;S DISCRETIONARY AUTHORITY TO
CUMULATE VOTES, &#147;FOR&#148; THE ELECTION OF THE PERSONS NOMINATED ON THE REVERSE
SIDE, AND WILL HAVE THE EFFECT OF WITHHOLDING DISCRETIONARY AUTHORITY TO
CUMULATE VOTES AND &#147;FOR&#148; THE RATIFICATION OF INDEPENDENT ACCOUNTANTS. THE BOARD
OF DIRECTORS IS NOT AWARE OF ANY OTHER MATTERS THAT WILL COME BEFORE THE ANNUAL
MEETING, OTHER THAN THOSE DESCRIBED IN THIS PROXY. HOWEVER, IF SUCH MATTERS
ARE PRESENTED, THE NAMED PROXIES WILL, IN THE ABSENCE OF INSTRUCTIONS TO THE
CONTRARY, VOTE SUCH PROXIES IN ACCORDANCE WITH THE JUDGMENT OF SUCH NAMED
PROXIES WITH RESPECT TO ANY SUCH OTHER MATTER PROPERLY COMING BEFORE THE
MEETING. THIS PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE
SECRETARY OF THE COMPANY AN INSTRUMENT IN WRITING REVOKING THIS PROXY OR A DULY
EXECUTED PROXY BEARING A LATER DATE. THIS PROXY ALSO MAY BE REVOKED BY
ATTENDANCE AT THE MEETING AND ELECTION TO VOTE IN PERSON.
</FONT>
<P align="center"><FONT size="2">(continued, and to be signed on the other side)
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#120;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This proxy when properly executed will be voted in the manner directed
herein and in the discretion of the proxy holders and all other matters coming
before the meeting. If no direction is made, this proxy will be voted FOR the
election of directors recommended herein, and FOR Proposal No.&nbsp;2.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors recommends a vote FOR election of the directors
nominated herein and FOR the ratification of independent accountants.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">1.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">ELECTION OF DIRECTORS. To elect five of the persons named below to the
Board of Directors to serve until the 2004 Annual Meeting of Shareholders
and until their successors are elected and have qualified.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>

</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="2"><FONT size="2">
FOR all nominees (except as indicated to the contrary below).</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top" colspan="2"><FONT size="2">
WITHHOLD AUTHORITY to vote for all nominees.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" colspan="3"><FONT size="2">(Instruction:</FONT></TD>

    <TD align="left" valign="top"><FONT size="2">
To withhold authority for any individual nominee(s), write
that nominee&#146;s name(s) in the space below.)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" colspan="3"><FONT size="2">NOMINEES:</FONT></TD>

    <TD align="left" valign="top"><FONT size="2">
Ernest A. Bates, M.D.<br>
Willie R. Barnes<br>
Olin C. Robison<br>
John F. Ruffle<br>
Stanley S. Trotman, Jr.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">2.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">RATIFICATION OF INDEPENDENT ACCOUNTANTS. To ratify the appointment of
Moss Adams LLP as the Company&#146;s independent accountants for the year ended
December&nbsp;31, 2003.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="90%">
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" align="center"><FONT size="2"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;FOR</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;AGAINST
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;ABSTAIN</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby ratifies and confirms all that said attorneys and
proxies, or any of them, or their substitutes, shall lawfully do or cause to be
done by virtue hereof, and hereby revokes any and all proxies heretofore given
by the undersigned to vote at the Meeting. The undersigned acknowledges
receipt of the Notice of the Annual Meeting and the Proxy Statement
accompanying such Notice.
</FONT>
<P align="left"><FONT size="2">PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE
ENCLOSED ENVELOPE.
</FONT>
<P align="left"><FONT size="2">I plan to attend the meeting in person <FONT face="Wingdings">&#111;</FONT>
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="44%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Signature</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Date
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">Signature</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Date
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Signature, if held jointly</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="left"><FONT size="2">NOTE: Please date this proxy and sign as your name(s) appear(s) on this
document. Joint owners should each sign personally. Corporate proxies should
be signed by an authorized officer. Executors, administrators, trustees, etc.
should give their full titles.
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>




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`
end

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
