-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 JJ+PR9R/UEMtisdow+N5DczZGjHcAtRgsPKVxH2t7jMXtl6LIsCeZiOOOtcPYp6T
 bnWFvAHnUsEE9N2384mN+w==

<SEC-DOCUMENT>0000950134-05-015823.txt : 20050812
<SEC-HEADER>0000950134-05-015823.hdr.sgml : 20050812
<ACCEPTANCE-DATETIME>20050812134956
ACCESSION NUMBER:		0000950134-05-015823
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		8
CONFORMED PERIOD OF REPORT:	20050630
FILED AS OF DATE:		20050812
DATE AS OF CHANGE:		20050812

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:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08789
		FILM NUMBER:		051020532

	BUSINESS ADDRESS:	
		STREET 1:		FOUR EMBARCADERO CENTER
		STREET 2:		SUITE 3700
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94111-4107
		BUSINESS PHONE:		415-788-5300

	MAIL ADDRESS:	
		STREET 1:		FOUR EMBARCADERO CENTER
		STREET 2:		SUITE 3700
		CITY:			SAN FRANCISCO
		STATE:			CA
		ZIP:			94111-4107
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>f11686e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, DC 20549</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>(Mark One)</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the quarterly period ended June&nbsp;30, 2005 or</B>
</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B><B>For the transition period from </B><FONT style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT> <B>to </B><FONT style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>.
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number 1-8789</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>American Shared Hospital Services</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Exact name of registrant as specified in its charter)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>California<BR>
(State or other jurisdiction of<BR>
Incorporation or organization)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>94-2918118<BR>
(IRS Employer<BR>
Identification No.)</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Four Embarcadero Center, Suite&nbsp;3700, San Francisco, California</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>94111</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>(Address of Principal Executive Offices)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>(Zip Code)</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Registrant&#146;s telephone number, including area code: (415)&nbsp;788-5300</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the Registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is an accelerated filer (as defined in Securities
Exchange Act Rule&nbsp;12b-2). Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of August&nbsp;1, 2005, there are outstanding 4,853,840 shares of the Registrant&#146;s common stock.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">








<!-- 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">PART I &#151; FINANCIAL INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">ITEM 1. FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Item&nbsp;4. Controls and Procedures</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">PART II &#151; OTHER INFORMATION</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Item&nbsp;1. Legal Proceedings</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Item&nbsp;2. Changes in Securities and Use of Proceeds</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Item&nbsp;3. Defaults Upon Senior Securities</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Item&nbsp;4. Submission of Matters to a Vote of Securities Holders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#009">Item&nbsp;5. Other Information</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Item&nbsp;6. Exhibits and Reports on Form&nbsp;8-K</A></TD></TR>
<TR><TD colspan="9"><A HREF="#011">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv10w46.htm">Exhibit 10.46</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv10w47.htm">Exhibit 10.47</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv10w48.htm">Exhibit 10.48</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv31w1.htm">Exhibit 31.1</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv31w2.htm">Exhibit 31.2</A></TD></TR>
<TR><TD colspan="9"><A HREF="f11686exv32w1.htm">Exhibit 32.1</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>




<!-- link1 "PART I &#151; FINANCIAL INFORMATION" -->
<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PART I &#151; FINANCIAL INFORMATION
</DIV>

<!-- link2 "ITEM 1. FINANCIAL STATEMENTS" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMERICAN SHARED HOSPITAL SERVICES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">CONDENSED CONSOLIDATED BALANCE SHEETS
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(audited)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">June 30, 2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">December 31, 2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,509,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,121,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,258,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">957,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable, net of allowance for
for doubtful accounts of $220,000 in
2005 and $170,000 in 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,956,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,950,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">543,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">594,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current deffered tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,579,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12,672,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Medical equipment and facilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,196,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,282,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Office equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">440,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">492,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deposits and construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,535,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,499,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,171,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,273,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accumulated depreciation and
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,598,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,001,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net property &#038; equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,573,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,272,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">162,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>48,315,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>47,106,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND
SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">648,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">282,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Employee compensation and benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">855,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">808,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,535,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,562,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current portion of long-term capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,704,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,955,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,181,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,924,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term capital leases, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,014,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">923,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,477,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,315,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Common stock, without par value: authorized
shares - 10,000,000; issued
&#038; outstanding shares, 4,853,840 in
2005
and 4,776,173 in 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,247,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,238,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,533,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,410,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,236,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,898,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,016,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,546,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>48,315,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>$</B></TD>
    <TD align="right"><B>47,106,000</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes
</DIV>


<P align="center" style="font-size: 10pt">2
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMERICAN SHARED HOSPITAL SERVICES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">CONDENSED CONSOLIDATED INCOME STATEMENT<BR>
(Unaudited)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Three Months ended June 30,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Six Months ended June 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Revenue:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Medical services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,730,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,114,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,179,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,343,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Costs of revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Maintenance and supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">219,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">517,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">422,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,341,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,178,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,633,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,356,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other direct operating costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">829,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">599,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,439,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,252,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,432,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,996,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,589,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,030,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross margin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,298,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,118,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,590,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,313,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Selling and administrative expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">933,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">762,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,854,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,528,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">511,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,174,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">854,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">794,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,690,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,611,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest and other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(287,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(246,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(561,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(497,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">568,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,229,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,157,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">391,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">389,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">786,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">759,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,854,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,958,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,841,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,941,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,135,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,062,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,133,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,083,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes
</DIV>


<P align="center" style="font-size: 10pt">3
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMERICAN SHARED HOSPITAL SERVICES</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">CONDENSED CONSOLIDATED CASH FLOWS STATEMENT<BR>
(Unaudited)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Six Months ended June 30,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">786,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">759,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Adjustments to reconcile net cash provided by operating
activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,399,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">418,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Minority interest in consolidated subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">561,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">497,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Changes in operating assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(87,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Prepaid expenses and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(99,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Accounts payable and accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">483,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash from operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,958,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,816,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of property and equipment (net of financing)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(778,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(501,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Investment in securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(301,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash from investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,079,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(501,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Principal payments on long-term debt and capitalized leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,668,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,822,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Distribution to minority owners</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(399,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(114,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payment for stock/option repurchase</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payment received for exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payment of dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(433,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(314,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash from financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,491,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,283,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net change in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(612,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(968,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,121,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,312,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,509,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,344,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental cash flow disclosure:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cash paid during the period for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Interest paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,046,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,284,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income taxes paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">101,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">101,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Schedule of noncash investing and financial activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Acquisition of equipment with lease/debt financing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,189,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">775,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accrued dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">231,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">171,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Income tax benefit from exercise of stock options and
warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">124,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">172,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">See accompanying notes
</DIV>


<P align="center" style="font-size: 10pt">4
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt">AMERICAN SHARED HOSPITAL SERVICES
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<BR>
(Unaudited)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 1. Basis of Presentation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of management, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring accruals) necessary to
present fairly American Shared Hospital Services&#146; consolidated financial position as of June&nbsp;30,
2005 and the results of its operations for the three and six month periods ended June&nbsp;30, 2005 and
2004, which results are not necessarily indicative of results on an annualized basis. Consolidated
balance sheet amounts as of December&nbsp;31, 2004 have been derived from audited financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These unaudited consolidated financial statements should be read in conjunction with the
audited financial statements for the year ended December&nbsp;31, 2004 included in the Company&#146;s 10-K
filed with the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These financial statements include the accounts of American Shared Hospital Services (the
&#147;Company&#148;) and its wholly-owned subsidiaries: OR21, Inc. (&#147;OR21&#148;); MedLeader.com, Inc.
(&#147;MedLeader&#148;); American Shared Radiosurgery Services (&#147;ASRS&#148;); and ASRS majority-owned subsidiary,
GK Financing, LLC (&#147;GK Financing&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company through its majority-owned subsidiary, GK Financing, provides Gamma Knife units to
twenty medical centers as of June&nbsp;30, 2005 in Arkansas, California, Connecticut, Florida, Illinois,
Maryland, Massachusetts, Mississippi, Nevada, New Jersey, New Mexico, New York, Tennessee, Ohio,
Pennsylvania, Texas and Wisconsin.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All significant intercompany accounts and transactions have been eliminated in consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain reclassifications have been made to the 2004 balances to conform with the 2005
presentation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 2. Per Share Amounts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Per share information has been computed based on the weighted average number of common shares
and dilutive common share equivalents outstanding. For the three and six months ended June&nbsp;30,
2005 basic earnings per share was computed using 4,854,000 and 4,841,000 common shares,
respectively, and diluted earnings per share was computed using 5,135,000 and 5,133,000 common
shares and equivalents, respectively. For the three and six months ended June&nbsp;30, 2004 basic
earnings per share was computed using 3,958,000 and 3,941,000 common shares, respectively, and
diluted earnings per share was computed using 5,062,000 and 5,083,000 common shares and
equivalents, respectively. The increase in common shares used in the basic earnings per shared
calculation in 2005 compared to 2004 is the result of stock options exercised, primarily in third
quarter 2004.
</DIV>

<P align="center" style="font-size: 10pt">5
</DIV>

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


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Note 3. Stock-based Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has two stock-based employee compensation plans, the 1995 and 2001 Stock Option
Plans. The Company accounts for those plans using the intrinsic value method prescribed by APB
Opinion No.&nbsp;25, <I>Accounting for Stock Issued to Employees</I>, and related Interpretations. No
stock-based employee compensation cost is reflected in net income, as all options granted under
those plans had an exercise price greater than or equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on net income and
earnings per share as if the Company had applied the fair value recognition provisions of FASB
Statement No.&nbsp;123, <I>Accounting for Stock-Based Compensation</I>, to stock-based employee compensation.
For pro forma purposes, the estimated fair value of the Company&#146;s options is amortized over the
options&#146; vesting period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three months ended June 30</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Six Months Ended June 30</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">391,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">389,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">786,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">759,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related
tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">($</TD>
    <TD align="right">6,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">($</TD>
    <TD align="right">8,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">385,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">389,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">778,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">759,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic-as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic-pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted-as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted-pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<!-- link2 "Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This quarterly report to the Securities and Exchange Commission may be deemed to contain
certain forward-looking statements with respect to the financial condition, results of operations
and future plans of American Shared Hospital Services, which involve risks and uncertainties
including, but not limited to, the risks of the Gamma Knife business. Further information on
potential factors that could affect the financial condition, results of operations and future plans
of American Shared Hospital Services is included in the filings of the Company with the Securities
and Exchange Commission, including the Company&#146;s Annual Report on Form 10-K for the year ended
December&nbsp;31, 2004 and the definitive Proxy Statement for the Annual Meeting of Shareholders held on
June&nbsp;16, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Medical services revenue increased $616,000 and $836,000 to $4,730,000 and $9,179,000 for the
three and six month periods ended June&nbsp;30, 2005 from $4,114,000 and $8,343,000 for the three and
six month periods ended June&nbsp;30, 2004, respectively. The increase for the three and six month
periods is primarily due to the addition of three new Gamma Knife units that have commenced
operation since second quarter 2004, including one that commenced operation during second quarter
2005. The revenue increase for the six month period was due to
the inclusion of three additional Gamma Knife units that commenced operation since second
</DIV>

<P align="center" style="font-size: 10pt">6
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">quarter 2004, which was partially offset by a 4% decrease in revenue at Gamma Knife centers in
operation more than one year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company had twenty Gamma Knife units in operation at June&nbsp;30, 2005 compared to seventeen
at June&nbsp;30, 2004. Fifteen of the Company&#146;s customers are under fee-per-use contracts, and five
customers are under retail arrangements. Retail arrangements are further classified as either
turn-key or net revenue sharing. Revenue from fee per use contracts is recorded on a gross basis
as determined by each hospital&#146;s contracted rate. Under turn-key arrangements, the Company
receives payment from the hospital in the amount of its reimbursement from third party payors, and
is responsible for paying all the operating costs of the Gamma Knife. Revenue is recorded on a
gross basis and estimated based on historical experience and hospital contracts with third party
payors. For net revenue sharing arrangements the Company receives a contracted percentage of the
reimbursement received by the hospital less the operating expenses of the Gamma Knife. Revenue is
recorded on a net basis and estimated based on historical experience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of Gamma Knife procedures increased by 24% to 636 and by 13% to 1,211 for the three
and six month periods ended June&nbsp;30, 2005 from 513 and 1,076 for the three and six month periods
ended June&nbsp;30, 2004, respectively. This increase was due to the addition of three new Gamma Knife
units that commenced operation after second quarter 2004, including one new Gamma Knife unit that
commenced operation during second quarter 2005, as well as a 12% and 2% increase in procedures
performed at Gamma Knife units in operation more than one year for the three and six month periods
ended June&nbsp;30, 2005 compared to the same periods in the prior year, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs of revenue increased $436,000 and $559,000 to $2,432,000 and $4,589,000 for the
three and six month periods ended June&nbsp;30, 2005 from $1,996,000 and $4,030,000 for the three and
six months periods ended June&nbsp;30, 2004. Maintenance and supplies increased by $43,000 and $95,000
for the three and six month periods ended June&nbsp;30, 2005 compared to the same periods in the prior
year, primarily due to an increase in the number of Gamma Knife units covered under maintenance
contract. There were seventeen Gamma Knife units covered under maintenance contract as of June&nbsp;30,
2005 compared to fifteen as of June&nbsp;30, 2004. Depreciation and amortization increased by $163,000
and $277,000 for the three and six month periods ended June&nbsp;30, 2005 compared to the same periods
in the prior year due to the addition of three new Gamma Knife units that commenced operation since
second quarter 2004, including one that began operation during second quarter 2005. Other direct
operating costs increased $230,000 and $187,000 for the three and six month periods ended June&nbsp;30,
2005 compared to the same periods in the prior year. For both the three and six month periods,
this increase is primarily due to increases in insurance and property taxes because of additional
Gamma Knife units, an increase in training costs, and an increase from two to three in the number
of turn-key revenue agreements where the Company is responsible for paying all the direct operating
costs. For the six month period, the increase was partially offset by lower site specific marketing
and promotion costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and administrative costs increased by $171,000 and $326,000 to $933,000 and $1,854,000
for the three and six month periods ended June&nbsp;30, 2005 from $762,000
and
</DIV>

<P align="center" style="font-size: 10pt">7
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">$1,528,000 for the three
and six month periods ended June&nbsp;30, 2004. For both the three and six month periods, the increase
was primarily due to increased marketing and business development costs. For the six month period
the increase is also due to the Company&#146;s second Gamma Knife User&#146;s Group meeting which was held in
February&nbsp;2005, and an increase in contributions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense decreased by $51,000 and $128,000 to $511,000 and $1,046,000 for the three
and six month periods ended June&nbsp;30, 2005 from $562,000 and $1,174,000 for the three and six month
periods ended June&nbsp;30, 2004 primarily due to lower interest expense on the debt relating to the
more mature Gamma Knife units, partially offset by additional interest expense relating to the
financing of the three new Gamma Knife units that commenced operation after second quarter 2004.
The mature units have lower interest expense because interest expense decreases as the outstanding
principal balance of each loan is reduced. In addition, the financing on the more recent Gamma
Knife units is at lower interest rates than the older loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest and other income increased by $37,000 and $57,000 to $57,000 and $100,000 for the
three and six month periods ended June&nbsp;30, 2005 from $20,000 and $43,000 for the three and six
month periods ended June&nbsp;30, 2004 primarily due to increased interest income as a result of higher
interest rates on invested cash balances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority interest increased by $41,000 and $64,000 to $287,000 and $561,000 for the three and
six month periods ended June&nbsp;30, 2005 from $246,000 and $497,000 for the three and six month
periods ended June&nbsp;30, 2004 due to increased profitability of GK Financing. Minority interest
represents the 19% interest of GK Financing owned by a third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense increased by $54,000 and $45,000 to $233,000 and $443,000 for the three and
six month periods ended June&nbsp;30, 2005 compared to $179,000 and $398,000 for the three and six month
periods ended June&nbsp;30, 2004. For the three and six month periods, the Company recorded a 40%
income tax provision in both 2005 and 2004. However, the effective income tax rate was reduced to
approximately 37% and 36% for the three and six month periods ended June&nbsp;30, 2005 compared to 32%
and 34% for the same periods in the prior year, respectively, due to income tax benefits that were
recognized on the exercise of previously expensed options to purchase common stock. For the three
month period ended June&nbsp;30, 2005 an income tax benefit of $16,000 was recorded for the exercise of
25,000 previously expensed options, compared to an income tax benefit of $49,000 on the exercise of
75,000 previously expensed options for the same period in the prior year. For the six month period
ended June&nbsp;30, 2005 an income tax benefit of $49,000 was recorded for the exercise of 75,000
previously expensed options, compared to an income tax benefit of $65,000 on the exercise of
100,000 previously expensed options for the same period in the prior year. These income tax
benefits are the result of compensation expense that was recognized when the options were granted
in 1995.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company had net income of $391,000 ($0.08 per diluted share) and $786,000 ($0.15 per
diluted share) for the three and six month periods ended June&nbsp;30, 2005 compared to net income of
$389,000 ($0.08 per diluted share) and $759,000 ($0.15 per diluted share) for the same periods in
the prior year. The increase for both the three and six month periods was
primarily due to revenue from the addition of three new Gamma Knife units since second quarter
2004 and lower interest expense, partially offset by increased selling and administrative costs
</DIV>

<P align="center" style="font-size: 10pt">8
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and
higher income tax expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company had cash and cash equivalents of $7,509,000 at June&nbsp;30, 2005 compared to
$8,121,000 at December&nbsp;31, 2004. The Company&#146;s cash position decreased by $612,000 primarily due
to capital expenditures of $778,000 and payment of shareholder dividends of $433,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During first and second quarters 2005, the Company paid quarterly dividends of $215,000
($0.045 per share) and $218,000 ($0.045 per share), respectively. On June&nbsp;16, 2005 the Company
declared a quarterly dividend of $0.0475 per share to shareholders of record on July&nbsp;1, 2005, which
resulted in a reduction in retained earnings of $231,000 in second quarter 2005. The dividends are
payable to shareholders on July&nbsp;15, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company as of June&nbsp;30, 2005 had shareholders&#146; equity of $18,016,000, working capital of
$3,875,000 and total assets of approximately $48,315,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has scheduled interest and principal payments under its debt obligations of
approximately $8,629,000 during the next 12&nbsp;months. The Company has a $6,000,000 line of credit,
renewable annually, available as needed for equipment purchases and working capital. Amounts drawn
against the line of credit are secured by the Company&#146;s cash invested with the bank. At June&nbsp;30,
2005 there were no amounts drawn against the line of credit. The Company believes that its cash
flow from operations and cash resources are adequate to meet its scheduled debt obligations during
the next 12&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In first quarter 2005, the Company entered into a capital lease obligation collateralized by
Gamma Knife equipment and construction. This obligation has a stated interest rate of 7.94%, is
payable in 84&nbsp;monthly payments of $37,335 and matures in January&nbsp;2012.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company invests its cash primarily in money market or similar funds and high quality short
to intermediate-term fixed income securities in order to maximize current income while minimizing
the potential for principal erosion. A portion of these investments are classified as securities
on the balance sheet and are considered <I>held-to-maturity </I>investments because it is the Company&#146;s
ability and intent to hold these securities until maturity.
</DIV>
<!-- link2 "Item&nbsp;4. Controls and Procedures" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>Evaluation of disclosure controls and procedures</U>. Our Chief Executive Officer and
our Chief Financial Officer, after evaluating the effectiveness of the Company&#146;s &#147;disclosure
controls and procedures&#148; (as defined in the Securities Exchange Act of 1934 (&#147;Exchange Act&#148;)
Exchange Rules&nbsp;13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly
report, have concluded that our disclosure controls and procedures are effective based on their
evaluation of these controls and procedures required by paragraph (b)&nbsp;of Exchange Act Rules
13a-15 or 15d-15.
</DIV>

<P align="center" style="font-size: 10pt">9
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Changes in internal control over financial reporting</U>. There were no changes in
our internal control over financial reporting identified in connection with the evaluation required
by paragraph (d)&nbsp;of Exchange Act Rules&nbsp;13a-15 or 15d-15 that occurred during our last fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
</DIV>
<!-- link1 "PART II &#151; OTHER INFORMATION" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PART II &#151; OTHER INFORMATION</B>
</DIV>

<!-- link2 "Item&nbsp;1. Legal Proceedings" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1. Legal Proceedings.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<!-- link2 "Item&nbsp;2. Changes in Securities and Use of Proceeds" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Changes in Securities and Use of Proceeds.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<!-- link2 "Item&nbsp;3. Defaults Upon Senior Securities" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Defaults Upon Senior Securities.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<!-- link2 "Item&nbsp;4. Submission of Matters to a Vote of Securities Holders" -->
<DIV align="left"><A NAME="008"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Submission of Matters to a Vote of Securities Holders.</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">The Company&#146;s Annual Shareholder Meeting (&#147;Meeting&#148;) was held on June&nbsp;16, 2005.
There were present in person or by proxy at said Meeting shareholders voting
4,631,064 shares that represented 95.9% of the 4,828,840 shares outstanding and
entitled to vote at the Meeting, which represented a quorum. At the meting, the
shareholders:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Voted on the Election of Directors as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Nominee</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">For</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Abstained</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ernest A. Bates, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,584,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,025</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ernest R. Bates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,583,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Olin C. Robison</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,583,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,025</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">John F. Ruffle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,583,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stanley S. Trotman, Jr.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,584,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,125</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Voted on the ratification of Moss Adams, LLP as the Company&#146;s
independent accountants for the year ending December&nbsp;31, 2005. There were
4,599,069 votes for, 22,145 votes against and 9,850 votes abstained.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Moss Adams, LLP was ratified as the Company&#146;s independent accountants for
the year ending December&nbsp;31, 2005.</TD>
</TR>

</TABLE>
</DIV>
<!-- link2 "Item&nbsp;5. Other Information" -->
<DIV align="left"><A NAME="009"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5. Other Information.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<!-- link2 "Item&nbsp;6. Exhibits and Reports on Form&nbsp;8-K" -->
<DIV align="left"><A NAME="010"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Exhibits and Reports on Form&nbsp;8-K.</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exhibits</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following exhibits are filed herewith:</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">10
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.46
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lease Agreement for a Gamma Knife
unit dated as of March&nbsp;21, 2003 between GK Financing, LLC and Northern Westchester
Hospital Center. (Confidential material
appearing in this document has been omitted and filed
separately with the Securities and Exchange Commission in
accordance with Rule&nbsp;24b-2, promulgated under the Securities
and Exchange Act of 1934, as amended. Omitted information has
been replaced with asterisks.)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.47
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Addendum Four to Lease Agreement
for a Gamma Knife unit effective
as of December&nbsp;1, 2002 between GK Financing, LLC and Hoag
Memorial Hospital Presbyterian. </TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.48
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Line of credit agreement between American Shared Hospital
Services and Bank of America dated July&nbsp;1, 2004 and related
amendments No.&nbsp;1 and No.&nbsp;2 dated June&nbsp;23, 2005.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification Pursuant to 18 U.S.C. Section&nbsp;1350, as Adopted
Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reports on Form&nbsp;8-K</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following report on Form 8-K was filed during the three months ended
June&nbsp;30, 2005:</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">11
</DIV>

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

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form&nbsp;8-K dated and filed May&nbsp;3, 2005 relating to a press release
announcing the Company&#146;s preliminary financial results for its first
quarter of fiscal year 2005.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following reports on Form 8-K were filed after June&nbsp;30, 2005:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form&nbsp;8-K dated and filed July&nbsp;5, 2005 announcing an increase in its
existing line of credit with Bank of America.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form&nbsp;8-K dated and filed July&nbsp;26, 2005 relating to a press release
announcing the Company&#146;s preliminary financial results for its second
quarter of fiscal year 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">12
</DIV>

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


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="011"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">SIGNATURES
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">AMERICAN SHARED HOSPITAL SERVICES<BR>
Registrant
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: August 12, 2005&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Ernest A. Bates, M.D.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Ernest A. Bates, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chairman of the Board and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: August 12, 2005&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Craig K. Tagawa
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Craig K. Tagawa&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Senior Vice President<br>
Chief Operating and Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">13
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.46
<SEQUENCE>2
<FILENAME>f11686exv10w46.htm
<DESCRIPTION>EXHIBIT 10.46
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w46</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.46
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EQUIPMENT LEASE AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS EQUIPMENT LEASE AGREEMENT </B>(&#147;Agreement&#148;) is made and entered into on March&nbsp;21, 2003, by
and between <B>GK FINANCING, LLC, </B>a California limited liability company (&#147;GKF&#148;), and Northern
Westchester Hospital Center, a not for profit corporation (&#147;Hospital&#148;), with reference to the
following facts:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>R E C I T A L S</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, Hospital wants to lease a Leksell Stereotactic Gamma Unit, model C with Automatic
Positioning System manufactured by Elekta Instruments, Inc., (hereinafter referred to as the
&#147;Equipment&#148;); and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, GKF is willing to lease the Equipment which GKF has acquired from Elekta Instruments,
Inc., a Georgia corporation (hereinafter referred to as &#147;Elekta&#148;), to Hospital, pursuant to the
terms and conditions of this Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>A G R E E M E N T</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE, </B>in consideration of the mutual covenants, conditions and agreements set forth
herein, and for such other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Lease</U>. Subject to and in accordance with the covenants and conditions set forth in
this Agreement, GKF hereby leases to Hospital, and Hospital hereby leases from GKF, the Equipment.
The Equipment to be leased to Hospital pursuant to this Agreement shall include the Gamma Knife
technology as specified in Exhibit&nbsp;1, including all hardware and software related thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>LGK Agreement</U>. Simultaneously with the execution of this Agreement, Hospital and
Elekta shall enter into that certain LGK Agreement (the &#147;LGK Agreement&#148;), a copy of which is
attached hereto as Exhibit&nbsp;1. Hospital shall perform, satisfy and fulfill all of its obligations
arising under the LGK Agreement when and as required thereunder. Hospital acknowledges that GKF is
a third party beneficiary of the LGK Agreement and, in that capacity, GKF shall be entitled to
enforce Hospital&#146;s performance, satisfaction and fulfillment of its obligations thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Term of the Agreement</U>. The initial term of this Agreement (the &#147;Term&#148;) shall
commence as of the date hereof and, unless earlier terminated or extended in accordance with the
provisions of this Agreement, shall continue for a period of ten (10)&nbsp;years following the date of
the performance of the first clinical Gamma Knife procedure (the &#147;First Procedure Date&#148;) at the
Site. Hospital&#146;s obligation to make the rental payments to GKF for the Equipment described in
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;8 below shall commence as of the date of performance of the first clinical Gamma Knife
procedure (the <B>&#147;</B>First Procedure Date)&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>User License</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 Hospital shall apply for and obtain in a timely manner a User License from the Nuclear
Regulatory Commission and, if necessary, from the applicable state agency authorizing it to take
possession of and maintain the Cobalt supply required in connection with the use of the Equipment
during the term of this Agreement. Hospital also shall apply for and obtain in a timely manner all
other licenses, permits, approvals, consents and authorizations which may be required by state or
local governmental or other regulatory agencies for the development, construction and preparation
of the Site, the charging of the Equipment with its Cobalt supply, the conduct of acceptance tests
with respect to the Equipment, and the use of the Equipment during the Term, as more fully set
forth in Article&nbsp;2.1 of the LGK Agreement. The effectiveness of the agreement is subject to the
prior approval of the installation of the Equipment by the New York State Department of Health and
the satisfaction by the Hospital of all its remaining obligations to obtain approvals set forth in
this Section&nbsp;4. Hospital, at its cost and expense, shall obtain all permits, certifications,
approvals or authorizations required by applicable federal, state or local laws, rules or
regulations necessary to construct and improve the Site for the installation, use and operation of
the Equipment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Delivery of Equipment; Site</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 GKF shall coordinate with Elekta and Hospital to have the Equipment delivered to Hospital
at 400 East Main Street Mt. Kisco NY (the &#147;Site&#148;) on or prior to the delivery date agreed upon by
Hospital and Elekta in writing. GKF makes no representations or warranties concerning delivery of
the Equipment to the Site or the actual date thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 Hospital, at its cost and expense, shall provide a safe, convenient and properly prepared
Site for the Equipment in accordance with Elekta&#146;s guidelines, specifications, technical
instructions and site planning criteria (which site planning criteria are attached as Exhibit&nbsp;B to
the LGK Agreement) (collectively the &#147;Site Planning Criteria&#148;). GKF has reviewed and approved the
&#147;Site Planning Criteria&#148; and the location of the site.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Site Preparation and Installation of Equipment</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 Hospital, at its cost, expense and risk, shall prepare all plans and specifications
required to construct and improve the Site for the installation, use and operation of the Equipment
during the Term (<B>&#147;</B>Hospital Plan&#148;, as set forth on Exhibit&nbsp;6.1 of this agreement) The Hospital
Plan, to the best of GKF&#146;s knowledge comply in all respects with the Site Planning Criteria<B>. </B>With
respect to the Hospital Plan, GKF makes no representations regarding the compliance with applicable
federal, state or local laws or regulations, including building codes, or those portions of the
Site Planning Criteria relating to the load bearing capacity of the floor of the treatment room and
to radiation protection.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Hospital Plan has been reviewed and approved by GKF and Elekta and all material changes
thereto shall be subject to the written approval of GKF and Elekta. Hospital shall provide GKF and
Elekta with a reasonable period of time for the review and consideration of all material changes to
the Hospital Plan following submission thereof for approval.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 Based upon the Hospital Plan approved by GKF and Elekta, Hospital, at its cost, expense
and risk, shall prepare, construct and improve the Site as necessary for the installation, use and
operation of the Equipment during the Term, including, without limitation, providing all temporary
or permanent shielding required for the charging of the Equipment with the Cobalt supply and for
its subsequent use, selecting and constructing a proper foundation for the Equipment and the
temporary or permanent shielding, aligning the Site for the Equipment, and installing all
electrical systems and other wiring required for the Equipment. In connection with the
construction of the Site, Hospital, at its cost and expense, shall select, purchase and install all
radiation monitoring equipment, devices, safety circuits and radiation warning signs required at
the Site in connection with the use and operation of the Equipment, all in accordance with
applicable federal, state and local laws, rules, regulations or custom.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 In addition to construction and improvement of the Site, Hospital, at its cost, expense
and risk, shall be responsible for the installation of the Equipment at the Site, including the
positioning of the Equipment on its foundation at the Site in compliance with the Site Planning
Criteria.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 Upon completion of construction, the Site shall (a)&nbsp;comply in all material respects with
the Hospital Plan and all applicable federal, state and local laws, rules and regulations, and (b)
be safe and suitable for the ongoing use and operation of the Equipment during the Term.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 Hospital shall use its reasonable efforts to satisfy its obligations under this Section&nbsp;6
in a timely manner. Hospital shall provide information to GKF as reasonably requested by GKF
concerning site preparation, the progress in the design of the Site, the preparation of plans and
specifications, the construction and improvement of the Site, and the satisfaction of its other
obligations under this Section&nbsp;6. In all events, Hospital shall complete all construction and
improvement of the Site required for the installation, positioning and testing of the Equipment on
or prior to the delivery date described in Section&nbsp;5.1 above. If the Site is not complete as of
the delivery date described in Section&nbsp;5.1 above plus a sixty (60)&nbsp;day grace period (other than by
reasons of force majeure as provided in Section&nbsp;23.16 below) (the &#147;late completion date&#148;), Hospital
shall reimburse GKF for its out-of-pocket financing costs incurred with respect the Equipment at
the Bank of America prime interest rate (which rate is sometimes referred to by the Bank as its
&#147;reference rate&#148;) plus 2% based upon GKF&#146;s cost of the Equipment for the period between the late
completion date and the date that the Site is completed to the extent necessary to allow for the
installation, positioning and testing of the Equipment.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 During the Term, Hospital, at its cost and expense, shall maintain the Site in a good
working order, condition and repair, reasonable wear and tear excepted.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 Hospital shall be liable for, and shall indemnify GKF in the manner described in Section
22 below from and against, all damage to the Equipment caused by (a)&nbsp;defects in construction of the
Site or in installation or positioning the Equipment at the Site ; (b)&nbsp;defects arising out of
materials or parts provided, modified or designed by Hospital for or with respect to the Site,
except any defects rising from the Equipment ; (c)&nbsp;negligent or wrongful acts or omissions by
Hospital or any of its officers, directors, agents, contractors (or their subcontractors), or
employees in connection with the construction and preparation of the Site ; and (d)&nbsp;negligent or
wrongful operation of the Equipment at the Site. Further, neither the review and approval of Site
plans, specifications and/or positioning plans by GKF and/or Elekta, nor the construction of any
other Site preparation, shall relieve Hospital for liability for damages to the Equipment caused by
the failure to comply with applicable federal, state or local laws or regulations, including
building codes, or those portions of the Site Planning Criteria relating to the load bearing
capacity of the floor of the treatment room and to radiation protection.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Educational Support</U>. Hospital shall provide community education (e.g.,seminars) to
physicians concerning the Equipment and Gamma Knife procedures and community education to
physicians. Not less than ninety (90)&nbsp;days prior to the First Procedure Date and the commencement
of each succeeding twelve (12)&nbsp;month period during the Term, GKF and Hospital shall develop a
mutually agreed upon educational budget and plan for the succeeding twelve (12)&nbsp;month period of the
Term. Once approved, the educational budget and plan shall be implemented by Hospital in
accordance with its terms. As funds are expended by Hospital in accordance with the educational
budget and plan, Hospital shall submit invoices (together with documentary evidence supporting the
invoices) for its expenditures and, promptly following the receipt of such invoices, GKF shall
reimburse Hospital for * of the expenditures up to an annual maximum of *. It is acknowledged by
the parties that such expenses to be reimbursed by GKF as provided in this Section&nbsp;7 have been
included in GKF&#146;s calculation of Hospital&#146;s Lease Payments so as to allow GKF to recover such GKF
reimbursed expenses during the Term of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Payment Terms</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 <U>Per Procedure Payments</U>. As rent for the lease of the Equipment to Hospital
pursuant to this Agreement, Hospital shall pay to GKF the sum as set forth in Exhibit&nbsp;8 of this
Agreement. (the &#147;Lease Payment&#148;). Hospital shall pay the Lease Payment for each &#147;Procedure&#148; that
is completed by the Hospital or its representatives or affiliates at the Site, as defined in
Section&nbsp;5.1, irrespective of whether the Procedure is performed on the Equipment or using any other
equipment or devices. As used herein, the term a &#147;Procedure&#148; means any treatment using
external, single fraction, conformal radiation, commonly called stereotactic radiosurgery, that may
include one or more isocenters during the patient treatment session, delivered to any site(s)
superior to the foramen magnum. Hospital&#146;s obligation to make Lease Payments pursuant to this
Section shall be expressly limited by Section&nbsp;8.2, 8.3 and 8.4 hereof.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If no Procedures are performed by Hospital or any other person utilizing the Equipment or any
other equipment devices at the Hospital<B>, </B>Hospital shall not owe any Lease Payment to GKF. GKF
shall submit an invoice to Hospital on the fifteenth (15th) and the last day of each calendar month
(or portion thereof) for the actual number of Procedures performed during the first and second half
of the calendar month, respectively. The Hospital shall pay invoices received during the initial
three (3)&nbsp;months following the First Procedure Date within sixty (60)&nbsp;days after receipt of such
invoices by the Hospital. For invoices received by the Hospital following the initial three (3)
months following the First Procedure Date, the Hospital shall pay invoices within thirty (30)&nbsp;days
after submission by GKF to Hospital. All or any portion of an invoice which is not paid in full
within forty-five (45)&nbsp;days after submission (with respect to invoices provided after the intial
three (3)&nbsp;months following the First Procedure Date) or seventy (75)&nbsp;days after submission (with
respect to invoices provided during the initial three (3)&nbsp;months following the First Procedure
Date) shall bear interest at the rate of the lesser of one percent (1.0%) per month (or the maximum
monthly interest rate permitted to be charged by law between an unrelated, commercial borrower and
lender, if less) until the unpaid rent invoice together with all accrued interest thereon is paid
in full. If GKF shall at any time accept a Lease Payment from Hospital after it shall become due,
such acceptance shall not constitute or be construed as a waiver of any or all of GKF&#146;s rights
under this Agreement, including the rights of GKF set forth in Section&nbsp;20 hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within ten (10)&nbsp;days after Hospital&#146;s receipt of written request by GKF, GKF shall have the
right to audit Hospital&#146;s books and records (including, without limitation, the books and records
pertaining to any other radiosurgery equipment or devices) relating solely to the Hospital&#146;s
provision of Procedures to verify the number of Procedures that have been performed by Hospital,
and Hospital shall provide GKF with access to such books and records; provided that any patient
names or identifiers shall not be disclosed. GKF shall not have access to nor shall it directly or
indirectly access any &#147; Patient Health Information&#148; as such terms are defined by HIPAA. GKF agrees
that it shall execute such documents and agreements as may be reasonably required by Hospital to
assure compliance with HIPAA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event a Procedure is not completed due to a technical problem with the Equipment, the
Hospital will not be charged a Lease Payment for such Procedure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 Adjustment to Lease Payment Due to Increase/Decrease in the Reimbursement Rate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If the &#147;Reimbursement Rate&#148; in effect on any &#147;Reset Date&#148; is * less than the &#147;Base Rate&#148;
(as such quoted terms are defined in Section&nbsp;8.2(e) below), Hospital shall inform GKF in writing
within ninety (90)&nbsp;days after the applicable Reset Date and shall provide GKF with the information
used in calculating such Reimbursement Rate. Within thirty (30)&nbsp;days after GKF&#146;s receipt of such
notice, the parties shall meet to renegotiate in good faith the Lease Payments payable by Hospital
under this Agreement.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In determining the renegotiated Lease Payment, any reduction or increase thereto may or may
not be (and is not required to be) in proportion to the reduction to the Reimbursement Rate.
Furthermore, any reduction to the Lease Payment will be calculated to provide Hospital with
&#147;Operating Income&#148; (as defined below) at a break even level as a result of such reduction (i.e.,
any reduction shall not exceed the amount required to achieve such &#147;Break Even Level&#148;. The term
&#147;Break Even Level&#148; is defined herein as zero dollars ($0) in Operating Income (as defined in
Section&nbsp;8.2(e) hereof) arising from the operation of the Equipment; provided that no Lease Payment
reduction shall be imposed that would result in negative Operating Income to GKF in accordance with
subsection 8.2(e) below. If the Lease Payment proposed by Hospital would result in negative
Operating Income to GKF, then (i)&nbsp;Hospital shall have the recourse to arbitration as provided in
Section&nbsp;8.2(c) below, and (ii)&nbsp;this Agreement shall remain unchanged and in full force and effect
until outcome of arbitration, if any.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Each of GKF and Hospital shall permit the other party and its representatives to inspect
its books and records pertaining to the Equipment in order to verify such Operating Income. All
HIPAA regulations will be applied in the inspection of Hospital&#146;s books and GKF agrees that it
shall execute such documents and agreement as may be reasonably required by Hospital to assure
compliance with HIPAA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c ) If the Hospital and GKF are unable to reach an agreement on the new Lease Payment rate,
then GKF and Hospital shall within ten (10)&nbsp;days of their failure to reach an agreement in
accordance with the last sentence of Section&nbsp;8.2(a), then GKF and Hospital shall each appoint an
arbitrator within ten (10)&nbsp;days of their failure to reach an agreement in accordance with the time
frames set forth in Section&nbsp;8.2(a). Such arbitrators shall appoint a third arbitrator within ten
(10)&nbsp;days after their appointment. The arbitrators shall have not less than ten (10)&nbsp;years
experience in medical equipment financing, be in good standing with the American Arbitration
Association or other comparable organization, and have no prior relationship, attorney/client or
otherwise, with any of the parties. The parties shall present all necessary information concerning
the dispute to the arbitrators within thirty (30)&nbsp;days following the arbitrator&#146;s appointment.
Such arbitrators shall review the information presented by both parties and shall render a decision
within thirty (30)&nbsp;days of his of her appointment. The arbitrator&#146;s decision, which shall be made
by majority or unanimously, shall be based on a determination of an equitable apportioning of the
economic losses resulting to the Hospital as a result of the decrease in the Reimbursement Rate
among the Hospital and GKF, and taking into account the capital investment made by the parties.
The arbitrators&#146; decision shall be binding upon the parties and non-appealable. The fees and
expenses of the arbitrator shall be shared equally between the parties. The foregoing arbitration
procedure shall apply only to disagreements arising from this Section&nbsp;8.2 and not to any other
disputes or disagreements arising from this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;If the parties mutually agree on a renegotiated Lease Payment or if a renegotiated Lease
Payment is determined by the arbitrator as set forth above, then such renegotiated Lease Payment
shall become effective on the date that is three (3)&nbsp;months following the applicable Reset Date,
and Exhibit&nbsp;8.2 hereto shall be deemed automatically amended as of such date.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;As used in this Section&nbsp;8.2, (i)&nbsp;the &#147;Reimbursement Rate&#148; means the average aggregate
technical component reimbursement for Gamma Knife Procedures received by Hospital from all payor
sources in effect as of any Reset Date; (ii)&nbsp;the &#147;Base Rate&#148; means the average aggregate technical
component reimbursement for Gamma Knife Procedures received by Hospital from all payor sources in
effect on the date which is one (1)&nbsp;year after the First Procedure Date<B>; </B>provided that, if the
Lease Payment is renegotiated by the parties at any time or from time-to-time pursuant to this
Section&nbsp;8.2, then, immediately following the implementation of the renegotiated Lease Payment, the
Base Rate shall become the Reimbursement Rate in effect as of the Reset Date that immediately
precedes the implementation of such renegotiated Lease Payment; (iii)&nbsp;the &#147;Reset Date&#148; means the
date which is two (2)&nbsp;years after the First Procedure Date of this Agreement and each annual
anniversary date thereafter and (iv) &#147;Operating Income&#148; with respect to either party, means the
revenues generated by such party from the Equipment less such party&#146;s corresponding direct
operating expenses related to the Equipment, including, without limitation, applicable interest and
depreciation expenses on the Equipment and Site improvements, but excluding physician professional
fees and direct or indirect administrative overhead expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;If the Lease Payment is reduced at any time or from time-to-time pursuant to this Section
8.2, and thereafter, the Reimbursement Rate in effect on any Reset Date increases by * or more over
the then-effective Base Rate, then, for each such increase, the Lease Payment shall also be
increased in proportion to the percentage increase in the Reimbursement Rate; provided that in no
event shall the increased Lease Payment exceed the Lease Payment in effect on the First Procedure
Date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 <U>New Technology</U>. Except for Section&nbsp;8.3(d) below, this Section&nbsp;8.3 shall only
become applicable (i)&nbsp;on or after the date that is * after the First Procedure Date (the &#147;* Year
Date&#148;), and (ii)&nbsp;if the average number of Procedures actually performed using the Equipment during
the twelve (12)&nbsp;month period immediately preceding the * Year Date was not less than * Procedures
(collectively, the &#147;New Technology Preconditions&#148;). If both of the New Technology Preconditions
have been satisfied, the following provisions shall apply:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If at any time on or after the * Year Date, &#147;New Technology&#148; becomes commercially
available to perform Procedures which Hospital desires to purchase or lease, Hospital shall,
promptly provide written notice thereof to GKF (the &#147;New Technology Notice&#148;). As used herein, &#147;New
Technology&#148; shall mean a treatment modality for providing Procedures which uses medical technology
not commercially available as of the First Procedure Date, but which subsequently becomes
commercially available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;If, within ninety (90)&nbsp;days following GKF&#146;s receipt of the New Technology Notice, the
parties are unable to agree in good faith on the lease payment or sale price or other material
terms for the New Technology, Hospital may lease or purchase the New Technology from any other
person or entity; provided that, prior to entering into any lease or purchase agreement with
another person or entity for the New Technology, Hospital shall first provide written notice to GKF
setting forth the equipment to be used, the amount to be paid, the payment of and (if applicable)
the term of such proposal transaction (the &#147;Option Notice&#148;). GKF shall have thirty (30)&nbsp;days
following its receipt of the Option Notice (the &#147;Option Period&#148;) within which to agree or decline
to lease or sell the New Technology to Hospital on the same terms as
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">stated in the Option Notice. If GKF agrees to lease or sell the New Technology to Hospital on
the same terms as stated in the Option Notice, GKF shall provide written notice of the same to
Hospital, and the parties shall promptly enter into a lease or sale of the New Technology on such
terms as stated in the Option Notice. If GKF declines to lease or sell the New Technology to
Hospital on the terms as stated on the Option Notice, GKF shall provide written notice of, same to
Hospital (or, if GKF fails to provide such written notice, GKF shall be deemed to have declined to
lease or sell such New Technology) and Hospital shall have one hundred twenty days (120)&nbsp;days
following its receipt of GKF&#146;s notice of declination (the &#147;Post-Option Period&#148;) within which to
enter into a lease or purchase of the New Technology in accordance with the terms of the Option
Notice. Hospital shall provide GKF with a certification of its officer promptly following the full
execution of such lease or purchase agreement which certification shall set forth that Hospital has
entered into a lease or purchase agreement for the New Technology which lease or purchase agreement
contains the terms set forth in the Option Notice, as well as any and all additional terms not
noted in the Option Notice and contains no additional substantive terms not stated in the Option
Notice. If Hospital does not enter into a lease or purchase agreement for the New Technology
containing the terms substantially similar to the terms set forth in the Option Notice within the
Post-Option Period, or if any of the terms set forth in the Option Notice are supplemented,
deleted, changed or otherwise modified in any way, the process of requiring a new Option Notice,
Option Period and Post-Option Period shall be repeated in accordance with the terms set forth in
this Section&nbsp;8.3(b)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;From and after the date on which the Hospital first uses the New Technology, Hospital
will not be obligated to pay Lease Payments to GKF for Procedures that are performed on the New
Technology. In consideration for the foregoing concession made by GKF, Hospital agrees to
guarantee a minimum payment (the &#147;Minimum New Technology Payment&#148;) to GKF for each 365-day period
during the Term of this Agreement commencing from and after the date on which the first procedure
is performed on the New Technology, the New Technology order date (each such 365-day period is
referred to as a &#147;New Technology Payment Period&#148;). The Minimum New Technology Payment shall be
equal to the Lease Payment then in effect multiplied by *. Thus, for each New Technology Payment
Period, GKF shall be entitled to the greater of: (a)&nbsp;the Lease Payment then in effect, multiplied
by the number of Procedures that are performed using the Equipment and any other equipment or
devices (other than the New Technology) during such New Technology Payment Period, or (b)&nbsp;the
Minimum New Technology Payment (the &#147;New Technology Lease Payment&#148;)<B>. </B>The foregoing shall apply
irrespective of whether * Procedures are actually performed using the Equipment during the New
Technology Payment Period, and/or whether the New Technology is acquired by Hospital through
purchase or lease (from GKF or any other entity). To the extent applicable, within thirty (30)
days following the close of each New Technology Payment Period, Hospital shall pay to GKF the
shortfall between the Lease Payments made to GKF during such New Technology Payment Period and the
Minimum New Technology Payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Nothing set forth in this Section&nbsp;8.3 shall be deemed or construed to prohibit the
purchase or lease by Hospital of any New Technology at any time prior to or after the Five Year
Date or otherwise require the Hospital to comply with Section&nbsp;8.3 (a)&nbsp;or (b). Subject to Section
8.4(b) below, if Hospital purchases or leases any New Technology without first having satisfied all
of the New Technology Preconditions, then, Hospital&#146;s obligation set forth in Section&nbsp;8.1 above to
pay Lease Payments for all Procedures, irrespective of whether the
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Procedure is performed on the Equipment or using any other equipment or devices, including,
without limitation, the New Technology, shall remain in full force and effect until the expiration
or termination of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 Obsolescence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If at any time on or after the * Year Date, should the Equipment at any time be deemed to
be obsolete (as determined in accordance with Section&nbsp;8.4(d) below), the Hospital shall only be
required to pay GKF the greater of the following : (i)&nbsp;the then current Lease Payment (as may be
modified on each Reset Date as set forth in Section&nbsp;8.2) for each Procedure performed on the
Equipment, or (ii)&nbsp;an amount, on an annual basis, equal to * multiplied by the then effective
Lease Payment ( as may be modified on each Reset Date as set forth in Section&nbsp;8.2). Payments owed
under clause (ii)&nbsp;of the immediately prior sentence shall be paid by the Hospital within thirty
(30)&nbsp;days following each annual anniversary of the date on which the first Procedure is performed
on new equipment after it was determined that the Equipment is obsolete.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, in the event the Equipment is deemed to be obsolete hereunder,
if GKF and the Hospital enter into an agreement whereby GKF provides Alternative Equipment to the
Hospital, then from and after the date on which the Hospital first uses the Alternative Equipment
provided by GKF, the Hospital&#146;s payment obligation shall be limited to the Hospital&#146;s obligation to
pay GKF an equal amount to (i)&nbsp;the then effective Lease Payment (as may be modified on each Reset
Date as set forth in Section&nbsp;8.2) for those Procedures performed using the Equipment plus (ii)&nbsp;the
payments required to be made for the use of the Alternative Equipment in accordance with the
agreement governing such Alternative Equipment between the Hospital and GKF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notwithstanding the foregoing, if the Equipment becomes obsolete on or after the * Year
Date, and Hospital has already purchased or leased (or subsequently purchases or leases) New
Technology, the Obsolescence Lease Payment shall supersede Hospital&#146;s obligation to pay Lease
Payments for all Procedures (whether performed on the Equipment or on any other equipment or
devices, including, without limitation, the New Technology).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If at any time on or after the * Year Date, the Equipment becomes obsolete as determined
above, GKF shall have the option in its sole discretion to terminate this Agreement by giving a
written notice thereof to Hospital not less than ninety (90)&nbsp;days prior to the effective date of
the termination designated in GKF&#146;s written notice. In the event GKF elects to terminate the
Agreement based on such obsolescence, GKF will be responsible at its sole cost and expense for
removing the Equipment and transporting it from the Hospital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;A determination as to whether the Equipment is obsolete may be requested in writing by
Hospital at any time on or after the * Year Date and not more than once during any twelve-month
period commencing from the * Year Date. The Equipment shall be deemed to be obsolete if it is
determined that another piece of equipment (but not a combination of different types of equipment)
is more medically appropriate to use than the Equipment to perform Procedures to treat * or greater
of the following indications : *. If GKF does not agree
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">that the Equipment is obsolete, it shall, within ten (10)&nbsp;days following its receipt of such
request, notify the other party in writing of the same. Within (10)&nbsp;ten days thereafter, each
party shall designate a practicing neurosurgeon or radiation oncologist who shall have not less
than ten (10)&nbsp;years experience in the performance of radiosurgical procedures using various
radiosurgical devices, including the Gamma Knife. Within ten (10)&nbsp;days of such designation, each
such designee shall mutually agree upon and designate a third neurosurgeon or radiation oncologist
having the same qualifications as described above and who shall have no relationship or medical
staff privileges with either Hospital, GKF or any of GKF&#146;s members. The three designated
physicians shall have thirty (30)&nbsp;days within which to determine whether the Equipment is obsolete
based on the standard set forth above in this subsection (d). Any determination of obsolescence
must state in writing that the Equipment is obsolete reciting the standard set forth above in this
subsection (d), and must be signed by each designee. The determination of two of the three
designated physicians shall be required to determine whether the Equipment is obsolete. Each party
shall pay their own costs or expenses incurred in connection with any determination under this
Section&nbsp;8.4(d).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Use of the Equipment</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 The Equipment shall be used by Hospital only at the Site and shall not be removed
therefrom. Hospital shall use the Equipment only in the regular and ordinary course of Hospital&#146;s
business operations and only within the capacity of the Equipment as determined by Elekta&#146;s
specifications. Hospital shall not use nor permit the Equipment to be used in any manner nor for
any purpose which, in the reasonable opinion of Elekta or GKF, the Equipment is not designed or
reasonably suitable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2 This is an agreement of lease only. Nothing herein shall be construed as conveying to
Hospital any right, title or interest in or to the Equipment, except for the express leasehold
interest granted to Hospital for the Term. All Equipment shall remain personal property (even
though said Equipment may hereafter become attached or affixed to real property) and the title
thereto shall at all times remain exclusively in GKF.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3 During the Term, upon the request of GKF, Hospital shall promptly affix to the Equipment
in a prominent place, or as otherwise directed by GKF, labels, plates, insignia, lettering or other
markings supplied by GKF indicating GKF&#146;s ownership of the Equipment, and shall keep the same
affixed for the entire Term. Hospital hereby authorizes GKF to cause this Lease or any statement
or other instrument showing the interest of GKF in the Equipment to be filed or recorded, or
refiled or re-recorded, with all governmental agencies considered appropriate by GKF, at Hospital&#146;s
cost and expense. Hospital also shall promptly execute and deliver, or cause to be executed and
delivered, to GKF any statement or instrument requested by GKF for the purpose of evidencing GKF&#146;s
interest in the Equipment, including financing statements and waivers with respect to rights in the
Equipment from any owners or mortgagees of any real estate where the Equipment may be located.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4 At Hospital&#146;s cost and expense, Hospital shall (a)&nbsp;protect and defend GKF&#146;s ownership of
and title to the Equipment from and against all persons claiming against or
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">through Hospital, (b)&nbsp;at all times keep the Equipment free from any and all liens,
encumbrances, attachments, levies, executions, burdens, charges or legal processes imposed against
Hospital, (c)&nbsp;give GKF immediate written notice of any matter described in clause (b), and (d)&nbsp;in
the manner described in Section&nbsp;22 below indemnify GKF harmless from and against any loss, cost or
expense (including reasonable attorneys&#146; fees) with respect to any of the foregoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Additional Covenants of Hospital</U>. In addition to the other covenants of Hospital
contained in this Agreement, Hospital shall, at its cost and expense:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 Provide properly trained professional, technical and support personnel and supplies
required for the proper performance of Gamma Knife procedures utilizing the Equipment. In this
regard, Hospital shall maintain a minimum of one (1)&nbsp;Gamma Knife trained team comprised of one (1)
neurosurgeon, one (1)&nbsp;radiation oncologist and one (1)&nbsp;physicist. Hospital will use its reasonable
efforts to maintain two teams. In the event the Hospital experiences the loss of physician teams on
staff, Hospital will utilize Locum Tenens or temporary physicians (in the same specialty as the
replaced physicians) to be trained to operate the Equipment and cover in the interim period. In
the Hospital shall be provided with six (6)&nbsp;Elekta Gamma Knife training slots for the training of
its two Gamma Knife teams. All travel and entertainment expenses related to training are the
responsibility of the Hospital. The Gamma Knife shall be available for use by all credentialed
neurosurgeons and radiation oncologists. GKF will provide assistance with additional physicians
training on the Equipment as mutually agreed upon by Hospital and GKF.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 Direct, supervise and administer the provision of all services relating to the
performance of Procedures utilizing the Equipment in accordance with all applicable laws, rules and
regulations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 Keep and maintain the Equipment and the Site fully protected, secure and free from
unauthorized access or use by any person.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Additional Covenants of GKF</U>. In addition to the other covenants of GKF contained
in this Agreement, GKF, at its cost and expense, shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 Use its best efforts to require Elekta to meets its contractual obligations to GKF and
Hospital upon delivery of the Equipment and put the Equipment, as soon as reasonably possible, into
good, safe and serviceable condition and fit for its intended use in accordance with the
manufacturer&#146;s specifications, guidelines and field modification instructions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 Cause Hospital to enjoy the use of the Equipment, free of the rights of any other persons
except for those rights reserved by GKF or granted to Elekta under the LGK Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 Restrictive Convenant
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;During the initial three (3)&nbsp;year period following the First Procedure Date, none of GKF
or American Shared Radiosurgery Services (&#147;ASRS&#148;) shall directly or indirectly, within Westchester
County lease, sell and/or otherwise own any interest in any Gamma Knife system, whether directly or
as a shareholder, partner, equity holder, manager or otherwise
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;GKF and ASRS acknowledge that: (i)&nbsp;the terms contained in this Section are necessary for
the commercially reasonable and proper protection of the Hospital&#146;s interests including without
limitation, the Hospital&#146;s substantial investment in the construction and improvement of the Site
to accommodate the installation of the Equipment; (ii)&nbsp;each and every covenant and restriction
contained in this Section is reasonable in respect of such matter, length of time and geographical
area; and (iii)&nbsp;the Hospital is relying on the representations of the parties contained in this
Section that they shall abide by and be bound by each of the aforesaid covenants and restrictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If any court or tribunal of competent jurisdiction determines that the duration,
geographical limit or any other aspect of the provisions of this Section is unenforceable in
accordance with its terms in a particular jurisdiction, the provisions of this Section shall not
terminate, but shall be deemed amended to the extent required to render them valid and enforceable
in such jurisdiction and such court or tribunal is hereby authorized and directed to amend this
Agreement only to the extent that such court or tribunal determines such an amendment is necessary
to make it valid and enforceable in said jurisdiction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Each of GKF and ASRS further agree that damages at law would be an insufficient remedy for
the Hospital in the event that any of them violate the provisions of this Section, and that the
Hospital shall be entitled to, among other remedies, make an application to a court of competent
jurisdiction to obtain injunctive relief. Nothing contained herein shall be construed as
prohibiting the Hospital from pursuing any other remedies available to the Hospital for a breach or
threatened breach of the provisions of this Section, including the recovery of damages from any of
GKF and/or ASRS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;The unsuccessful party in judicial proceedings to enforce its rights under this Section
shall reimburse the successful party for the reasonable legal fees, costs and disbursements which
it incurs as a result of such proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;The restrictive covenants contained in this Section shall automatically terminate and be
of no further force and effect upon the termination of this Agreement for any reason.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Maintenance of Equipment; Damage or Destruction of Equipment</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 During the Term and except as otherwise provided in this Agreement, GKF, at its cost and
expense, shall (a)&nbsp;maintain the Equipment in good operating condition and repair, reasonable wear
and tear excepted, and (b)&nbsp;maintain in full force and effect a Service
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Agreement with Elekta and any other service or other agreements required to fulfill GKF&#146;s
obligation to repair and maintain the Equipment under this Section&nbsp;12. Hospital shall promptly
notify GKF in the event of any damage or destruction to the Equipment or of any required
maintenance or repairs to the Equipment, regardless of whether such repairs or maintenance are
covered or not covered by the Service Agreement. GKF shall pursue all remedies available to it
under the Service Agreement and under any warranties made by Elekta with respect to the Equipment
so that the Equipment will be free from defects in design, materials and workmanship and will
conform to Elekta&#146;s technical specifications concerning the Equipment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 GKF and Elekta shall have the right to access the Equipment for the purpose of inspection
and the performance of repairs at all reasonable times, upon reasonable advance notice and with a
minimum of interference or disruptions to Hospital&#146;s regular business operations. GKF will comply
with HIPPA patient privacy regulations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3 Hospital shall be liable for, and in the manner described in Section&nbsp;22 below shall
indemnify GKF from and against, any damage to or destruction of the Equipment caused by the misuse,
improper use or wrongful or negligent acts or omissions of Hospital&#146;s officers, employees, agents,
contractors and physicians. In the event the Equipment is damaged as a result of the misuse,
improper use, or other wrongful or negligent acts or omissions of Hospital&#146;s officers, employees,
agents, contractors and physicians, to the extent such damage is not covered by the Service
Agreement or any warranties or insurance, GKF may service or repair the Equipment as needed and the
cost thereof shall be paid by Hospital to GKF promptly upon written request together with interest
thereon at the rate of one (1.0%) per month (or the maximum monthly interest rate permitted to be
charged by law between an unrelated, commercial borrower and lender, if less) and reasonable
attorneys&#146; fees and costs incurred by GKF in collecting such amount from Hospital. Any work so
performed by GKF shall not deprive GKF of any of its rights, remedies or actions against Hospital
for such damages.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4 If the Equipment is rendered unusable as a result of any physical damage to or
destruction of the Equipment, Hospital shall give GKF written notice thereof. GKF shall determine,
within thirty (30)&nbsp;days after it is given written notice of such damage or destruction, whether the
Equipment can be repaired. In the event GKF determines that the Equipment cannot be repaired (a)
GKF, at its cost and expense, shall replace the Equipment as soon as reasonably possible taking
into account the availability of replacement equipment from Elekta, Elekta&#146;s other then existing
orders for equipment, and the then existing limitations on Elekta&#146;s manufacturing capabilities, and
(b)&nbsp;this Agreement shall continue in full force and effect as though such damage or destruction had
not occurred. In the event GKF determines that the Equipment can be repaired, GKF shall cause the
Equipment to be repaired as soon as reasonably possible thereafter. Hospital shall fully cooperate
with GKF to effect the replacement of the Equipment or the repair of the Equipment (including,
without limitation, providing full access to the Site) following the damage or destruction thereof.
In the event the Hospital is unable to use the equipment after providing written notice to GKF as
set forth in this section, the Hospital shall
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">not be obligated to pay any Lease Payment to GKF for Procedures not provided on the Equipment
until GKF has remedied the problems set forth in the written notice.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Alterations and Upgrades to Equipment</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 Hospital shall not make any modifications, alterations or additions to the Equipment
(other than normal operating accessories or controls) without the prior written consent of GKF.
Hospital shall not, and shall not permit any person other than representatives of Elekta or any
other person authorized by GKF to, effect any inspection, adjustment, preventative or remedial
maintenance, or repair to the Equipment without the prior written consent of GKF. All
modifications, alterations, additions, accessories or operating controls incorporated in or affixed
to the Equipment (herein collectively called &#147;additions&#148; and included in the definition of
&#147;Equipment&#148;) shall become the property of the GKF upon termination of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 The necessity and financial responsibility for modifications, additions or upgrades to the
Equipment, including the reloading of the Cobalt-60 source, shall be mutually agreed upon by GKF
and Hospital. In the event GKF and Hospital agree to reload the Cobalt-60 source (i.e., in
approximately the seventh (7th) year of the Term), and GKF pays the costs associated therewith,
notwithstanding any provisions to the contrary herein, the initial Term shall be automatically
extended for a period of * years. It is the intent of the parties that GKF shall be responsible
for Equipment related costs and expenses and that Hospital shall be responsible for Site related
costs and expenses for modifications, additions or upgrades to the Equipment, including the
reloading of the Cobalt-60 source that are mutually agreed upon by GKF and Hospital. GKF shall be
responsible for upgrading the Gamma Knife to its most current version or at least to within one
release of the current version. In the event Equipment is upgraded, Hospital and GKF will mutually
agree to extend the term of contract and/or increase the fee per procedure rate to offset the
additional expense to GKF.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Financing of Equipment by GKF</U>. GKF, in its sole discretion, may finance the
Equipment. Financing may be in the form of an installment loan, a capitalized lease or other
commercially available debt or financing instrument. If GKF finances the Equipment through an
installment loan, GKF shall be required to provide the Equipment as collateral for the loan. If
GKF finances the Equipment through a capitalized lease, title shall vest with the lessor until such
time as GKF exercises its buy-out option under the lease, if any. If required by the lender,
lessor or other financing entity (the &#147;Lender&#148;), GKF may assign its interest under this Agreement
as security for the financing. Hospital&#146;s interest under this Agreement shall be subject to the
interests of the Lender.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>Equipment Operational Costs</U>. Except as otherwise expressly provided in this
Agreement, Hospital shall be responsible and liable for all costs and expenses incurred, directly
or indirectly, in connection with the operation and use of the Equipment during the Term,
including, without limitation, the costs and expenses required to provide trained physicians,
professionals, and technical and support personnel, supplies and other items required to properly
operate the Equipment and perform Gamma Knife procedures.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>Taxes</U>. GKF shall pay all sales or use taxes imposed or assessed in connection
with the purchase of the Equipment and all personal property taxes imposed, levied or assessed on
the ownership and possession of the Equipment during the Term. All other taxes, assessments,
licenses or other charges imposed, levied or assessed on the Equipment during the Term shall be
paid by Hospital before the same shall become delinquent, whether such taxes are assessed or would
ordinarily be assessed against GKF or Hospital; provided, however, Hospital shall not be required
to pay any federal, state or local income, franchise, corporation or excise taxes imposed upon
GKF&#146;s net income realized from the lease of the Equipment. In case of a failure by Hospital to pay
any taxes, assessments, licenses or other charges when and as required under this Section, GKF may
pay all or any part of such taxes, in which event the amount paid by GKF shall be promptly payable
by Hospital to GKF upon written request together with interest thereon at the rate of at the rate
of one percent (1.0%) per month (or the maximum monthly interest rate permitted to be charged by
law between an unrelated, commercial borrower and lender, if less) and reasonable attorneys&#146; fees
and costs incurred by GKF in collecting such amount from Hospital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>No Warranties by GKF</U>. Hospital warrants that as of the First Procedure Date, it
shall have (a)&nbsp;thoroughly inspected the Equipment, (b)&nbsp;determined that the Equipment is consistent
with the size, design, capacity and manufacture selected by it, and (c)&nbsp;satisfied itself that to
the best of its knowledge the Equipment is suitable for Hospital&#146;s intended purposes and is good
working order, condition and repair. GKF SUPPLIES THE EQUIPMENT UNDER THIS AGREEMENT IN ITS &#147;AS
IS&#148; CONDITION. GKF, NOT BEING THE MANUFACTURER OF THE EQUIPMENT OR THE MANUFACTURER&#146;S AGENT, MAKES
NO WARRANTY OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO THE EQUIPMENT&#146;S MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR USE, DESIGN, CONDITION, DURABILITY, CAPACITY, MATERIAL OR
WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE. As between GKF and Hospital, Hospital shall
bear all risks with respect to the foregoing warranties. GKF shall not be liable for any direct,
indirect and consequential losses or damages suffered by Hospital or by any other person, and
Hospital expressly waives any right to hold GKF liable hereunder for, any claims, demands and
liabilities arising out of or in connection with the design, manufacture, possession or operation
of the Equipment, including injury to persons or property resulting from the failure of, defective
or faulty design, operation, condition, suitability or use of the Equipment. All warranty or other
similar claims with respect to the Equipment shall be made by Hospital solely and exclusively
against persons other than GKF, including Elekta or any other manufacturers or suppliers. In this
regard and with prior written approval of GKF, Hospital may, in GKF&#146;s name, but at Hospital&#146;s sole
cost and expense, enforce all warranties, agreements or representations, if any, which may have
been made by Elekta or manufacturers, suppliers or other third parties regarding the Equipment to
GKF or Hospital. GKF shall not be responsible for the delivery, installation or operation of the
Equipment or for any delay or inadequacy of any or all of the foregoing. GKF will enforce any
warranties provided to it by Elekta.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Termination for Economic Justification</U>. If, following the initial twenty four
(24)&nbsp;months after the First Procedure Date and following each subsequent 12&nbsp;month period thereafter
during the Term, based upon the utilization of the Equipment within a reasonable period of time
after GKF&#146;s written request, Hospital does not provide GKF with a reasonable economic justification
to continue this Agreement and the provision of Gamma Knife services at the Hospital, then and in
that event, GKF shall have the option to terminate this Agreement by giving a written notice
thereof to Hospital not less than ninety (90)&nbsp;days prior to the effective date of the termination
designated in GKF&#146;s written notice. In the event GKF exercises this Economic Justification clause
or terminates the Agreement for any reason other than that the Hospital is in breach of the
Agreement, GKF will be responsible at its sole cost and expense for removing the Equipment and
transporting it from the Hospital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Options to Extend Agreement</U>. As of the end of the Term, Hospital shall have the
option either to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.1 Extend the Term of this Agreement for a specified period of time and upon such other
terms and conditions as may be agreed upon by GKF and Hospital: or shall automatically terminate
unless extended by the Hospital in writing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.2 At the end of the Term, the Hospital shall have the option to extend the Term of the
Agreement for a specified period of time and upon such other terms and conditions as may be agreed
upon by GKF and the Hospital. Should the Hospital not exercise such option, this Agreement shall
automatically terminate. The Hospital shall exercise such option by giving an irrevocable written
notice thereof to GKF at least nine (9)&nbsp;months prior to the expiration of the initial term. Any
such notice shall be sufficient if it states in substance that Hospital elects to exercise its
option and GKF and Hospital can agree upon the terms of the extension. If Hospital fails to
exercise the option granted herein at least nine (9)&nbsp;months prior to the expiration of the initial
Term, the option shall lapse and this Agreement shall expire as of the end of the initial Term.
Further, if Hospital exercises the option set forth in the first sentence of this Section&nbsp;19 and
the parties are unable to mutually agree upon the length of the extension of the Term or any other
terms or conditions applicable to such extension prior to the expiration of the Term, this
Agreement shall expire as of the end of the initial Term. At the end of the term, this Agreement
shall automatically terminate unless it is extended upon the written agreement of GKF and Hospital.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Events of Default by Hospital and Remedies</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1 The occurrence of any one of the following shall constitute an event of default under
this Agreement (an &#147;Event of Default&#148;):
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.1 Hospital fails to pay any rent payment when due pursuant to Paragraph&nbsp;8 above and such
failure continues for a period of thirty (30)&nbsp;days after written notice thereof is given by GKF or
its assignee to Hospital; however, if Hospital cures the rent payment default within the applicable
thirty (30)&nbsp;day period, such default shall not constitute an Event of Default.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.2 Hospital attempts to remove, sell, transfer, encumber, assign, sublet or part with
possession of the Equipment or any items thereof, except as expressly permitted herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.3 Hospital fails to observe or perform any of its material covenants, duties or
obligations arising under this Agreement or the LGK Agreement and such failure continues for a
period of thirty (30)&nbsp;days after written notice thereof by GKF to Hospital; however, if Hospital
cures the default within the applicable thirty (30)&nbsp;day period or if the default reasonably
requires more than thirty (30)&nbsp;days to cure, Hospital commences to cure the default during the
initial thirty (30)&nbsp;day period and Hospital diligently completes the cure as soon as reasonably
possible following the end of the thirty (30)&nbsp;day period, such default shall not constitute an
Event of Default.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.4 Hospital ceases doing business as a going concern, makes an assignment for the benefit
of creditors, admits in writing its inability to pay its debts as they become due, files a
voluntary petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a petition
seeking for itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar arrangement under any present or future statute, law or regulation or files
an answer admitting the material allegations of a petition filed against it in any such proceeding,
consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of it or of all
or any substantial part of its assets or properties, or it or its shareholders shall take any
action looking to its dissolution or liquidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.5 Within sixty (60)&nbsp;days after the commencement of any proceedings against Hospital
seeking reorganization, arrangement, readjustment, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, such proceedings shall not have been dismissed,
or if within thirty (30)&nbsp;days after the appointment without Hospital&#146;s consent or acquiescence of
any trustee, receiver or liquidator of it or of all or any substantial part of its assets and
properties, such appointment shall not be vacated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.1.6 Hospital is suspended or terminated from participation in the Medicare program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2 Upon the occurrence of an Event of Default with respect to Hospital, GKF may at its
option do any or all of the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2.1 By written notice to Hospital, immediately terminate this Agreement as to the
Equipment, wherever situated. As a result of the termination, GKF may enter upon the Site and
remove the Equipment without liability of any kind or nature for so doing or GKF may demand that
Hospital remove and return the Equipment to GKF, all at Hospital&#146;s sole cost and expense.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2.2 Recover from Hospital as liquidated damages for the loss of the bargain represented by
this Agreement and not as a penalty an amount equal to the present value
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of the unpaid estimated future rent payments to be made by Hospital to GKF through the end of
the Term discounted at the annual rate of nine percent (9%), which liquidated damages shall become
immediately due and payable. Notwithstanding the foregoing, if the Event of Default occurs at any
time after the fifth (5th) anniversary of the First Procedure Date, then, the liquidated damages
shall be an amount equal to the present value of the unpaid estimated future rent payments to be
made by Hospital to GKF for a two (2)&nbsp;year period commencing from and after the date on which the
subject Event of Default occurred, or through the end of the Term, whichever time period is less,
the sum of which payments shall be discounted at the annual rate of nine percent (9%) and shall be
immediately due and payable in full. The unpaid estimated future lease payments shall be based on
the prior twelve (12)&nbsp;months rent payments made by Hospital to GKF hereunder with an annual five
(5%) percent increase thereof through the end of the Term or the two (2)&nbsp;year measuring period, as
the case may be. Hospital and GKF acknowledge that the liquidated damages formula set forth in
this Section&nbsp;20.2.2 constitutes a reasonable method to calculate GKF&#146;s damages resulting from an
Event of Default under the circumstances existing as of the date of this Agreement. The liquidated
damages remedy available under this Section&nbsp;20.2.2 shall apply if and only to the extent an Event
of Default has occurred under Sections&nbsp;20.1.1 and/or 20.1.2 above.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2.3 Sell, dispose of, hold, use or lease the Equipment, as GKF in its sole and absolute
discretion may determine (and GKF shall not be obligated to give preference to the sale, lease or
other disposition of the Equipment over the sale, lease or other disposition of similar Equipment
owned or leased by GKF).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2.4 Exercise any other right or remedy which may be available to GKF under the Uniform
Commercial Code or any other applicable law or proceed by appropriate court action, without
affecting GKF&#146;s title or right to possession of the Equipment, to enforce the terms hereof or to
recover damages for the breach hereof or to cancel this Agreement as to the Equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.2.5 In addition to the foregoing remedies, Hospital shall be liable to GKF for all
reasonable attorneys fees, costs and expenses incurred by GKF as a result of the Event of Default
or the exercise of GKF&#146;s remedies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.3 Upon termination of this Agreement or the exercise of any other rights or remedies under
this Agreement or available under applicable law following an Event of Default, Hospital shall,
without further request or demand, pay to GKF all accrued and unpaid rent payments and other sums
owing under this Agreement. In the event that Hospital shall pay the liquidated damages referred
to in Section&nbsp;20.2.2 above to GKF, GKF shall pay to Hospital promptly after receipt thereof all
rentals or proceeds received from the reletting or sale of the Equipment during the balance of the
initial Term (after deduction of all costs and expenses, including reasonable attorneys fees and
costs, incurred by GKF as a result of the Event of Default), said amount never to exceed the amount
of the liquidated damages paid by Hospital. However, Hospital acknowledges that GKF shall have no
obligation to sell the Equipment.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Hospital shall in any event remain fully liable for all damages as may be provided by law and
for all costs and expenses incurred by GKF on account of such default, including but not limited
to, all court costs and reasonable attorneys&#146; fees. The rights and remedies afforded GKF under
this Agreement shall be deemed cumulative and not exclusive, and shall be in addition to any other
rights or remedies to GKF provided by law or in equity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;<U>Insurance</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.1 During the Term, GKF shall, at its cost and expense, purchase and maintain in effect an
all risk property and casualty insurance policy covering the Equipment. The all risk property and
casualty insurance policy shall be for an amount not less than the replacement cost of the
Equipment. Hospital shall be named as an additional insured party on the all risk property and
casualty insurance policy to the extent of its interest in the Equipment arising under this
Agreement. The all risk property and casualty insurance policy maintained by GKF shall be
evidenced by a certificate of insurance or other reasonable documentation which shall be delivered
by GKF to Hospital upon request following the commencement of this Agreement and as of each annual
renewal of such policy during the Term.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.2 During the Term, Hospital shall, at its cost and expense, purchase and maintain in effect
general liability and professional liability insurance policies covering the Site (together with
all premises where the Site is located) and the use or operation of the Equipment by Hospital or
its officers, directors, agents, employees, contractors or physicians. The general liability and
professional liability insurance policies shall provide coverage in amounts not less than One
Million Dollars ($1,000,000.00) per occurrence and Three Million Dollars ($3,000,000.00) annual
aggregate. GKF shall be named as additional insured party on the general liability and professional
liability insurance policies to be maintained hereunder by Hospital. The policies to be maintained
by Hospital hereunder shall be evidenced by a certificate of insurance or other reasonable
documentation which shall be delivered by Hospital to GKF no later than the First Procedure Date
and as of each annual renewal of such policies during the Term. Subject to compliance with the
requirements set forth in this section, the general liability and professional insurance may be
insured through Hospital&#146;s self-insurance program.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.3 During the construction of the Site and prior to the First Procedure Date, Hospital, at
its cost and expense, shall purchase and maintain a general liability insurance policy which
conforms with the coverage amounts and other requirements described in Section&nbsp;21.2 above and which
names GKF as an additional insured party. The policy to be maintained by Hospital hereunder shall
be evidenced by a certificate of insurance or other reasonable documentation which shall be
delivered by Hospital to GKF prior to the commencement of any construction at the Site.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.4 During the Term, Hospital shall purchase and maintain all workers compensation insurance
to the maximum extent required by applicable law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;<U>Indemnification</U>.
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.1 Hospital shall indemnify, defend, protect and hold GKF and its members, managers,
officers, employees, agents and contractors (collectively &#147;GKF&#148;) harmless from and against all
losses, claims, damages, liabilities, assessments, deficiencies, actions, proceedings, orders,
judgments, liens, costs and other expenses (including reasonable attorney&#146;s fees) of any nature or
kind whatsoever asserted against or incurred by GKF (collectively &#147;Damages&#148;) which in any manner
arise out of or relate to (a)&nbsp;the failure by Hospital to fully perform, observe or satisfy its
covenants, duties or obligations contained in this Agreement or in the LGK Agreement; (b)&nbsp;the use
and operation of the Equipment during the Term; (c)&nbsp;the design, construction and preparation of the
Site by Hospital or the maintenance of the Site during the Term by Hospital; (d)&nbsp;Damages to the
Equipment from the defective, faulty or improper design, construction or preparation of the Site or
the installation and positioning of the Equipment; (e)&nbsp;Damages to the Equipment (including any
Damages arising out of or related to violations by Hospital, its agents, officers, physicians,
employees or contractors of the Service Agreement) caused by the negligent or wrongful acts or
omissions of Hospital, its agents, officers, physicians, employees or contractors (in the event the
Equipment is destroyed or rendered unusable, subject to Section&nbsp;22.6 below, this indemnity shall
extend up to (but not exceed) the full replacement value of the Equipment at the time of its
destruction less salvage value, if any); and (f)&nbsp;the events or occurrences described in Article&nbsp;7.3
of the LGK Agreement to the same extent that Hospital agrees to indemnify Elekta thereunder. The
Hospital shall not indemnify GKF for any costs, expenses, losses, etc. incurred by GKF arising out
of the Hospital&#146;s compliance with the Site Planning Criteria provided by GKF, instructions from GKF
concerning the use of the Equipment or any instructions from GKF concerning the repair and
maintenance of the Equipment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.2 Upon the occurrence of an event for which GKF is entitled to indemnification under this
Agreement, GKF shall give written notice thereof to Hospital setting forth the type and amount of
Damages. If the indemnity relates to a Third Party Claim (as defined in Section&nbsp;22.3 below), the
matter shall be subject to Section&nbsp;22.3 below. If the indemnity relates to any Damages other than
a Third Party Claim, not more than thirty (30)&nbsp;days after GKF&#146;s written notice is given, Hospital
either shall acknowledge in writing to GKF its obligation to indemnify hereunder and pay the
Damages in full to GKF or dispute its obligation to indemnify in a written notice delivered to GKF.
If Hospital disputes the obligation to indemnify, the parties shall meet and negotiate in good
faith to mutually resolve the disagreement regarding indemnification.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.3 GKF shall give written notice to Hospital as soon as reasonably possible after it has
knowledge of any third party claim or legal proceedings (&#147;Third Party Claim&#148;) for which GKF is
entitled to indemnification under this Section&nbsp;22. Hospital shall (a)&nbsp;immediately assume, at its
sole cost and expense, the defense of the Third Party Claim with legal counsel approved by GKF
(which approval will not be unreasonably withheld, delayed or conditioned), and (b)&nbsp;as soon as
reasonably possible after GKF&#146;s written notice is given to Hospital, acknowledge in writing to GKF
its obligation to indemnify GKF in accordance with the terms of this Agreement. If Hospital fails
to assume the defense of a Third Party Claim or fails to timely
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">acknowledge in writing its obligation to indemnify GKF, GKF may assume the defense of the
Third Party Claim in the manner described in Section&nbsp;22.4 below. GKF shall cooperate with Hospital
in the defense of any Third Party Claim. Any settlement or compromise of a Third Party Claim to
which GKF is a party shall be subject to the express written approval of GKF, which approval shall
not be unreasonably withheld, delayed or conditioned as long as an unconditional term of the
settlement or compromise is the full and absolute release of GKF from all Damages arising out of
the Third Party Claim. GKF, at its own cost and expense, may participate on its own behalf with
legal counsel of its own selection in the defense of any Third Party Claim which may have a
material impact on GKF.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.4 If Hospital fails to promptly assume the defense of any Third Party Claim, GKF may assume
the defense of the Third Party Claim with legal counsel selected by GKF, all at Hospital&#146;s cost and
expense. The defense of an action by GKF under this Section&nbsp;22.4 shall not impair, limit or
otherwise restrict Hospital&#146;s indemnification obligations arising under this Section&nbsp;22 or GKF&#146;s
right to enforce such obligations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.5 The indemnity obligations under this Section&nbsp;22 shall survive the termination of this
Lease with respect to events occurring during or relating to the Term.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.6 The indemnification obligations set forth in this Agreement are intended to supplement,
and not supersede, supplant or replace, any coverage for Damages which may be available under any
insurance policies that may be maintained by GKF or Hospital. In the event any Damages may be
covered by insurance policies, the parties shall exercise good faith and use their best efforts to
obtain the benefits of and apply the available insurance coverage to the Damages subject to
indemnification under this Agreement. In the event that an insurer provides coverage under an
insurance policy on the basis of a &#147;reservation of rights&#148;, the indemnification obligations under
this Agreement shall apply to all Damages which are finally determined as not being covered under
the insurance policy.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.7 Hospital and GKF each hereby covenants and agrees that it will defend, indemnify and hold
the other party and their respective officers, directors, members, employees and agents at all
times harmless from and against any loss, damage and expense (including reasonable attorneys&#146; fees
and other costs of defense) caused by or arising out of: (i)&nbsp;any
liability or obligation related to the business of the indemnifying party prior to the date hereof and the
commencement of the Program; (ii)&nbsp;any obligation or liability arising from services provided under
this Agreement or in connection with the Program by the indemnifying party to the extent any such
liability or obligation directly results from the negligence or intentional misconduct of the
indemnifying party; or (iii)&nbsp;any obligation or liability resulting from a breach of any provision
of this Agreement by the indemnifying party. The obligations of the parties under this Section
survive the expiration or earlier termination of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.8 Any party that intends to enforce an indemnity obligation under this Agreement shall give
the indemnifying party written notice of any claim promptly after such claim is made, but the
failure to give such notice shall not constitute a waiver or release of the
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">indemnifying party and shall not affect the rights of the indemnified party to recover under
this indemnity, except to the extent the indemnified party is materially prejudiced thereby. In
connection with any claim giving rise to indemnity under this Section&nbsp;22 resulting from or arising
out of any claim or legal proceeding by a person who is not a party to this Agreement, the
indemnifying party, at its sole cost and expense, may, upon written notice to the indemnified
party, assume control of the defense of such claim or legal proceeding, to the extent that the
indemnifying party admits in writing its indemnification liability to the indemnified party with
respect to all material elements thereof. If the indemnifying party assumes the defense of any such
claim or legal proceeding, the obligations of the indemnifying party hereunder as to such claim or
legal proceeding shall be to take all steps necessary in the defense or settlement thereof and to
hold the indemnified party harmless from and against any losses, damages, expenses or liability
caused by or arising out of any settlement approved by the indemnifying party and the indemnified
party or any judgment in connection with such claim or legal proceeding. Each indemnified party
shall cooperate with the indemnifying party in the defense of any such action, the defense of which
is assumed by the indemnifying party. Except with the consent of the indemnified party, which
consent may be withheld at the indemnified party&#146;s sole discretion, the indemnifying party shall
not consent to any settlement or the entry of any judgment arising from any such claim or legal
proceeding which, in each case, does not include as an unconditional term thereof the delivery by
the claimant or the plaintiff to the indemnified party of a release from all liability in respect
thereof. If the indemnifying party does not assume the defense of any claim or litigation, any
indemnified party may defend against such claim or litigation in such manner as it may deem
appropriate, including but not limited to settling such claim or litigation, after giving notice of
the same to the indemnifying party, on such terms as the indemnified party may deem appropriate.
The indemnifying party will, promptly after any of the same is incurred, reimburse the indemnified
party in accordance with the provisions hereof for all damages, losses, liabilities, costs and
expenses incurred by the indemnified party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.&nbsp;<U>Miscellaneous</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.1 <U>Binding Effect</U>. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Hospital shall not assign this
Agreement or any of its rights hereunder or sublease the Equipment without the prior written
consent of GKF, which consent shall not be unreasonably withheld. An assignment or sublease shall
not relieve Hospital of any liability for performance of this Agreement during the remainder of the
Term. Any purported assignment or sublease made without GKF&#146;s prior written consent shall be null,
void and of no force or effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.2 <U>Agreement to Perform Necessary Acts</U>. Each party agrees to perform any further
acts and execute and deliver any further documents which may be reasonably necessary or otherwise
reasonably required to carry out the provisions of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.3 <U>Validity</U>. If for any reason any clause or provision of this Agreement, or the
application of any such clause or provision in a particular context or to a particular situation,
circumstance or person, should be held unenforceable, invalid or in violation of law by any court
or other tribunal of competent jurisdiction, then the application of such clause or provision in
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">contexts or to situations, circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining
clauses and provisions hereof shall nevertheless remain in full force and effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.4 <U>Attorney&#146;s Fees and Costs</U>. In the event of any action, arbitration or other
proceedings between or among the parties hereto with respect to this Agreement, the non-prevailing
party or parties to such action, arbitration or proceedings shall pay to the prevailing party or
parties all costs and expenses, including reasonable attorneys&#146; fees, incurred in the defense or
prosecution thereof by the prevailing party or parties. The party which is a &#147;prevailing party&#148;
shall be determined by the arbitrator(s) or judge(s) hearing the matter and shall be the party who
is entitled to recover his, her or its costs of suit, whether or not the matter proceeds to a final
judgment, decree or determination. A party not entitled to recover his, her or its costs of suit
shall not recover attorneys&#146; fees. If a prevailing party or parties shall recover a decision,
decree or judgment in any action, arbitration or proceeding, the costs and expenses awarded to such
party may be included in and as part of such decision, decree or judgment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.5 <U>Entire Agreement; Amendment</U>. This Agreement together with the Exhibits attached
hereto constitutes the full and complete agreement and understanding between the parties hereto
concerning the subject matter hereof and shall supersede any and all prior written and oral
agreements with regard to such subject matter. This Agreement may be modified or amended only by a
written instrument executed by all of the parties hereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.6 <U>Number and Gender</U>. Words in the singular shall include the plural, and words in
a particular gender shall include either or both additional genders, when the context in which such
words are used indicates that such is the intent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.7 <U>Effect of Headings</U>. The titles or headings of the various paragraphs hereof are
intended solely for convenience or reference and are not intended and shall not be deemed to
modify, explain or place any construction upon any of the provisions of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.8 <U>Counterparts</U>. This Agreement may be executed in one or more counterparts by the
parties hereto. All counterparts shall be construed together and shall constitute one agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.9 <U>Governing Law</U>. This Agreement shall be interpreted and enforced in accordance
with the internal laws, and not the law of conflicts, of the State of New York applicable to
agreements made and to be performed in that State. The venue shall be in New York Courts in
Westchester County without regard to conflict of law rules.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.10 <U>Exhibits</U>. All exhibits attached hereto and referred to in this Agreement are
hereby incorporated by reference herein as though fully set forth at length.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.11 <U>Ambiguities</U>. The general rule that ambiguities are to be construed against the
drafter shall not apply to this Agreement. In the event that any provision of this Agreement is
found to be ambiguous, each party shall have an opportunity to present evidence as to the actual
intent of the parties with respect to such ambiguous provision.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.12 <U>Representations</U>. Each of the parties hereto represents (a)&nbsp;that no
representation or promise not expressly contained in this Agreement has been made by any other
party hereto or by any of its agents, employees, representatives or attorneys; (b)&nbsp;that this
Agreement is not being entered into on the basis of, or in reliance on, any promise or
representation, expressed or implied, other than such as are set forth expressly in this Agreement;
(c)&nbsp;that it has been represented by counsel of its own choice in this matter or has affirmatively
elected not to be represented by counsel; (d)&nbsp;it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (e)&nbsp;it has full power and
authority to execute, deliver and perform this Agreement, and (f)&nbsp;the execution, delivery and
performance of this Agreement has been duly authorized by all necessary corporate or other similar
action.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.13 <U>Non-Waiver</U>. No failure or delay by a party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or to exercise any
right, power or remedy hereunder or under law or consequent upon a breach hereof or thereof shall
constitute a waiver of any such term, condition, covenant, agreement, right, power or remedy or of
any such breach or preclude such party from exercising any such right, power or remedy at any later
time or times.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.14 <U>Notices</U>. All notices, requests, demands or other communications required or
permitted to be given under this Agreement shall be in writing and shall be delivered to the party
to whom notice is to be given either (a)&nbsp;by personal delivery (in which case such notice shall be
deemed to have been duly given on the date of delivery), (b)&nbsp;by next business day air courier
service (e.g., Federal Express or other similar service) (in which case such notice shall be deemed
given on the business day following deposit with the air courier service), or (c)&nbsp;by United States
mail, first class, postage prepaid, registered or certified, return receipt requested (in which
case such notice shall be deemed given on the third (3rd) day following the date of mailing), and
properly addressed as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To GKF:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Craig K. Tagawa</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">GK Financing, LLC</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Two Embarcadero Hospital, Suite&nbsp;2370</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">San Francisco, CA 94111</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To Hospital:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Warren Geller</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Administration</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Northern Westchester Hospital Center</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">400 East Main Street</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Mt. Kisco, NY 10549</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">







<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A party to this Agreement may change his, her or its address for purposes of this Section by giving
written notice to the other parties in the manner specified herein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.15 <U>Special Provisions Respecting Medicare and Medicaid Patients</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.15.1 Hospital and GKF shall generate such records and make such disclosures as may be
required, from time to time, by the Medicare, Medicaid and other third party payment programs with
respect to this Agreement in order to meet all requirements for participation and payment
associated with such programs, including but not limited to the matters covered by Section
1861(v)(1)(I) of the Social Security Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.15.2 For the purpose of compliance with Section&nbsp;1861(v)(1)(I) of the Social Security Act,
as amended, and any regulations promulgated pursuant thereto, both parties agree to comply with the
following statutory requirements (a)&nbsp;Until the expiration of four (4)&nbsp;years after the termination
of this Agreement, both parties shall make available, upon written request to the Secretary of
Health and Human Services or, upon request, to the Comptroller General of the United States, or any
of their duly authorized representatives, the contract, and books, documents and records of such
party that are necessary to certify the nature and extent of such costs, and (b)&nbsp;if either party
carries out any of the duties of the contract through a subcontract with a value or cost of $10,000
or more over a twelve month period, with a related organization, such subcontract shall contain a
clause to the effect that until the expiration of four (4)&nbsp;years after the furnishing of such
services pursuant to such subcontract, the related organization shall make available, upon written
request to the Secretary, or upon request to the Comptroller General, or any of their duly
authorized representatives the subcontract, and books, documents and records of such organization
that are necessary to verify the nature and extent of such costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23.16 <U>Force Majeure</U>. Failure to perform by either party will be excused in the event
of any delay or inability to perform its duties under this Agreement directly or indirectly caused
by conditions beyond its reasonable control, including, without limitation, fires, floods,
earthquakes, snow, ice, disasters, acts of God, accidents, riots, wars, operation of law, strikes,
governmental action or regulations, shortages of labor, fuel, power, materials, manufacturer delays
or transportation problems. Notwithstanding the foregoing, all parties shall make good faith
efforts to perform under this Agreement in the event of any such circumstance. Further, once such
an event is resolved, the parties shall again perform their respective obligations under this
Agreement.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties hereto have caused this Agreement to be executed as of the
date first set forth above.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><B>&#147;GKF&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>GK Financing, LLC</B>,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">a California limited liability company</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Craig K. Tagawa</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Craig K. Tagawa,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><B>&#147;Hospital&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Northern Westchester Hospital Center,</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Joel Seligman</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joel Seligman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President &#038; CEO</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Exhibit&nbsp;8</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As rent for the lease of the Equipment to Hospital pursuant to this Agreement, Hospital shall
pay to GKF the sum of * for each Gamma Knife Procedure * and * for each Procedure * and * for each
Procedure * preformed by Hospital or its representatives or affiliates. The calculation for the
number of Procedures will run in twelve (12)&nbsp;month cycles starting with the First Procedure Date.
Each twelve-month period following the First Procedure Date will begin calculating Procedures from
zero (0).
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><B>&#147;GKF&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>GK Financing, LLC</B>,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">a California limited liability company</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Craig K. Tagawa</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Craig K. Tagawa,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><B>&#147;Hospital&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>Northern Westchester Hospital Center,</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Joel Seligman</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joel Seligman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President &#038; CEO</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>HIPAA BUSINESS ASSOCIATE ADDENDUM</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Addendum, dated as of March&nbsp;21, 2003 (&#147;Addendum&#148;), supplements and is made a part of the
Services Agreement (as defined below) by and between Northern Westchester Hospital Center (&#147;Covered
Entity&#148;) and GK Financing, LLC (&#147;Business Associate&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>Covered Entity and Business Associate are parties to the Service Agreement pursuant
to which Business Associate provides certain services to Covered Entity. In connection with
Business Associate&#146;s services, Business Associate creates or receives Protected Health Information
from or on behalf of Covered Entity, which information is subject to protection under the Federal
Health Insurance Portability and Accountability Act of 1996, Pub. L. No.&nbsp;104-191 (&#147;HIPAA&#148;) and
related regulations promulgated by the Secretary (&#147;HIPAA Regulations&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>in light of the foregoing and the requirements of the HIPAA Regulations, Business
Associate and Covered Entity agree to be bound by the following terms and conditions:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Definitions</B></U><B>.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>General</U>. Terms used, but not otherwise defined, in this Addendum shall have the
same meaning as those terms in the Privacy Rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Specific</U>.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Individual</U>. &#147;Individual&#148; shall have the same meaning as
the term &#147;individual&#148; in 45 CFR 164.501 and shall include a person who
qualifies as a personal representative in accordance with 45 CFR 164.502(g).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Privacy Rule</U>. &#147;Privacy Rule&#148; shall mean the Standards
for Privacy of Individually Identifiable Health Information at 45 CFR part 160
and part 164, subparts A and E.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Protected Health Information</U>. &#147;Protected Health
Information&#148; shall have the same meaning as the term &#147;protected health
information&#148; in 45 CFR 164.501, limited to the information created or received
by Business Associate from or on behalf of Covered Entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Required By Law</U>. &#147;Required by Law&#148;shall have the same
meaning as the term &#147;required by law&#148; in 45 CFR 164.501.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">e.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Secretary</U>. &#147;Secretary&#148; shall mean the Secretary of the
Department of Health and Human Services or his designee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">f.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Services Agreement</U>. &#147;Services Agreement&#148; shall mean
any present or future agreements, either written or oral, between Covered
Entity and Business Associate under which Business Associate provides services
to Covered Entity which involve the use or disclosure of Protected Health
Information.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Obligations and Activities of Business Associate</B></U><B>.</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Use and Disclosure</U>. Business Associate agrees to not use or disclose
Protected Health Information other than as permitted or required by the Services
Agreement or as Required By Law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Appropriate Safeguards</U>. Business Associate agrees to use appropriate
safeguards to prevent use or disclosure of the Protected Health Information other than
as provided for by the Services Agreement. Without limiting the generality of the
foregoing, Business Associate agrees to protect the integrity and confidentiality of
any Protected Health Information it electronically exchanges with Covered Entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Mitigation</U>. Business Associate agrees to mitigate, to the extent
practicable, any harmful effect that is known to Business Associate of a use or
disclosure of Protected Health Information by Business Associate in violation of the
requirements of this Addendum.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reporting</U>. Business Associate agrees to report to Covered Entity any
use or disclosure of the Protected Health Information not provided for by the Services
Agreement of which it becomes aware.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">e.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Agents</U>. Business Associate agrees to ensure that any agent, including a
subcontractor, to whom it provides Protected Health Information received from, or
created or received by Business Associate on behalf of Covered Entity agrees to the
same restrictions and conditions that apply through this Addendum to Business Associate
with respect to such information.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">f.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Access to Designated Record Sets</U>. To the extent that Business Associate
possesses or maintains Protected Health Information in a Designated Record Set,
Business Associate agrees to provide access, at the request of Covered Entity, and in
the time and manner designated by the Covered Entity, to Protected Health Information
in a Designated Record Set, to Covered Entity or, as directed by Covered Entity, to an
Individual in order to meet the requirements under 45 CFR 164.524.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">g.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Amendments to Designated Record Sets</U>. To the extent that Business
Associate possesses or maintains Protected Health Information in a Designated Record
Set, Business Associate agrees to make any amendment(s) to Protected Health Information
in a Designated Record Set that the Covered Entity directs or agrees to pursuant to 45
CFR 164.526 at the request of Covered Entity or an Individual, and in the time and
manner designated by the Covered Entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">h.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Access to Books and Records</U>. Business Associate agrees to make internal
practices, books, and records, including policies and procedures and Protected Health
Information, relating to the use and disclosure of Protected Health Information
received from, or created or received by Business Associate on behalf of, Covered
Entity available to the Covered Entity, or to the Secretary, in a time and manner
designated by the Covered Entity or designated by the Secretary, for purposes of the
Secretary determining Covered Entity&#146;s compliance with the Privacy Rule.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">i.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Accountings</U>. Business Associate agrees to document such disclosures of
Protected Health Information and information related to such disclosures as would be
required for Covered Entity to respond to a request by an Individual for an accounting
of disclosures of Protected Health Information in accordance with 45 CFR 164.528.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">j.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Requests for Accountings</U>. Business Associate agrees to provide to
Covered Entity or an Individual, in the time and manner designated by the Covered
Entity, information collected in accordance with Section&nbsp;2.i. of this Addendum, to
permit Covered Entity to respond to a request by an Individual for an accounting of
disclosures of Protected Health Information in accordance with 45 CFR 164.528.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Permitted Uses and Disclosures by Business Associate</B></U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Services Agreement</U>. Except as otherwise limited in this Addendum,
Business Associate may use or disclose Protected Health Information to perform
functions, activities, or services for, or on behalf of, Covered Entity as specified in
the Services Agreement, provided that such use or disclosure would not violate the
Privacy Rule if done by Covered Entity or the minimum necessary policies and procedures
of the Covered Entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Use for Administration of Business Associate</U>. Except as otherwise
limited in this Addendum, Business Associate may use Protected Health Information for
the proper management and administration of the Business Associate or to carry out the
legal responsibilities of the Business Associate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Disclosure for Administration of Business Associate</U>. Except as
otherwise limited in this Addendum, Business Associate may disclose Protected Health
Information for the proper management and administration of the Business Associate,
provided that disclosures are Required by Law, or Business Associate obtains reasonable
assurances from the person to whom the information is disclosed that it will remain
confidential and used or further disclosed only as Required by Law or for the purpose
for which it was disclosed to the person, and the person notifies the Business
Associate of any instances of which it is aware in which the confidentiality of the
information has been breached.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Permissible Requests by Covered Entity</B></U>. Except as set forth in Section&nbsp;3 of this
Addendum, Covered Entity shall not request Business Associate to use or disclose Protected
Health Information in any manner that would not be permissible under the Privacy Rule if done
by Covered Entity.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U><B>.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">a.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Regulatory References</U>. A reference in this Addendum to a section in the
Privacy Rule means the section as in effect or as amended.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">b.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Amendment</U>. The Parties agree to take such action as is necessary to
amend the Services Agreement from time to time as is necessary for Covered Entity to
comply with the requirements of the Privacy Rule and HIPAA.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">c.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Survival</U>. The respective rights and obligations of Business Associate
under Section&nbsp;5.c. of this Addendum shall survive the termination of the Services
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">d.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Interpretation</U>. Any ambiguity in this Addendum shall be resolved to
permit Covered Entity to comply with the Privacy Rule.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">e.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Indemnity</U>. Business Associate agrees to indemnify, defend and hold
harmless Covered Entity and its employees, directors/trustees, members, representatives
and agents (collectively, the &#147;Indemnitees&#148;) from and against any and all claims
(whether in law or in equity), obligations, actions, causes of action, suits, debts,
judgments, losses, fines, penalties, damages, expenses (including attorney&#146;s fees),
liabilities, lawsuits or costs incurred by the Indemnities which arise or result from a
breach of the terms and conditions of this Agreement by Business Associate or its
employees or agents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">f.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Miscellaneous</U>. The terms of this Addendum are hereby incorporated into
the Services Agreement. Except as otherwise set forth in Section&nbsp;6.d. of this
Addendum, in the event of a conflict between the terms of this Addendum and the terms
of the Services Agreement, the terms of this Addendum shall prevail. The terms of the
Agreement which are not modified by this Addendum shall remain in full force and effect
in accordance with the terms thereof. The Services Agreement together with this
Addendum constitutes the entire agreement between the parties with respect to the
subject matter contained herein.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties have executed this Addendum as of the date set forth above.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>NORTHERN WESTCHESTER</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>GK FINANCING, LLC</B></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>HOSPITAL CENTER</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Joel Seligman
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Craig K. Tagawa</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joel Seligman
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Craig K. Tagawa</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President &#038; CEO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CEO</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Confidential material has been omitted in accordance with rule 24b-2.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.47
<SEQUENCE>3
<FILENAME>f11686exv10w47.htm
<DESCRIPTION>EXHIBIT 10.47
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w47</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.47
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDENDUM FOUR<BR>
TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This ADDENDUM FOUR TO LEASE AGREEMENT FOR A GAMMA KNIFE UNIT (this &#147;Addendum&#148;) is effective as
of December&nbsp;1, 2002 between Hoag Memorial Hospital Presbyterian, a California Corporation
(&#147;Hospital&#148;), and GK Financing, LLC, a California limited liability company (&#147;GKF&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RECITALS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, on October&nbsp;31, 1996, GKF and Hospital executed a Lease Agreement for a Gamma Knife
Unit (the &#147;Original Lease&#148;);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the parties executed and Addendum Three to Lease Agreement For A Gamma Knife Unit
(&#147;Addendum Three&#148;) which was effective through November&nbsp;30, 2002;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, at the expiration of Addendum Three on November&nbsp;30, 2002, the parties intended to
extend the terms and provisions of Addendum Three for an additional three-year period from December
1, 2002 through November&nbsp;30, 2005, but inadvertently neglected to execute a document memorializing
the same; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS, the parties desire to enter into this Addendum in order to memorialize their
agreement on December&nbsp;1, 2002 to extend the terms and provisions of Addendum Three as described
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<B>Defined Terms</B>. Unless otherwise defined herein, the capitalized terms used herein shall
have the same meaning set forth in the Original Lease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<B>Addendum Extension</B>. All of the terms and provisions of Addendum Three are hereby extended
and shall remain in effect for an additional three (3)&nbsp;year period commencing from December&nbsp;1, 2002
through November&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<B>Full Force and Effect</B>. Except as otherwise amended hereby or provided herein, all of the
terms and provisions of the Original Lease shall remain in full force and effect.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>&#091;Signatures continued on next page&#093;</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#091;Signature page to Addendum Four To Lease Agreement For A Gamma Knife Unit dated effective as of
December&nbsp;1, 2002 between Hoag Memorial Hospital Presbyterian and GK Financing, LLC.&#093;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties have executed this Addendum effective as of the date first
written above.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;HOSPITAL&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Hoag Memorial Hospital Presbyterian</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">/s/ Robert Braithwaite</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Robert Braithwaite</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">VP, Operations</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;GKF&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">GK Financing, LLC</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BY:</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">/s/ Craig K. Tagawa</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Craig K. Tagawa</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Chief Executive Officer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.48
<SEQUENCE>4
<FILENAME>f11686exv10w48.htm
<DESCRIPTION>EXHIBIT 10.48
<TEXT>
<HTML>
<HEAD>
<TITLE>exv10w48</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit 10.48
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="f11686f1168600.gif" alt="( BANK OF AMERICA&#096; LOGO)">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">LOAN AGREEMENT
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This Agreement dated as of July&nbsp;1, 2004, is between Bank of America, N.A. (the &#147;Bank&#148;) and American
Shared Hospital Services (the &#147;Borrower&#148;).
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Line of Credit Amount.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the availability period described below, the Bank will provide a line of credit to the
Borrower. The amount of the line of credit (the &#147;Facility No.&nbsp;1 Commitment&#148;) is Three Million
Five Hundred Thousand and 00/100 Dollars ($3,500,000.00).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This is a revolving line of credit. During the availability period, the Borrower may repay
principal amounts and reborrow them.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees not to permit the principal balance outstanding to exceed the Facility
No.&nbsp;1 Commitment. If the Borrower exceeds this limit, the Borrower will immediately pay the
excess to the Bank upon the Bank&#146;s demand.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1.2 <U>Availability Period.</U> The line of credit is available between the date of this Agreement
and June&nbsp;1, 2005, or such earlier date as the availability may terminate as provided in this
Agreement (the &#147;Facility No.&nbsp;1 Expiration Date&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The availability period for this line of credit will be considered renewed if and only if the Bank
has sent to the Borrower a written notice of renewal effective as of the Facility No.&nbsp;1 Expiration
Date for the line of credit (the &#147;Renewal Notice&#148;). If this line of credit is renewed, it will
continue to be subject to all the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice. If this line of credit is renewed, the term &#147;Expiration Date&#148;
shall mean the date set forth in the Renewal Notice as the Expiration Date and the same process
for renewal will apply to any subsequent renewal of this line of credit. A renewal fee may be
charged at the Bank&#146;s option. The amount of the renewal fee will be specified in the Renewal
Notice.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Repayment Terms.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will pay interest on August&nbsp;1, 2004, and then on the same day of each month
thereafter until payment in full of any principal outstanding under this facility. Any
interest period for an optional interest rate (as described below) shall expire no later than
the Facility No.&nbsp;1 Expiration Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will repay in full any principal, interest or other charges outstanding under
this facility no later than the Facility No.&nbsp;1 Expiration Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Interest Rate.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The interest rate is a rate per year equal to the Bank&#146;s Prime Rate minus 1&nbsp;percentage point.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Prime Rate is the rate of interest publicly announced from time to time by the Bank as
its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the
Bank&#146;s costs and desired return, general economic conditions and other factors, and is used as
a reference point for pricing some loans. The Bank may price loans to its customers at, above,
or</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>below the Prime Rate. Any change In the Prime Rate shall take effect at the opening
of business on the day specified in the public announcement of a change in the Bank&#146;s Prime
Rate.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1.5 <U>Optional Interest Rates.</U> Instead of the Interest rate based on the rate stated in the
paragraph entitled &#147;Interest Rate&#148; above, the Borrower may elect the optional interest rates
listed below for this Facility No.&nbsp;1 during interest periods agreed to by the Bank and the
Borrower. The optional interest rates shall be subject to the terms and conditions described later
in this Agreement. Any principal amount bearing interest at an optional rate under this Agreement
is referred to as a &#147;Portion,&#148; The following optional interest rates are available:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The LIBOR Rate plus 1.5&nbsp;percentage points.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>OPTIONAL INTEREST RATES</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2.1 <U>Optional Rates.</U> Each optional interest rate is a rate per year. Interest will be paid
on August&nbsp;1, 2004, and then on the same day of each month thereafter until payment in full of any
principal outstanding under this facility. No Portion will be converted to a different interest
rate during the applicable interest period. Upon the occurrence of an event of default under this
Agreement, the Bank may terminate the availability of optional interest rates for interest periods
commencing after the default occurs. At the end of each interest period, the interest rate will
revert to the rate stated in the paragraph(s) entitled &#147;Interest Rate&#148; above, unless the Borrower
has designated another optional interest rate for the Portion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2.2 <U>LIBOR Rate.</U>The election of LIBOR Rates shall be subject to the following terms and
requirements:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The interest period during which the LIBOR Rate will be in effect will be one, two, and three
months. The first day of the interest period must be a day other than a Saturday or a Sunday
on which the Bank is open for business in New York and London and dealing in offshore dollars
(a &#147;LIBOR Banking Day&#148;). The last day of the interest period and the actual number of days
during the interest period will be determined by the Bank using the practices of the London
inter-bank market.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each LIBOR Rate portion will be for an amount not less than One Hundred Thousand and 00/100
Dollars ($100,000.00).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The &#147;LIBOR Rate&#148; means the interest rate determined by the following formula, rounded upward
to the nearest 1/100 of one percent. (All amounts in the calculation will be determined by
the Bank as of the first day of the interest period.)</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">LIBOR Rate =
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">London Inter-Bank Offered Rate</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><DIV style="border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV>
(1.00 - Reserve Percentage)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where,
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;London Inter-Bank Offered Rate&#148; means the average per annum interest rate at
which U.S. dollar deposits would be offered for the applicable interest period by
major banks in the London inter-bank market, as shown on the Telerate Page 3750 (or
any successor page) at approximately 11:00&nbsp;a.m. London time two (2)&nbsp;London Banking
Days before the commencement of the interest period. If such rate does not appear on
the Telerate Page 3750 (or any successor page), the rat(e) for that interest period
will be determined by such alternate method as reasonably selected by the Bank. A
&#147;London Banking Day&#148; is a day on which the Bank&#146;s London Banking Center is open for
business and dealing in offshore dollars.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Reserve Percentage&#148; means the total of the maximum reserve percentages for
determining the reserves to be maintained by member banks of the Federal Reserve
System for Eurocurrency Liabilities, as defined in Federal Reserve Board Regulation
D, rounded upward to the nearest 1/100 of one percent. The percentage will be
expressed as a decimal, and will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve percentages.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left:2%; text-indent:-2%">(d)&nbsp;The Borrower shall irrevocably request a LIBOR Rate Portion no later than 12:00 noon Pacific
time on the LIBOR Banking Day preceding the day on which the London Inter-Bank Offered Rate
will be set, as specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made at least three days
before the LIBOR Rate takes effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left:2%; text-indent:-2%">(e)&nbsp;The Bank will have no obligation to accept an election for a LIBOR Rate Portion if any of the
following described events has occurred and is continuing:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Dollar deposits in the principal amount, and for periods equal to the
interest period, of a LIBOR Rate Portion are not available in the London inter-bank
market; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The LIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or
otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a
prepayment fee as described below. A &#147;prepayment&#148; is a payment of an amount on a date earlier
than the scheduled payment date for such amount as required by this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The prepayment fee shall be in an amount sufficient to compensate the Bank for any loss, cost
or expense incurred by it as a result of the prepayment, including any loss of anticipated
profits and any loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Portion or from fees payable to terminate the deposits from which such
funds were obtained. The Borrower shall also pay any customary administrative fees charged by
the Bank in connection with the foregoing. For purposes of this paragraph, the Bank shall be
deemed to have funded each Portion by a matching deposit or other borrowing in the applicable
Interbank market, whether or not such Portion was in fact so funded.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">3. COLLATERAL
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">3.1 <U>Personal Property.</U> The personal property listed below now owned or owned in the future
by the parties listed below will secure the Borrower&#146;s obligations to the Bank under this
Agreement. The collateral is further defined in security agreement(s) executed by the owners of
the collateral. The Bank and the Borrower acknowledge and agree that the collateral does not
include accounts or subaccounts owned by the Borrower&#146;s related entities or affiliates.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following investment property owned by the Borrower (for the purposes of this
subparagraph referred to as &#147;Grantor&#148;):</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Account number P61-074330 maintained by Banc of America Investment Services, Inc. (&#147;Securities
Intermediary&#148;) in the name of Grantor, for the benefit of Grantor, or as a collateral account of
Bank of America, N.A. for Grantor, together with any linked or related accounts or subaccounts
held by any entity as clearing broker for Securities Intermediary, in the name of Grantor, for the
benefit of Grantor or as a collateral account of Bank of America, N.A. for Grantor and all
successor and replacement accounts, regardless of the numbers of such accounts or the offices at
which such accounts are maintained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Regulation&nbsp;U of the Board of Governors of the Federal Reserve System places certain restrictions
on loans secured by margin stock (as defined in the Regulation). The Bank and the Borrower shall
comply
</DIV>




<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with Regulation&nbsp;U. If any of the collateral is margin stock, the Borrower shall provide to
the Bank a Form U-1 Purpose Statement.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>FEES AND EXPENSES</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Loan Fee.</U> The Borrower agrees to pay a loan fee in the amount of Three Thousand and
00/100 Dollars ($3,000.00). This fee is due on the date of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Late Fee.</U> To the extent permitted by law, the Borrower agrees to pay a late fee in an
amount not to exceed four percent (4%) of any payment that is more than fifteen (15)&nbsp;days
late. The imposition and payment of a late fee shall not constitute a waiver of the Bank&#146;s
rights with respect to the default.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4.2 <U>Expenses.</U> &nbsp;&nbsp;&nbsp;The Borrower agrees to immediately repay the Bank for expenses that include,
but are not limited to, filing, recording and search fees, appraisal fees, title report fees, and
documentation fees.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reimbursement Costs.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees to reimburse the Bank for any expenses it incurs in the preparation of
this Agreement and any agreement or instrument required by this Agreement. Expenses include,
but are not limited to, reasonable attorneys&#146; fees, including any allocated costs of the
Bank&#146;s in-house counsel to the extent permitted by applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees to reimburse the Bank for the cost of periodic appraisals of the
collateral, at such intervals as the Bank may reasonably require. The actions described in
this paragraph may be performed by employees of the Bank or by independent appraisers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>DISBURSEMENTS, PAYMENTS AND COSTS</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Disbursements and Payments.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each payment by the Borrower will be made in U.S. Dollars and immediately available funds by
direct debit to a deposit account as specified below or, for payments not required to be made
by direct debit, by mail to the address shown on the Borrower&#146;s statement or at one of the
Bank&#146;s banking centers in the United States.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each disbursement by the Bank and each payment by the Borrower will be evidenced by records
kept by the Bank. In addition, the Bank may, at its discretion, require the Borrower to sign
one or more promissory notes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Telephone and Telefax Authorization.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank may honor telephone or telefax instructions for advances or repayments or for the
designation of optional interest rates given, or purported to be given, by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower, or any other
individual designated by any one of such authorized signers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Advances will be deposited in and repayments will be withdrawn from account number 14993-14357 owned by the Borrower or such other of the Borrower&#146;s accounts with the Bank as
designated in writing by the Borrower.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will indemnify and hold the Bank harmless from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions the Bank reasonably</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>believes are made by any individual authorized by the Borrower to give such
instructions. This paragraph will survive this Agreement&#146;s termination, and will benefit
the Bank and its officers, employees, and agents.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Direct Debit (Pre-Billing).</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower agrees that the Bank will debit deposit account number 14993-14357 owned by the
Borrower or such other of the Borrower&#146;s accounts with the Bank as designated in writing by
the Borrower (the &#147;Designated Account&#148;) on the date each payment of principal and interest and
any fees from the Borrower becomes due (the &#147;Due Date&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to each Due Date, the Bank will mail to the Borrower a statement of the amounts that
will be due on that Due Date (the &#147;Billed Amount&#148;). The bill will be mailed a specified
number of calendar days prior to the Due Date, which number of days will be mutually agreed
from time to time by the Bank and the Borrower. The calculations in the bill will be made on
the assumption that no new extensions of credit or payments will be made between the date of
the billing statement and the Due Date, and that there will be no changes in the applicable
interest rate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Bank will debit the Designated Account for the Billed Amount, regardless of the actual
amount due on that date (the &#147;Accrued Amount&#148;). If the Billed Amount debited to the Designated
Account differs from the Accrued Amount, the discrepancy will be treated as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Billed Amount is less than the Accrued Amount, the Billed Amount for
the following Due Date will be increased by the amount of the discrepancy. The
Borrower will not be in default by reason of any such discrepancy.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Billed Amount is more than the Accrued Amount, the Billed Amount for
the following Due Date will be decreased by the amount of the discrepancy.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Regardless of any such discrepancy, interest will continue to accrue based on the actual
amount of principal outstanding without compounding. The Bank will not pay the Borrower
interest on any overpayment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower will maintain sufficient funds in the Designated Account to cover each debit.
If there are insufficient funds in the Designated Account on the date the Bank enters any
debit authorized by this Agreement, the Bank may reverse the debit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Borrower may terminate this direct debit arrangement at any time by sending written
notice to the Bank at the address specified at the end of this Agreement. If the Borrower
terminates this arrangement, then the principal amount outstanding under this Agreement will
at the option of the Bank bear interest at a rate per annum which is 0.5&nbsp;percentage point(s)
higher than the rate of interest otherwise provided under this Agreement.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.4 <U>Banking Days.</U> Unless otherwise provided in this Agreement, a banking day is a day other
than a Saturday, Sunday or other day on which commercial banks are authorized to close, or are in
fact closed, in the state where the Bank&#146;s lending office is located, and, if such day relates to
amounts bearing interest at an offshore rate (if any), means any such day on which dealings in
dollar deposits are conducted among banks in the offshore dollar interbank market. All payments and
disbursements which would be due on a day which is not a banking day will be due on the next
banking day. Ail payments received on a day which is not a banking day will be applied to the
credit on the next banking day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.5 <U>Interest Calculation.</U> Except as otherwise stated in this Agreement, all interest and fees, if
any, will be computed on the basis of a 360-day year and the actual number of days elapsed. This
results in more Interest or a higher fee than if a 365-day year is used. Installments of principal
which are not paid when due under this Agreement shall continue to bear interest until paid.
</DIV>




<P align="center" style="font-size: 10pt">5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5.6 <U>Default Rate.</U> Upon the occurrence of any default under this Agreement, all
amounts outstanding under this Agreement, Including any interest, fees, or costs which are not paid
when due, will at the option of the Bank bear interest at a rate which is 6.0&nbsp;percentage point(s)
higher than the rate of interest otherwise provided under this Agreement. This may result in
compounding of interest. This will not constitute a waiver of any default.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>CONDITIONS</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Before the Bank is required to extend any credit to the Borrower under this Agreement, it must
receive any documents and other items it may reasonably require, in form and content acceptable to
the Bank, including any items specifically listed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.1 <U>Authorizations.</U> If the Borrower or any guarantor is anything other than a natural
person, evidence that the execution, delivery and performance by the Borrower and/or such guarantor
of this Agreement and any instrument or agreement required under this Agreement have been duly
authorized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.2 <U>Governing Documents.</U> If required by the Bank, a copy of the Borrower&#146;s
organizational documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.3 <U>Security Agreements.</U> Signed original security agreements covering the personal
property collateral which the Bank requires.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.4 <U>Perfection and Evidence of Priority.</U> Evidence that the security interests and liens in
favor of the Bank are valid, enforceable, property perfected in a manner acceptable to the Bank and
prior to all others&#146; rights and interests, except those the Bank consents to in writing. All title
documents for motor vehicles which are part of the collateral must show the Bank&#146;s interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.5 <U>Good Standing.</U> Certificates of good standing for the Borrower from its state of
formation and from any other state in which the Borrower is required to qualify to conduct its
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.6 <U>Insurance.</U> Evidence of insurance coverage, as required in the &#147;Covenants&#148; section of
this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">6.7 <U>Condition to Each Extension of Credit.</U> Before each extension of credit, including the
first, a monthly brokerage statement from Bank of America investment Services, Inc.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">7. REPRESENTATIONS AND WARRANTIES
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When the Borrower signs this Agreement, and until the Bank is repaid in full, the Borrower makes
the following representations and warranties. Each request for an extension of credit constitutes
a renewal of these representations and warranties as of the date of the request:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.1 <U>Formation.</U> If the Borrower is anything other than a natural person, it is duly formed
and existing under the laws of the state or other jurisdiction where organized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.2 <U>Authorization.</U> This Agreement, and any instrument or agreement required hereunder, are
within the Borrower&#146;s powers, have been duly authorized, and do not conflict with any of its
organizational papers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.3 <U>Enforceable Agreement.</U> This Agreement is a legal, valid and binding agreement of
the Borrower, enforceable against the Borrower in accordance with its terms, and any instrument or
agreement required hereunder, when executed and delivered, will be similarly legal, valid, binding
and enforceable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.4 <U>Good Standing.</U> In each state in which the Borrower does business, it is properly
licensed, in good standing, and, where required, in compliance with fictitious name statutes.
</DIV>




<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.5 <U>No Conflicts.</U> This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.6 <U>Financial Information.</U> All financial and other information that has been or will be
supplied to the Bank is sufficiently complete to give the Bank accurate knowledge of the Borrower&#146;s
(and any guarantor&#146;s) financial condition, including all material contingent liabilities. Since the
date of the most recent financial statement provided to the Bank, there has been no material
adverse change in the business condition (financial or otherwise), operations, properties or
prospects of the Borrower (or any guarantor). If the Borrower is comprised of the trustees of a
trust, the foregoing representations shall also pertain to the trustor(s) of the trust,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.7 <U>Lawsuits.</U> There is no lawsuit, tax claim or other dispute pending or threatened
against the Borrower which, if lost, would impair the Borrower&#146;s financial condition or ability to
repay the loan, except as have been disclosed in writing to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.8 <U>Collateral.</U> All collateral required in this Agreement is owned by the grantor of the
security interest free of any title defects or any liens or interests of others, except those which
have been approved by the Bank in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.9 <U>Permits, Franchises.</U> The Borrower possesses all permits, memberships, franchises,
contracts and licenses required and all trademark rights, trade name rights, patent rights,
copyrights and fictitious name rights necessary to enable it to conduct the business in which it is
now engaged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.10 <U>Other Obligations.</U> The Borrower is not in default on any obligation for borrowed
money, any purchase money obligation or any other material lease, commitment, contract, instrument
or obligation, except as have been disclosed in writing to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.11 <U>Tax Matters.</U> The Borrower has no knowledge of any pending assessments or adjustments
of its income tax for any year and all taxes due have been paid, except as have been disclosed in
writing to the Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.12 <U>No Event of Default.</U> There is no event which is, or with notice or lapse of time or both would
be, a default under this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">7.13 <U>Insurance.</U> The Borrower has obtained, and maintained in effect, the insurance
coverage required in the &#147;Covenants&#148; section of this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8. COVENANTS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Borrower agrees, so long as credit is available under this Agreement and until the Bank is
repaid in full:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8.1 <U>Use of Proceeds.</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(a)&nbsp;To use the proceeds of Facility No.&nbsp;1 only for working capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.2 <U>Financial information.</U> To provide the following financial information and statements in
form and content acceptable to the Bank, and such additional information as requested by the Bank
from time to time:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Within one hundred twenty (120)&nbsp;days of the fiscal year end, the annual financial statements
of the Borrower. These financial statements must be audited (with an opinion satisfactory to
the Bank) by a Certified Public Accountant acceptable to the Bank. The statements shall be
prepared on a consolidated basis.</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Within ninety (90)&nbsp;days of the period&#146;s end, semi-annual financial statements of
the Borrower. These financial statements may be company-prepared. The statements shall be
prepared on a consolidated basis.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.3 <U>Profitability.</U> To maintain on a consolidated basis a positive net income before taxes
and extraordinary items for each annual accounting period.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Notices to Bank.</U> To promptly notify the Bank in writing of:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any lawsuit over One Million and 00/100 Dollars ($1,000,000.00) against the Borrower (or any
guarantor or, if the Borrower is comprised of the trustees of a trust, any trustor).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any substantial dispute between any governmental authority and the Borrower (or any guarantor
or, if the Borrower is comprised of the trustees of a trust, any trustor).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any event of default under this Agreement, or any event which, with notice or lapse of time
or both, would constitute an event of default.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any material adverse change in the Borrower&#146;s (or any guarantor&#146;s, or, if the Borrower is
comprised of the trustees of a trust, any trustor&#146;s) business condition (financial or
otherwise), operations, properties or prospects, or ability to repay the credit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any change in the Borrower&#146;s name, legal structure, place of business, or chief executive
office if the Borrower has more than one place of business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any actual contingent liabilities of the Borrower (or any guarantor or, if the Borrower is
comprised of the trustees of a trust, any trustor), and any such contingent liabilities which
are reasonably foreseeable, where such liabilities are in excess of One Million
and 00/100 Dollars ($1,000,000.00) in the aggregate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Insurance.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>General Business Insurance.</U> To maintain insurance as is usual for the business it is
in.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.6 <U>Compliance with Laws.</U> To comply with the laws (including any fictitious or trade name
statute), regulations, and orders of any government body with authority over the Borrower&#146;s
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.7 <U>ERISA Plans.</U> Promptly during each year, to pay and cause any subsidiaries to pay
contributions adequate to meet at least the minimum funding standards under ERISA with respect to
each and every Plan; file each annual report required to be filed pursuant to ERISA in connection
with each Plan for each year; and notify the Bank within ten (10)&nbsp;days of the occurrence of any
Reportable Event that might constitute grounds for termination of any capital Plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer any Plan. &#147;ERISA&#148; means the Employee Retirement Income Security
Act of 1974, as amended from time to time. Capitalized terms in this paragraph shall have the
meanings defined within ERISA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.8 <U>Books and Records.</U> To maintain adequate books and records.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.9 <U>Perfection of Liens.</U> To help the Bank perfect and protect its security interests and
liens, and reimburse it for related costs it incurs to protect its security interests and liens.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">8.10 <U>Cooperation.</U> To take any action reasonably requested by the Bank to carry out the
intent of this Agreement.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>DEFAULT AND REMEDIES</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If any of the following events of default occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit available to the
Borrower, and require the Borrower to repay its entire debt immediately and without prior notice.
If an event which, with notice or the passage of time, will constitute an event of default has
occurred and is continuing, the Bank has no obligation to make advances or extend additional credit
under this Agreement. In addition, if any event of default occurs, the Bank shall have all rights,
powers and remedies available under any instruments and agreements required by or executed in
connection with this Agreement, as well as all rights and remedies available at law or in equity.
If an event of default occurs under the paragraph entitled &#147;Bankruptcy,&#148; below, with respect to the
Borrower, then the entire debt outstanding under this Agreement will automatically be due
immediately.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.1 <U>Failure to Pay.</U> The Borrower fails to make a payment under this Agreement when due.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.2 <U>Other Bank Agreements.</U> Any default occurs under any other agreement the Borrower (or
any Obligor) or any of the Borrower&#146;s related entities or affiliates has with the Bank or any
affiliate of the Bank. For purposes of this Agreement, &#147;Obligor&#148; shall mean any guarantor, any
party pledging collateral to the Bank, or, if the Borrower is comprised of the trustees of a trust,
any trustor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.3 <U>Cross-default.</U> Any default occurs under any agreement in connection with any credit
the Borrower (or any Obligor) has obtained from anyone else or which the Borrower (or any Obligor)
has guaranteed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.4 <U>False Information.</U> The Borrower or any Obligor has given the Bank false or
misleading information or representations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.5 <U>Bankruptcy.</U> The Borrower, any Obligor, or any general partner of the Borrower or of
any Obligor files a bankruptcy petition, a bankruptcy petition is filed against any of the
foregoing parties, or the Borrower, any Obligor, or any general partner of the Borrower or of any
Obligor makes a general assignment for the benefit of creditors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.6 <U>Receivers.</U> A receiver or similar official is appointed for a substantial portion of
the Borrower&#146;s or any Obligor&#146;s business, or the business is terminated, or, if any Obligor is
anything other than a natural person, such Obligor is liquidated or dissolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.7 <U>Lien Priority.</U> The Bank fails to have an enforceable first lien (except for any prior
liens to which the Bank has consented in writing) on or security interest in any property given as
security for this Agreement (or any guaranty).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.8 <U>Judgments.</U> Any judgments or arbitration awards are entered against the Borrower or any
Obligor, or the Borrower or any Obligor enters into any settlement agreements with respect to any
litigation or arbitration, in an aggregate amount of One Million and 00/100 Dollars
($1,000,000.00) or more in excess of any insurance coverage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.9 <U>Material Adverse Change.</U> A material adverse change occurs, or is reasonably likely to
occur, in the Borrower&#146;s (or any Obligor&#146;s) business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.10 <U>Government Action.</U> Any government authority takes action that the Bank believes
materially adversely affects the Borrower&#146;s or any Obligor&#146;s financial condition or ability to
repay.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.11 <U>Default under Related Documents.</U> Any default occurs under any guaranty,
subordination agreement, security agreement, deed of trust, mortgage, or other document required by
or delivered in connection with this Agreement or any such document is no longer in effect, or any
guarantor purports to revoke or disavow the guaranty.
</DIV>




<P align="center" style="font-size: 10pt">9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.12 <U>ERISA Plans.</U> Any one or more of the following events occurs with respect to a
Plan of the Borrower subject to Title IV of ERISA, provided such event or events could reasonably
be expected, in the judgment of the Bank, to subject the Borrower to any tax, penalty or liability
(or any combination of the foregoing) which, in the aggregate, could have a material adverse effect
on the financial condition of the Borrower:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reportable event shall occur under Section 4043(c) of ERISA with respect to a Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any Plan termination (or commencement of proceedings to terminate a Plan) or the full or
partial withdrawal from a Plan by the Borrower or any ERISA Affiliate.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">9.13 <U>Other Breach Under Agreement.</U> A default occurs under any other term or condition of
this Agreement not specifically referred to in this Article. This includes any failure or
anticipated failure by the Borrower (or any other party named in the Covenants section) to comply
with the financial covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower or the Bank.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10. ENFORCING THIS AGREEMENT; MISCELLANEOUS
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.1 <U>GAAP.</U> Except as otherwise stated in this Agreement, all financial information
provided to the Bank and all financial covenants will be made under generally accepted accounting
principles, consistently applied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.2 <U>California Law.</U> This Agreement is governed by California state law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.3 <U>Successors and Assigns.</U> This Agreement is binding on the Borrower&#146;s and the Bank&#146;s
successors and assignees. The Borrower agrees that it may not assign this Agreement without the
Bank&#146;s prior consent. The Bank may sell participations in or assign this loan, and may exchange
financial information about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right of set-off against
the Borrower.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10.4 <U>Arbitration and Waiver of Jury Trial</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This paragraph concerns the resolution of any controversies or claims between the parties,
whether arising in contract, tort or by statute, including but not limited to controversies or
claims that arise out of or relate to: (i)&nbsp;this agreement (including any renewals, extensions
or modifications); or (ii)&nbsp;any document related to this agreement (collectively a &#147;Claim&#148;).
For the purposes of this arbitration provision only, the term &#147;parties&#148; shall include any
parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management
or administration of any obligation described or evidenced by this agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the request of any party to this agreement, any Claim shall be resolved by binding
arbitration in accordance with the Federal Arbitration Act (Title 9, U. S. Code) (the &#147;Act&#148;).
The Act will apply even though this agreement provides that it is governed by the law of a
specified state.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Arbitration proceedings will be determined in accordance with the Act, the applicable rules
and procedures for the arbitration of disputes of JAMS or any successor thereof (&#147;JAMS&#148;), and
the terms of this paragraph. In the event of any inconsistency, the terms of this paragraph
shall control.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitration shall be administered by JAMS and conducted, unless otherwise required by
law, in any U. S. state where real or tangible personal property collateral for this credit is
located or if there is no such collateral, in the state specified in the governing law section
of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed
Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided
by three arbitrators. All arbitration hearings shall commence within ninety (90)&nbsp;days of the
demand for arbitration and</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>close within ninety (90)&nbsp;days of commencement and the award of the arbitrator (s) shall
be issued within thirty (30)&nbsp;days of the close of the hearing. However, the arbitrator(s),
upon a showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60)&nbsp;days. The arbitrator(s) shall provide a concise written statement of
reasons for the award. The arbitration award may be submitted to any court having
jurisdiction to be confirmed and enforced.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitrator(s) will have the authority to decide whether any Claim is barred by the
statute of limitations and, if so, to dismiss the arbitration on that basis. For purposes of
the application of the statute of limitations, the service on JAMS under applicable JAMS
rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable shall be determined by
the arbitrator(s). The arbitrator(s) shall have the power to award legal fees pursuant to the
terms of this agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This paragraph does not limit the right of any party to: (i)&nbsp;exercise self-help remedies,
such as but not limited to, setoff; (ii)&nbsp;initiate judicial or non-judicial foreclosure against
any real or personal property collateral; (iii)&nbsp;exercise any judicial or power of sale rights,
or (iv)&nbsp;act in a court of law to obtain an interim remedy, such as but not limited to,
injunctive relief, writ of possession or appointment of a receiver, or additional or
supplementary remedies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The procedure described above will not apply If the Claim, at the time of the proposed
submission to arbitration, arises from or relates to an obligation to the Bank secured by real
property. In this case, all of the parties to this agreement must consent to submission of the
Claim to arbitration. If both parties do not consent to arbitration, the Claim will be
resolved as follows: The parties will designate a referee (or a panel of referees) selected
under the auspices of JAMS in the same manner as arbitrators are selected in JAMS administered
proceedings. The designated referee(s) will be appointed by a court as provided in California
Code of Civil Procedure Section&nbsp;638 and the following related sections. The referee (or
presiding referee of the panel) will be an active attorney or a retired judge. The award that
results from the decision of the referee(s) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of California Code of Civil Procedure
Sections&nbsp;644 and 645.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The filing of a court action is not intended to constitute a waiver of the right of any
party, including the suing party, thereafter to require submittal of the Claim to
arbitration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right
they may have to a trial by jury in respect of any Claim. Furthermore, without intending in
any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the
parties irrevocably and voluntarily waive any right they may have to a trial by jury in
respect of such Claim. This provision is a material inducement for the parties entering into
this agreement.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.5 <U>Severability; Waivers.</U> If any part of this Agreement is not enforceable, the rest of
the Agreement may be enforced. The Bank retains all rights, even if it makes a loan after default.
If the Bank waives a default, it may enforce a later default. Any consent or waiver under this
Agreement must be in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.6 <U>Attorneys&#146; Fees.</U> The Borrower shall reimburse the Bank for any reasonable costs and
attorneys&#146; fees incurred by the Bank in connection with the enforcement or preservation of any
rights or remedies under this Agreement and any other documents executed in connection with this
Agreement, and in connection with any amendment, waiver, &#147;workout&#148; or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing party is entitled to
recover costs and reasonable attorneys&#146; fees incurred in connection with the lawsuit or arbitration
proceeding, as determined by the court or arbitrator. In the event that any case is commenced by
or against the Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar or
successor statute, the Bank is entitled to recover costs and reasonable attorneys&#146; fees incurred by
the Bank related to the preservation, protection, or enforcement of any rights of the Bank in such
a case. As used in this paragraph, &#147;attorneys&#146; fees&#148; includes the allocated costs of the Bank&#146;s
in-house counsel.
</DIV>


<P align="center" style="font-size: 10pt">11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.7 <U>One Agreement</U>. This Agreement and any related security or other agreements
required by this Agreement, collectively:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>represent the sum of the understandings and agreements between the Bank and the Borrower
concerning this credit;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>replace any prior oral or written agreements between the Bank and the Borrower concerning
this credit; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>are intended by the Bank and the Borrower as the final, complete and exclusive statement of
the terms agreed to by them.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of any conflict between this Agreement and any other agreements required by this
Agreement, this Agreement will prevail. Any reference in any related document to a &#147;promissory
note&#148; or a &#147;note&#148; executed by the Borrower and dated as of the date of this Agreement shall be
deemed to refer to this Agreement, as now in effect or as hereafter amended, renewed, or restated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.8 <U>Indemnification</U>. The Borrower will indemnify and hold the Bank harmless from any loss,
liability, damages, judgments, and costs of any kind relating to or arising directly or indirectly
out of (a)&nbsp;this Agreement or any document required hereunder, (b)&nbsp;any credit extended or committed
by the Bank to the Borrower hereunder, and (c)&nbsp;any litigation or proceeding related to or arising
out of this Agreement, any such document, or any such credit. This indemnity includes but is not
limited to attorneys&#146; fees (including the allocated cost of in-house counsel). This indemnity
extends to the Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys, and assigns. This indemnity will survive repayment of the Borrower&#146;s
obligations to the Bank. All sums due to the Bank hereunder shall be obligations of the Borrower,
due and payable immediately without demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.9 <U>Notices</U>. Unless otherwise provided in this Agreement or in another agreement between
the Bank and the Borrower, all notices required under this Agreement shall be personally delivered
or sent by first class mail, postage prepaid, or by overnight courier, to the addresses on the
signature page of this Agreement, or sent by facsimile to the fax numbers listed on the signature
page, or to such other addresses as the Bank and the Borrower may specify from time to time in
writing. Notices and other communications shall be effective (i)&nbsp;if mailed, upon the earlier of
receipt or five (5)&nbsp;days after deposit in the U.S. mail, first class, postage prepaid, (ii)&nbsp;if
telecopied, when transmitted, or (iii)&nbsp;if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.10 <U>Headings</U>. Article and paragraph headings are for reference only and shall not
affect the interpretation or meaning of any provisions of this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">10.11 <U>Counterparts</U>. This Agreement may be executed in as many counterparts as necessary
or convenient, and by the different parties on separate counterparts each of which, when so
executed, shall be deemed an original but all such counterparts shall constitute but one and the
same agreement.
</DIV>




<P align="center" style="font-size: 10pt">12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt">The Agreement is executed as of the date stated at the top of the first page.
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Borrower:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bank:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">American Shared Hospital Services
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bank of America, N.A.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: /s/ Ernest A. Bates
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/ Vicki Hankins</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ernest A. Bates, M.D., Chairman of the Board
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vicki Hankins, Senior Vice President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Address where notices to the Borrower are to be sent:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address where notices to the Bank are to be sent:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px; border-bottom: 1px solid #000000">Four Embarcadero Center, Suite&nbsp;3700
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">San Francisco Middle Market Group</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">San Francisco, CA 94117-4107<br>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">315 Montgomery Street<br></TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Telephone:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">San Francisco, CA</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Facsimile:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile: (415)&nbsp;953-2247</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="f11686f1168600.gif" alt="(BANK OF AMERICA LOGO)">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMENDMENT NO. 1 TO COMMERCIAL PLEDGE AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment No.&nbsp;1 (the &#147;Amendment&#148;) dated as of June&nbsp;23, 2005 is between Bank of
America, N.A. (&#147;Lender&#148;) and American Shared Hospital Services (&#147;Grantor&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>RECITALS</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Grantor has executed various documents concerning credit extended by the Lender, including,
without limitation, the following document:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. A certain Commercial Pledge Agreement dated as of February&nbsp;25, 2005 (together with
any previous amendments, the &#147;Pledge Agreement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Lender and Grantor desire to amend the Pledge Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>AGREEMENT</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definitions.</U> Capitalized terms used but not defined in this Amendment shall have
the meaning given to them in the Pledge Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Amendments to Pledge Agreement.</U> The Pledge Agreement is hereby amended as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the paragraph immediately following the CHART under subparagraph E of the
paragraph entitled &#147;<B>Value of Collateral,</B>&#148; the Original Advance and Margin Call percentages,
respectively, for the Account are hereby amended to read in full as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 9%">Account No. ending in 0796144 with Bank of America N.A.
and any successor account thereto&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;80%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 85%
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Representations and Warranties.</U> When Grantor signs this Amendment, Grantor
represents and warrants to Lender that: (a)&nbsp;there is no event which is, or with notice or lapse of
time or both would be, a default under the Pledge Agreement except those events, if any, that have
been disclosed in writing to Lender or waived in writing by Lender, (b)&nbsp;the representations and
warranties in the Pledge Agreement are true as of the date of this Amendment as if made on the date
of this Amendment, (c)&nbsp;this Amendment does not conflict with any law, agreement, or obligation by
which Grantor is bound, and (d)&nbsp;this Amendment is within Grantor&#146;s powers, has been duly
authorized, and does not conflict with any of Grantor&#146;s organizational papers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Effect of Amendment.</U> Except as provided in this Amendment, all of the terms and
conditions of the Pledge Agreement shall remain in full force and effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Counterparts.</U> This Amendment may be executed in counterparts, each of which when so
executed shall be deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>FINAL AGREEMENT.</U> BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT:
(A)&nbsp;THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF, (B)&nbsp;THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF
TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM
SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY, (C)
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D)&nbsp;THIS DOCUMENT MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
UNDERSTANDINGS OF THE PARTIES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment is executed as of the data stated at the beginning of this Amendment.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Grantor:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lender:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">American Shared Hospital Services
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bank of America, N.A.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: /s/ Ernest A. Bates
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/&nbsp; (ILLEGIBLE)</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ernest A. Bates, M.D., Chairman
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Authorized Signer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="f11686f1168600.gif" alt="(BANK OF AMERICA LOGO)">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">AMENDMENT NO. 2 TO LOAN AGREEMENT
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment No.&nbsp;2 (the &#147;Amendment&#148;) dated as of June&nbsp;23, 2005 is
between Bank of America, N.A. (the &#147;Bank&#148;) and American Shared Hospital Services (the &#147;Borrower&#148;).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>RECITALS</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;The Bank and the Borrower entered into a certain Loan Agreement dated as of July&nbsp;1, 2004
(together with any previous amendments, the &#147;Agreement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;The Bank and the Borrower desire to amend the Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>AGREEMENT</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Definitions.</U> Capitalized terms used but not defined in this Amendment shall have
the meaning given to them in the Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <U>Amendments.</U> The Agreement is hereby amended as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 In paragraph number 1.1 (a), the amount &#147;Three Million Five Hundred Thousand and
00/100 Dollars ($3,500,000.00)&#148; is changed to &#147;Six Million Dollars ($6,000,000).&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 In paragraph number 1.2, entitled &#147;Availability Period,&#148; the date June&nbsp;1, 2005 is
changed to June&nbsp;1, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 The following paragraph number 8.4(g) is hereby added:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any event wherein a government authority,
including but not limited to Medicare or the Food and Drug
Administration, withdraws or fails to renew any material license, permits
or certification of the Borrower or its equipment.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 The following paragraph numbers 8.11 thru 8.13 are hereby added:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.11</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Maintenance of Assets</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to sell, assign, lease, transfer or otherwise
dispose of any part of the Borrower&#146;s business or the Borrower&#146;s assets
except in the ordinary course of the Borrower&#146;s business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to sell, assign, lease, transfer or otherwise
dispose of any assets for less than fair  market value, or enter into
any agreement to do so.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not to enter into any sale and leaseback agreement covering any of its
fixed assets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To maintain and preserve all rights, privileges, and franchises the
Borrower now has.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To make any repairs, renewals, or replacements to
keep the Borrower&#146;s properties in good working condition.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.12</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Additional Negative Covenants</U>. Not to, without the Bank&#146;s written
consent:<BR></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Liquidate or dissolve the Borrower&#146;s business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Voluntarily suspend the Borrower&#146;s business for more than seven (7)&nbsp;days in
any 365-day period.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">8.13 <U>Audits.</U> To allow the Bank and its agents to inspect the Borrower&#146;s properties
and examine, audit, and make copies of books and records at any reasonable time. If any of
the Borrower&#146;s properties, books or records are in the possession of a third party, the
Borrower authorizes that third party to permit the Bank or its agents to have access to
perform inspections or audits and to respond to the Bank&#146;s requests for information
concerning such properties, books and records.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Paragraph number 10.4 is hereby amended to read in its entirety as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Arbitration and Waiver of Jury Trial.</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This paragraph concerns the resolution of any controversies or claims between
the parties, whether arising in contract, tort or by statute, including but not
limited to controversies or claims that arise out of or relate to: (i)&nbsp;this agreement
(including any renewals, extensions or modifications); or (ii)&nbsp;any document related to
this agreement (collectively a &#147;Claim&#148;). For the purposes of this arbitration
provision only, the term &#147;parties&#148; shall include any parent corporation, subsidiary or
affiliate of the Bank involved in the servicing, management or administration of any
obligation described or evidenced by this agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the request of any party to this agreement, any Claim shall be resolved by
binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S.
Code) (the &#147;Act&#148;). The Act will apply even though this agreement provides that it is
governed by the law of a specified state. The arbitration will take place on an
individual basis without resort to any form of class action.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Arbitration proceedings will be determined in accordance with the Act, the
then current rules and procedures for the arbitration of financial services disputes
of the American Arbitration Association or any successor thereof (&#147;AAA&#148;), and the
terms of this paragraph. In the event of any inconsistency, the terms of this
paragraph shall control. If AAA is unwilling or unable to (i)&nbsp;serve as the provider of
arbitration or (ii)&nbsp;enforce any provision of this arbitration clause, any party to
this agreement may substitute another arbitration organization with similar procedures
to serve as the provider of arbitration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitration shall be administered by AAA and conducted, unless otherwise
required by law, in any U.S. state where real or tangible personal property collateral
for this credit is located or if there is no such collateral, in the state specified
in the governing law section of this agreement. All Claims shall be determined by one
arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the
request of any party, the Claims shall be decided by three arbitrators. All
arbitration hearings shall commence within ninety (90)&nbsp;days of the demand for
arbitration and close within ninety (90)&nbsp;days of commencement and the award of the
arbitrator(s) shall be issued within thirty (30)&nbsp;days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the commencement
of the hearing for up to an additional sixty (60)&nbsp;days. The arbitrator(s) shall
provide a concise written statement of reasons for the award. The arbitration award
may be submitted to any court having jurisdiction to be confirmed, judgment entered
and enforced.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The arbitrator(s) will give effect to statutes of limitation in
determining any Claim and may dismiss the arbitration on the basis that
the Claim is barred. For purposes of the application of the statute of
limitations, the service on AAA under applicable AAA rules of a notice
of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a Claim is arbitrable
shall be determined by the arbitrator(s). The arbitrator(s) shall have
the power to award legal fees pursuant to the terms of this agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This paragraph does not limit the right of any
party to: (i)&nbsp;exercise self-help remedies, such as but not limited to,
setoff; (ii)&nbsp;initiate judicial or non-judicial foreclosure against any
real or personal property collateral; (iii) exercise any judicial or power
of sale rights, or (iv)&nbsp;act in a court of law to obtain an interim
remedy, such as but not limited to, injunctive relief, writ of possession
or appointment of a receiver, or additional or supplementary remedies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The filing of a court action is not intended to
constitute a waiver of the right of any party, including the suing party,
thereafter to require submittal of the Claim to arbitration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>By agreeing to binding arbitration, the
parties irrevocably and voluntarily waive any right they may have to a
trial by jury in respect of any Claim. Furthermore, without intending in
any way to limit this agreement to arbitrate, to the extent any Claim is
not arbitrated, the parties irrevocably and voluntarily waive any right
they may have to a trial by jury in respect of such Claim. This provision
is a material inducement for the parties entering into this agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Representations and Warranties.</U> When the Borrower signs this Amendment, the
Borrower represents and warrants to the Bank that: (a)&nbsp;there is no event which is, or with notice
or lapse of time or both would be, a default under the Agreement except those events, if any, that
have been disclosed in writing to the Bank or waived in writing by the Bank, (b)&nbsp;the
representations and warranties in the Agreement are true as of the date of this Amendment as if
made on the date of this Amendment, (c)&nbsp;this Amendment does not conflict with any law, agreement,
or obligation by which the Borrower is bound, and (d)&nbsp;this Amendment is within the Borrower&#146;s
powers, has been duly authorized, and does not conflict with any of the Borrower&#146;s organizational
papers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Conditions.</U> This Amendment will be effective when the Bank receives the following
items, in form and content acceptable to the Bank:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) It the Borrower or any guarantor is anything other than a natural person, evidence
that the execution, delivery and performance by the Borrower and/or such guarantor of this
Amendment and any instrument or agreement required under this Amendment have been duly
authorized.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Payment by the Borrower of a loan fee in the amount of Five Thousand Dollars
($5,000).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Effect of Amendment.</U> Except as provided in this Amendment, all of the terms and
conditions of the Agreement shall remain in full force and effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Counterparts.</U> This Amendment may be executed in counterparts, each of which when
so executed shall be deemed an original, but all such counterparts together shall constitute but
one and the same instrument.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U><B>FINAL AGREEMENT.</B></U><B> BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT:
(A)&nbsp;THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF, (B)&nbsp;THIS DOCUMENT SUPERSEDES ANY COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF
TERMS AND CONDITIONS RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM
SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO THE CONTRARY,
(C)&nbsp;THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (D)&nbsp;THIS DOCUMENT MAY NOT BE</B>
</DIV>

<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment is executed as of the date stated at the beginning of this Amendment.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Borrower:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bank:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">American Shared Hospital Services
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bank of America, N.A.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:/s/ Ernest A. Bates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/&nbsp; [ILLEGIBLE]</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ernest A. Bates, M.D., Chairman
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Authorized Signer</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">4
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>5
<FILENAME>f11686exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Craig K. Tagawa, certify that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1. I have reviewed this quarterly report on Form 10-Q of American Shared Hospital Services;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4. The registrant&#146;s other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) for the registrant and have:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">b) &#091;Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;&#093; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">d) Disclosed in this report any changes in the registrant&#146;s internal control over financial
reporting that occurred during registrant&#146;s most recent fiscal quarter (or the fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5. The registrant&#146;s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the equivalent function):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">August&nbsp;12, 2005
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">     /s/ Craig K. Tagawa
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Craig K. Tagawa&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">14
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>6
<FILENAME>f11686exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Ernest A. Bates, M.D., certify that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1. I have reviewed this quarterly report on Form 10-Q of American Shared Hospital Services;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4. The registrant&#146;s other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) for the registrant and have:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">b) &#091;Paragraph omitted pursuant to SEC Release Nos. 33-8238 and 34-47986;&#093; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">d) Disclosed in this report any changes in the registrant&#146;s internal control over financial
reporting that occurred during registrant&#146;s most recent fiscal quarter (or the fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant&#146;s internal control over financial reporting;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">5. The registrant&#146;s other certifying officers and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of registrant&#146;s board of directors (or persons performing the equivalent function):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">August&nbsp;12, 2005
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">     /s/ Ernest A. Bates, M.D.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Ernest A. Bates, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">15
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>7
<FILENAME>f11686exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The certification set forth below is being submitted in connection with the Quarterly
Report on Form 10-Q of American Shared Hospital Services for the quarterly period ended June&nbsp;30,
2005 (the &#147;Report&#148;) for the purpose of complying with Rule&nbsp;13a-14(b) or Rule&nbsp;15d-14(b) of the
Securities Exchange Act of 1934 (the &#147;Exchange Act&#148;) and Section&nbsp;1350 of Chapter&nbsp;63 of Title 18 of
the United States Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ernest A. Bates, M.D., the Chief Executive Officer and Craig K. Tagawa, the Chief Financial
Officer of American Shared Hospital Services, each certifies that, to the best of his knowledge:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of American Shared Hospital Services.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Ernest A. Bates, M.D.
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Ernest A. Bates, M.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Craig K. Tagawa
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Craig K. Tagawa&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt">16
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>8
<FILENAME>f11686f1168600.gif
<DESCRIPTION>GRAPHIC
<TEXT>
begin 644 f11686f1168600.gif
M1TE&.#EAO``>`/<``````(````"``("`````@(``@`"`@,#`P,#<P*;*\`0$
M!`@("`P,#!$1$186%AP<'"(B(BDI*55554U-34)"0CDY.?]\@/]04-8`D\SL
M_^_6QN?GUJVID#,``&8``)D``,P````S`#,S`&8S`)DS`,PS`/\S``!F`#-F
M`&9F`)EF`,QF`/]F``"9`#.9`&:9`)F9`,R9`/^9``#,`#/,`&;,`)G,`,S,
M`/_,`&;_`)G_`,S_````,S,`,V8`,YD`,\P`,_\`,P`S,S,S,V8S,YDS,\PS
M,_\S,P!F,S-F,V9F,YEF,\QF,_]F,P"9,S.9,V:9,YF9,\R9,_^9,P#,,S/,
M,V;,,YG,,\S,,__,,S/_,V;_,YG_,\S_,___,P``9C,`9F8`9ID`9LP`9O\`
M9@`S9C,S9F8S9IDS9LPS9O\S9@!F9C-F9F9F9IEF9LQF9@"99C.99F:99IF9
M9LR99O^99@#,9C/,9IG,9LS,9O_,9@#_9C/_9IG_9LS_9O\`S,P`_P"9F9DS
MF9D`F<P`F0``F3,SF68`F<PSF?\`F0!FF3-FF68SF9EFF<QFF?\SF3.9F6:9
MF9F9F<R9F?^9F0#,F3/,F6;,9IG,F<S,F?_,F0#_F3/_F6;,F9G_F<S_F?__
MF0``S#,`F68`S)D`S,P`S``SF3,SS&8SS)DSS,PSS/\SS`!FS#-FS&9FF9EF
MS,QFS/]FF0"9S#.9S&:9S)F9S,R9S/^9S`#,S#/,S&;,S)G,S,S,S/_,S`#_
MS#/_S&;_F9G_S,S_S/__S#,`S&8`_YD`_P`SS#,S_V8S_YDS_\PS__\S_P!F
M_S-F_V9FS)EF_\QF__]FS`"9_S.9_V:9_YF9_\R9__^9_P#,_S/,_V;,_YG,
M_\S,___,_S/__V;_S)G__\S___]F9F;_9O__9F9F__]F_V;__Z4`(5]?7W=W
M=X:&AI:6ELO+R[*RLM?7U]W=W>/CX^KJZO'Q\?CX^/_[\*"@I("`@/\```#_
M`/__````__\`_P#______RP`````O``>```(_@#_"1Q(L*#!@P@3*ES(L*'#
MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LN1%=^H45)!T@-X\DS`'SCL0LR9#
M>?'DX7MY0,$]!4#;_*MGD^&!-N\HSIO0;H*#@A7B\4IJ\ET[=O%@PGM0`2@$
MJ@<HO(N@(,([2?+<203JH*M*=A?C*9CP@*("?$,4&(3`(*\"JB/=`A[Y#MX_
M>!34^04\;QT#!0\HT/LGCY<\APK6O6-P@!T%"#0KPE,98:(D!7G?A1[X3@*O
M"!'PE71[+^3+K#T9N/SW<@([H`HN%[SWKLW=>Y,7^E30;MX\!8]K5P0:@6C$
M=GR1#G\'V9V"IR3A_KU+#G*>/.#L\-&D)_P?!`CJUL&EY_*!`[_0I2MDL&X(
M0:`2#)250KR\1!`##SQ`DWX&N=.>0!3@(T$%20&VSCP,/`=408/]0Y]`[,AC
MX$#822+4/X,=,,\][0C4(07L2#*BA_0H!L%"\%P&G`+JT*2B6ZC5,^,_#%#`
MUER=U7;`.FT,:)`"QEGW#X`#&0>4?P(9=^.4"D`PV5)#E(9B4`2M`]P]`TI`
M01O>*3`C=WHQ55>675+PSP-`J4<64-:UDQ)P:OW3$P3M'/```_]4\!A<O$U@
M)60M_M,.GL!!P.!`\AP03YA#B)?4/&H!UX8$\#C'"R_X`/7`/1*4!9@[_O1`
M%D%D!\UUET!`22)=9H\!M8Y`9IK9JP,JNM<EK@H$.%!/;A:G`%RGK1-!JP=(
MV2JB$P`E7*J25$"I2@H8"91A_[##@&N4&G9`!`Q`P-8_V3X[V6@1M(&A3\@2
MR^R)!9WV;`05*$N/<=E"P"AO_[3QP!`0[*E..UG14X^:.R;+RY/`1>#NQ0+Y
M.QF4"DR6*B_J<'?>K^7*]T^KX+D(%%4*Q/,`?6VTH0X%M0EGIE[_B&OGF.[*
MHQ-DEYE)`4V_\=PS<X*NDRUQ64W0JB2\&:G./%)!1U-QY))YT#I<P<4+/8>^
MQR.Y_[2I5Z_R)'=`.]"%;&4%%Y(G4#P.B.O7_E/D<LPERGCZ=P`\$D3PTGGJ
M5-!&O06YBVC:2"E`E`0.,.`DB,\*9&CFY0[AP(F032"0NW4]UU?'9!$UJDH"
MS4-/PSRO`[=`AE$0P8/R).W.Y0>-IL!IH+W3]C][2O#;!)*P8U@]!^BJ%W[O
MO%,/F@8Q2W6Y74;@]P$5.,HY4#19!IWF\3(P*T'S.`#90'&//BY!O"3;#LQ_
MT:D`QZA%"E0%N'9%-W"&B9>4B-05@0PA+QXR"#OFL2?UW6.`"&E'7O#!,7H,
MP3BJ214[J&(>=P$E:4-`&;*&Q"P)&`A.R8$;!%J%#Y1I2R#J:%56WG&/(3R@
M`;["5*OF]`]UG,X]_L9A4%C:,(1L^;!^7+*4H("B#F1A"3B*6P>36D2!"8CN
M/Q!81U9V-K9_:`8N<(+'QQ0@QH;(HXF'^4D%Y-$]-SVH'3\!CI&N1Y#B=.@`
MZG@`8.[1E<N$:4X3N`?*V,&..;5A'6A[5FW(,A@<SHD>/]G2"A6P&GD\B@(4
MD$!*&"4?IA'I5EP22CU04YIZ/,AV%Q1(VRC)LY[\[#"EF<<0),``P_#"3$-:
M"#XHT!<'%"=;JZE'&WS30BNUH24%R=%!)/$./0Y$7`))4.E>AJL(9.4T1A*(
M=Q3TC_AQ[A_J>\!EDB8FLC!`2O3@SA7?X4WMQ*M%OM-?9I;((U5Z1B#Q_O*;
ML7AFI5)]4C8.6$=4_B$)LN12(7`+5P2R=44/L<-[]0(*SGBW$#@Q@`&5RXNR
M5,6E"K3H)V2YS)Y\!+XQ;2B:$J6'^I0&G(;>Z:2408T"U.*N"#1Q3UM2U?*\
MPBRF9=(!RHKF8W@3#RO](R]FF8<'B0B<@R[$7S,5""]:]0YW[>R5$3D/=="C
MS#@>TE<YP5.A.GJQA>+K'ZE26C=E"AD)),=,$'#I=R0G$&'FA1VC!$J+G'*L
MO"IM9\!15E<B])\/"H15WS$2/FI3P[*,ZC$/>@@?I6.FI!TM5ZN1R`:+4Z[,
M)BJ!!YA*;;"##Z+`HTF&N8PO420H7@PP0!6`=X<(471&P"C3I:JY![1D61N.
MW:@PF"3(].)!0^NXPZ59FH=E"'(`H?WC<BJBB7,PHI)),FNV%X%@42RBW>UV
M)([L:,IO$"D;[YKWO#51GW'XA=[VNE<D/SG8>^=+W_K:][[XS:]^]\O?_OKW
..OP`.L(`'3&"#!`0``#L_
`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
