EXHIBIT 10.25

 

FIRST AMENDMENT

 

TO

 

LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into on January 12, 2006, by and between

 

SILICON VALLEY BANK (“Bank”)

 

and the following (collectively, jointly and severally, the “Borrower”) whose
address is 20200 Sunburst Street, Chatsworth, California 91311:

 

NORTH AMERICAN SCIENTIFIC, INC., a Delaware corporation (“NASI”);

 

NORTH AMERICAN SCIENTIFIC, INC., a California corporation (“NASI-CA”); and

 

NOMOS CORPORATION, a Delaware corporation (“NOMOS”).

 

 

RECITALS

 

A.                                    Bank and Borrower have entered into that
certain Loan and Security Agreement, with an Effective Date of October 5, 2005
(as the same may from time to time be further amended, modified, supplemented or
restated, the “Loan Agreement”).

 

B.                                    Bank has extended credit to Borrower for
the purposes permitted in the Loan Agreement.

 

C.                                    The parties desire to amend the Loan
Agreement as herein set forth.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

1.                                      Definitions.  Capitalized terms used but
not defined in this Amendment shall have the meanings given to them in the Loan
Agreement.

 

2.                                      Amendments to Loan Agreement.

 

2.1                               Amended and Restated Schedule 2.  Schedule 2
to the Loan Agreement is amended and restated to read as set forth in Schedule 2
hereto, which is being signed by Borrower and Bank concurrently herewith.

 

2.2                               Asset Based Terms Effective.

 

(a)                                  The Asset Based Terms (as defined in the
Loan Agreement) shall be fully effective on the date hereof and shall continue
in full force and effect at all times hereafter,

 

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notwithstanding anything in the Loan Agreement to the contrary.  Without
limiting the generality of the foregoing, all provisions in the Loan Agreement
which state that they are effective “while the Asset Based Terms are in effect”
or words of similar effect shall be fully effective on the date hereof and shall
continue in full force and effect at all times hereafter.

 

(b)                                  Without limiting Section 2.2(a) above,
Section 9.8 of the Loan Agreement is amended in its entirety to read as follows:

 

“9.8.                        Asset Based Terms. The provisions of Exhibit E
hereto (the “Asset Based Terms”) and the applicable Asset Based Terms as
otherwise set forth herein, are fully effective on the date hereof and shall
continue in full force and effect hereafter.

 

2.3                               Other Defaults. Without limiting
Section 2.2(a) above, Section 8.3, which presently reads as follows:

 

“8.3.                        Other Defaults.  If Borrower fails to perform or
comply with any other term, condition or covenant in this Agreement (other than
as set forth in Section 8.1 or 8.2 above or, while the Asset Based Terms are not
in effect, the Financial Covenants set forth in Schedule 2 hereto), and such
failure is not cured within 30 days after the date it occurs.”

 

is amended to read as follows:

 

“8.3.                        Financial Covenant Default.  If Borrower fails to
comply with the Financial Covenants set forth in Schedule 2 hereto.

 

“8.3A.              Officers.  The persons presently serving in the capacities
of Chief Executive Officer or Chief Financial Officer shall cease serving in
such capacities for any reason, and shall not be replaced with a person
satisfactory to Bank in its good faith business judgment within 60 days
thereafter.

 

 “8.3B.             Other Defaults.  If Borrower fails to perform or comply with
any other term, condition or covenant in this Agreement (other than as set forth
in Section 8.1, 8.2,8.3, or 8.3A above), and such failure is not cured within
five days after the date it occurs.”

 

2.4                               Definitions.  The definition of “Permitted
Liens” in Section 13.1 of the Loan Agreement is amended by (i) deleting the
period at the end of clause (g) thereof and inserting in its place “; and” and
(ii) adding a new clause (h) which shall read as follows:  “(h) Liens in favor
of any holder of Subordinated Debt which are subordinated to the Liens in favor
of Bank arising under this Agreement pursuant to a written subordination
agreement between Bank and the holder of Subordinated Debt, on Bank’s standard
form and otherwise acceptable to Bank in its good faith business judgment.

 

2.5                               Exhibits.

 

(a)                                  Exhibit C to the Loan Agreement, the form
of Borrowing Base Certificate, and all references thereto are hereby deleted
from the Loan Agreement.  In lieu of a Borrowing Base Certificate, the Borrower
shall provide Transactions Reports as provided in the Loan Agreement, on a
weekly basis and at each date an Advance is requested.

 

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(b)                                  Exhibit D to the Loan Agreement, the form
of Compliance Certificate, is hereby replaced by Exhibit D hereto.

 

3.                                      Limitation of Amendments.

 

3.1                               The amendments set forth in Section 2, above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document, or
(b) otherwise prejudice any right or remedy which Bank may now have or may have
in the future under or in connection with any Loan Document.

 

3.2                               This Amendment shall be construed in
connection with and as part of the Loan Documents and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Loan
Documents, except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.

 

4.                                      Representations and Warranties.  To
induce Bank to enter into this Amendment, Borrower hereby represents and
warrants to Bank as follows:

 

4.1                               Immediately after giving effect to this
Amendment (a) the representations and warranties contained in the Loan Documents
are true, accurate and complete in all material respects as of the date hereof
(except to the extent such representations and warranties relate to an earlier
date, in which case they are true and correct as of such date), and (b) no Event
of Default has occurred and is continuing;

 

4.2                               Borrower has the corporate power and authority
to execute and deliver this Amendment and to perform its obligations under the
Loan Agreement, as amended by this Amendment;

 

4.3                               The organizational documents of Borrower
delivered to Bank on the Effective Date remain accurate and complete and have
not been amended, supplemented or restated since the Effective Date and are, and
continue to be, in full force and effect;

 

4.4                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, have been duly authorized;

 

4.5                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not and will not contravene (a) any
law or regulation binding on or affecting Borrower, (b) any material agreement
by which Borrower or its property is bound, (c) any order, judgment or decree of
any court or other governmental or public body or authority, or subdivision
thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

4.6                               The execution and delivery by Borrower of this
Amendment and the performance by Borrower of its obligations under the Loan
Agreement, as amended by this Amendment, do not require any order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or authority,
or subdivision thereof, binding on either Borrower, except as already has been
obtained or made; and

 

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4.7                               This Amendment has been duly executed and
delivered by Borrower and is the binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.

 

5.                                      Counterparts.  This Amendment may be
executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

6.                                      Effectiveness.  This Amendment shall be
deemed effective upon (a) the due execution and delivery of this Amendment by
each party hereto, and (b) Borrower’s payment of the fees set forth in the
Amended and Restated Schedule 2 hereto.

 

 [Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed and delivered as of the date first written above.

 

 

“Borrower”:

“Bank”:

 

 

 

 

NORTH AMERICAN SCIENTIFIC,
INC.
A Delaware corporation

SILICON VALLEY BANK

 

 

 

By

/s/BOB MULLER

 

By

/s/L. MICHAEL CUTRER

 

Title

Senior Relationship Manager

 

 

President or Vice President

 

 

 

 

 

“Borrower”:

 

 

 

NORTH AMERICAN SCIENTIFIC,
INC.
A California corporation

 

 

 

 

 

By

/s/L. MICHAEL CUTRER

 

 

 

President or Vice President

 

 

 

 

 

 

“Borrower”:

 

 

 

NOMOS CORPORATION

 

 

 

 

 

By

/s/L. MICHAEL CUTRER

 

 

 

President or Vice President

 

 

 

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Amended and Restated Schedule 2

 

to

 

Loan and Security Agreement

 

Borrower:

 

North American Scientific, Inc., a Delaware Corporation

 

 

North American Scientific, Inc., a California Corporation

 

 

NOMOS Corporation, a Delaware corporation

 

 

 

Date:

 

January 12, 2006

 

This Amended and Restated Schedule 2 amends and restates in its entirety
Schedule 2 to the Loan and Security Agreement (as amended, the “Loan Agreement”)
between Silicon Valley Bank (“Bank”) and the above-borrowers (collectively,
jointly and severally, the “Borrower”) dated October 5, 2005, and forms an
integral part of the same.  (Capitalized terms used herein, which are not
defined, shall have the meanings set forth in the Loan Agreement.)

 

1.   CREDIT LIMIT

 

(Section 2.1.1):

An amount not to exceed:

 

 

 

(a)          the lesser of (1) $5,000,000 at any one time outstanding (the
“Revolving Line Credit Amount”) or (2) the sum of the following:

 

 

 

(i)           up to 80% (an “Advance Rate”) of the amount of NASI Eligible
Accounts, plus

 

(ii)        up to 80% (an “Advance Rate”) of the amount of NASI-CA Eligible
Accounts, plus

 

(iii)     up to 65% (an “Advance Rate”) of the amount of NOMOS Eligible
Accounts;

 

 

minus

 

(b)

the sum of the following:

 

 

 

(i)           the amount of all outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit); plus

 

(ii)        the FX Reserve; and plus

 

(iii         the aggregate amount of Cash Management Services utilizations.

 

provided, however, that Bank shall have the right, in Bank’s discretion, to
modify the above Advance Rates based upon the results of field audits conducted
by Bank.

 

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Letter of Credit Sublimit

 

 

 

(Section 2.1.2):

 

$

500,000.

 

Foreign Exchange Sublimit

 

 

 

(Section 2.1.3):

 

$

500,000.

 

Cash Management Services Sublimit:

 

 

 

(Section 2.1.4):

 

$

500,000.

 

 

2.   INTEREST.

 

Interest Rate

 

(Section 2.3(a)):

A per annum rate equal to the “Prime Rate” in effect from time to time, plus
1.50% per annum.

 

 

3.   FEES (Section 2.4(a)):

 

 

 

Facility Fee:

In addition to the fees previously paid, Borrower shall pay to Bank an
additional facility fee of $25,000, plus a loan fee of $5,000, concurrently
herewith.

 

 

Collateral Handling Fee:

Borrower shall pay Bank a collateral handling fee in an amount equal to $2,000
per month, payable in arrears on the first day of each month with respect to the
prior month.

 

 

Unused Line Fee:

Borrower shall pay to Bank an unused line fee equal to the rate of one-half of
one percentage point (.50%) per annum multiplied by the amount by which the
Revolving Line Credit Amount exceeds the average daily principal balance of the
outstanding aggregate amount of the sum, without duplication, of Advances,
Letters of Credit, FX Reserve and Cash Management Services utilizations during
the immediately preceding calendar month (or part thereof), which fee shall be
payable monthly in arrears on the first day of each month, beginning on the
first day of the month following the date hereof.

 

 

Termination Fee:

 

 

The “Termination Fee” that is payable as set forth in Section 2.1.1(d) shall be
equal to one percent (1%) of the Revolving Line Credit Amount in effect from
time to time, provided that no termination fee shall be charged if the credit
facility hereunder is replaced with a new facility from another division of
Silicon Valley Bank.

 

 

 

 

4.    MATURITY DATE

 

(Section 13.1):

October 4, 2006.

 

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5.  FINANCIAL COVENANTS

 

(Section 6.7):

Borrower shall comply with the following financial covenant at all times during
the term of this Agreement, measured on a monthly basis, and, monthly and
otherwise at the request of Bank from time to time, Borrower shall provide
evidence of compliance therewith.

 

 

Minimum Tangible

 

Net Worth:

Borrower shall maintain a Tangible Net Worth of not less than $1,500,000 plus
(i) 50% of Borrower’s net quarterly income, realized after October 31, 2005,
plus (ii) 50% of all consideration received by Borrower for the issuance of
equity securities after October 31, 2005.

 

Increases in the Minimum Tangible Net Worth Covenant based on consideration
received for equity securities of Borrower shall be effective as of the end of
the month in which such consideration is received, and shall continue effective
thereafter. Increases in the Minimum Tangible Net Worth Covenant based on net
income shall be effective on the last day of the fiscal quarter in which said
net income is realized, and shall continue effective thereafter. In no event
shall the Minimum Tangible Net Worth Covenant be decreased.

“Tangible Net Worth” shall mean the excess of total assets less total
liabilities, determined in accordance with GAAP, with

 

the following adjustments:

(A) there shall be excluded from assets: (i) notes, accounts receivable and
other obligations owing to Borrower from its officers or other Affiliates, and
(ii) all assets which would be classified as intangible assets under GAAP,
including without limitation goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and organizational costs, licenses and
franchises, and (iii) minority investments in other Persons.

(B) there shall be excluded from liabilities: all indebtedness which is
subordinated to the Obligations under a subordination agreement in form
specified by Bank or by language in the instrument evidencing the indebtedness
which Bank agrees in writing is acceptable to Bank in its good faith business
judgment.

 

 

6.  ADDITIONAL PROVISIONS

 

 

(a)                                  Collections of Accounts.  As provided in
the Loan Agreement, all collections of Accounts shall be remitted to the Bank.
Promptly following receipt by Bank of such collections in immediately available
funds, Bank shall apply the same to the Obligations

 

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in such order as Bank shall determine, provided that Bank shall instead deposit
the same into Borrower’s operating account at Bank, if (i) no Default or an
Event of Default has occurred and is continuing, and (ii) Borrower has Advances
available to it under the formulas and provisions of this Loan Agreement of at
least $1,000,000, as confirmed by the latest Transaction Report received by the
Bank.

 

 

 

(b)                                 Warrant.  Borrower shall concurrently with
the execution hereof issue to Bank a Warrant to Purchase Shares of Borrower’s
Common Stock in the form being executed and delivered concurrently herewith.

 

Signatures on Next Page

 

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IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Schedule 2 to Loan and Security Agreement as of the date first above written.

 

“Borrower”:

“Bank”:

 

 

NORTH AMERICAN SCIENTIFIC, INC.

SILICON VALLEY BANK

A Delaware corporation

 

 

 

 

 

By

/s/L. MICHAEL CUTRER

 

By

/s/BOB MULLER

 

 

President or Vice President

 

Title

Senior Relationship Manager

 

 

 

 

 

NORTH AMERICAN SCIENTIFIC, INC.

 

A California corporation

 

 

 

 

 

By

/s/L. MICHAEL CUTRER

 

 

 

President or Vice President

 

 

 

 

NOMOS CORPORATION

 

 

 

 

 

By

/s/L. MICHAEL CUTRER

 

 

 

President or Vice President

 

 

 

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THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company: NORTH AMERICAN SCIENTIFIC, INC., a Delaware corporation.

Number of Shares: As provided below.

Class of Stock: Common Stock.

Warrant Price: As provided below.

Issue Date:  January 12, 2006

Expiration Date:  January 12, 2011

 

THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other
good and valuable consideration, SILICON VALLEY BANK (“Holder”) is entitled to
purchase the number of fully paid and nonassessable shares of the common stock,
$0.01 par value per share (the “Shares”) of the company (the “Company”) at the
Warrant Price, all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant.

 

ARTICLE A.                            NUMBER OF SHARES AND PRICE.

 

A.1                             Number of Shares.  The number of Shares subject
to this Warrant shall be equal to $75,000 divided by the Warrant Price.

 

A.2.                          Warrant Price.  The Warrant Price shall be an
amount equal to the lowest of (i) $1.99 per Share; or (ii) the average closing
price of the Shares on the five trading days immediately preceding the Issue
Date; or (iii) the lowest closing price of the Shares during the ten trading
days immediately following the release of the Company’s 2005 earnings report
(which release is presently anticipated on or about January 9, 2006).

 

ARTICLE 1. EXERCISE.

 

1.1                                 Method of Exercise.  Holder may exercise
this Warrant by delivering a duly executed Notice of Exercise in substantially
the form attached as Appendix 1 to the principal office of the Company.  Unless
Holder is exercising the conversion right set forth in Article 1.2, Holder shall
also deliver to the Company a check, wire transfer (to an account designated by
the Company), or other form of payment acceptable to the Company for the
aggregate Warrant Price for the Shares being purchased.

 

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1.2                                 Conversion Right.  In lieu of exercising
this Warrant as specified in Article 1.1, Holder may from time to time convert
this Warrant, in whole or in part, into a number of Shares determined by
dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant
Price of such Shares by (b) the fair market value of one Share.  The fair market
value of the Shares shall be determined pursuant to Article 1.3.

 

1.3                                 Fair Market Value.  If the Company’s common
stock is traded in a public market and the Shares are common stock, the fair
market value of each Share shall be the closing price of a Share reported for
the business day immediately before Holder delivers its Notice of Exercise to
the Company. .  If the Company’s common stock is not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment.

 

1.4                                 Delivery of Certificate and New Warrant. 
Promptly after Holder exercises or converts this Warrant and, if applicable, the
Company receives payment of the aggregate Warrant Price, the Company shall
deliver to Holder certificates for the Shares acquired and, if this Warrant has
not been fully exercised or converted and has not expired, a new Warrant
representing the Shares not so acquired.

 

1.5                                 Replacement of Warrants.  On receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation on surrender and cancellation of this
Warrant, the Company shall execute and deliver, in lieu of this Warrant, a new
warrant of like tenor.

 

1.6                                 Treatment of Warrant Upon Acquisition of
Company.

 

1.6.1                        “Acquisition”.  For the purpose of this Warrant,
“Acquisition” means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company’s
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.

 

1.6.2                        Treatment of Warrant at Acquisition.

 

A)                                  Upon the written request of the Company,
Holder agrees that, in the event of an Acquisition that is not an asset sale and
in which the sole consideration is cash, either (a) Holder shall exercise its
conversion or purchase right under this Warrant and such exercise will be deemed
effective immediately prior to the consummation of such Acquisition or (b) if
Holder elects not to exercise the Warrant, this Warrant will expire upon the
consummation of such Acquisition.  The Company shall provide the Holder with
written notice of its request relating to the foregoing (together with such
reasonable information as the Holder may request in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered
to Holder not less than ten (10) days prior to the closing of the proposed
Acquisition.

 

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B)                                    Upon the written request of the Company,
Holder agrees that, in the event of an Acquisition that is an “arms length” sale
of all or substantially all of the Company’s assets (and only its assets) to a
third party that is not an Affiliate (as defined below) of the Company (a “True
Asset Sale”), either (a) Holder shall exercise its conversion or purchase right
under this Warrant and such exercise will be deemed effective immediately prior
to the consummation of such Acquisition or (b) if Holder elects not to exercise
the Warrant, this Warrant will continue until the Expiration Date if the Company
continues as a going concern following the closing of any such True Asset Sale. 
The Company shall provide the Holder with written notice of its request relating
to the foregoing (together with such reasonable information as the Holder may
request in connection with such contemplated Acquisition giving rise to such
notice), which is to be delivered to Holder not less than ten (10) days prior to
the closing of the proposed Acquisition.

 

C)                                    Upon the closing of any Acquisition other
than those particularly described in subsections (A) and (B) above, the
successor entity shall assume the obligations of this Warrant, and this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on the record date for the
Acquisition and subsequent closing.  The Warrant Price and/or number of Shares
shall be adjusted accordingly.

 

As used herein “Affiliate” shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person’s or entity’s officers,
directors, joint venturers or partners, as applicable.

 

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

 

2.1                                 Stock Dividends, Splits, Etc.  If the
Company declares or pays a dividend on the Shares payable in common stock, or
other securities, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of
securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend occurred.  If the Company subdivides the
Shares by reclassification or otherwise into a greater number of shares or takes
any other action which increase the amount of stock into which the Shares are
convertible, the number of shares purchasable hereunder shall be proportionately
increased and the Warrant Price shall be proportionately decreased, but the
aggregate purchase price payable for the total number of shares purchasable
under this Warrant (as adjusted) shall remain the same.  If the outstanding
shares are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares, the Warrant Price shall be proportionately increased
(but the aggregate purchase price payable for the total number of Shares
purchasable under this Warrant, as adjusted, shall remain the same), and the
number of Shares shall be proportionately decreased.

 

2.2                                 Reclassification, Exchange, Combinations or
Substitution.  Upon any reclassification, exchange, substitution, or other event
that results in a change of the number and/or class of the securities issuable
upon exercise or conversion of this

 

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Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. The
Company or its successor shall promptly issue to Holder an amendment to this
Warrant setting forth the number and kind of such new securities or other
property issuable upon exercise or conversion of this Warrant as a result of
such reclassification, exchange, substitution or other event that results in a
change of the number and/or class of securities issuable upon exercise or
conversion of this Warrant.  The amendment to this Warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 2 including, without limitation,
adjustments to the Warrant Price (but not to the aggregate purchase price
payable for the total number of Shares purchasable under this Warrant (as
adjusted), which shall remain the same) and to the number of securities or
property issuable upon exercise of the new Warrant.  The provisions of this
Article 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, or other events.

 

2.3                                 Adjustments for Diluting Issuances.  The
Warrant Price and the number of Shares issuable upon exercise of this Warrant
shall be subject to adjustment, from time to time in the manner set forth in the
Company’s Certificate of Incorporation as if the Shares were issued and
outstanding on and as of the date of any such required adjustment.  The
provisions set forth for the Shares in the Company’s Certificate of
Incorporation relating to the above in effect as of the Issue Date may not be
amended, modified or waived, without the prior written consent of Holder unless
such amendment, modification or waiver affects the rights associated with the
Shares in the same manner as such amendment, modification or waiver affects the
rights associated with all other shares of the same series and class as the
Shares granted to the Holder.

 

2.4                                 No Impairment.  The Company shall not, by
amendment of its Certificate of Incorporation or through a reorganization,
transfer of assets, consolidation, merger, dissolution, issue, or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2 and in taking all such action as may
be necessary or appropriate to protect Holder’s rights under this
Article against impairment.

 

2.5                                 Fractional Shares.  No fractional Shares
shall be issuable upon exercise or conversion of this Warrant and the number of
Shares to be issued shall be rounded down to the nearest whole Share.  If a
fractional share interest arises upon any exercise or conversion of the Warrant,
the Company shall eliminate such fractional share interest by paying Holder the
amount computed by multiplying the fractional interest by the fair market value
of a full Share.

 

2.6                                 Certificate as to Adjustments.  Upon each
adjustment of the Warrant Price, the Company shall promptly notify Holder in
writing, and, at the Company’s expense, promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based.  The Company
shall, upon written request, furnish

 

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Holder a certificate setting forth the Warrant Price in effect upon the date
thereof and the series of adjustments leading to such Warrant Price.

 

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1                                 Representations and Warranties.  The Company
represents and warrants to the Holder as follows: All Shares which may be issued
upon the exercise of the purchase right represented by this Warrant, and all
securities, if any, issuable upon conversion of the Shares, shall, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable, and
free of any liens and encumbrances except for restrictions on transfer provided
for herein or under applicable federal and state securities laws.

 

3.2                                 Notice of Certain Events.  If the Company
proposes at any time (a) to declare any dividend or distribution upon any of its
stock, whether in cash, property, stock, or other securities and whether or not
a regular cash dividend; (b) to offer for sale any shares of the Company’s
capital stock (or other securities convertible into such capital stock), other
than (i) pursuant to the Company’s stock option or other compensatory plans,
(ii) in connection with commercial credit arrangements or equipment financings,
or (iii) in connection with strategic transactions for purposes other than
capital raising; (c) to effect any reclassification or recapitalization of any
of its stock; (d) to merge or consolidate with or into any other corporation, or
sell, lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company’s
securities for cash, then, in connection with each such event, the Company shall
give Holder: (1) at least 10 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (a) and (b) above; (2) in the case of the matters referred to in
(c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.

 

3.3                                 Registration Under Securities Act of 1933,
as amended.  The Company represents and warrants that no shareholders or warrant
holders of the Company have contractual rights to cause the Company to register
their shares under the Securities Act of 1933, as amended, and accordingly no
such rights are being granted to Holder with respect to the Shares.

 

3.4                                 No Shareholder Rights.  Except as provided
in this Warrant, the Holder will not have any rights as a shareholder of the
Company until the exercise of this Warrant.

 

ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.  The Holder represents and
warrants to the Company as follows:

 

4.1                                 Purchase for Own Account.  This Warrant and
the securities to be

 

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acquired upon exercise of this Warrant by the Holder will be acquired for
investment for the Holder’s account, not as a nominee or agent, and not with a
view to the public resale or distribution within the meaning of the Act.  Holder
also represents that the Holder has not been formed for the specific purpose of
acquiring this Warrant or the Shares.

 

4.2                                 Disclosure of Information.  The Holder has
received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the
acquisition of this Warrant and its underlying securities.  The Holder further
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of this Warrant and its
underlying securities and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to the Holder
or to which the Holder has access.

 

4.3                                 Investment Experience.  The Holder
understands that the purchase of this Warrant and its underlying securities
involves substantial risk.  The Holder has experience as an investor in
securities of companies in the development stage and acknowledges that the
Holder can bear the economic risk of such Holder’s investment in this Warrant
and its underlying securities and has such knowledge and experience in financial
or business matters that the Holder is capable of evaluating the merits and
risks of its investment in this Warrant and its underlying securities and/or has
a preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables the Holder to be aware of the character, business acumen and financial
circumstances of such persons.

 

4.4                                 Accredited Investor Status.  The Holder is
an “accredited investor” within the meaning of Regulation D promulgated under
the Act.

 

4.5                                 The Act.  The Holder understands that this
Warrant and the Shares issuable upon exercise or conversion hereof have not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of the Holder’s
investment intent as expressed herein.  The Holder understands that this Warrant
and the Shares issued upon any exercise or conversion hereof must be held
indefinitely unless subsequently registered under the Act and qualified under
applicable state securities laws, or unless exemption from such registration and
qualification are otherwise available.

 

ARTICLE 5. MISCELLANEOUS.

 

5.1                                 Term:  This Warrant is exercisable in whole
or in part at any time and from time to time on or before the Expiration Date.

 

5.2                                 Legends.   This Warrant and the Shares (and
the securities issuable, directly or indirectly, upon conversion of the Shares,
if any) shall be imprinted with a legend in substantially the following form:

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS

 

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AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND
PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

 

5.3                                 Compliance with Securities Laws on
Transfer.  This Warrant and the Shares issuable upon exercise of this Warrant
(and the securities issuable, directly or indirectly, upon conversion of the
Shares, if any) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company).  The Company shall not require
Holder to provide an opinion of counsel if the transfer is to Holder’s parent
company, SVB Financial Group (formerly Silicon Valley Bancshares), or any other
affiliate of Holder.  Additionally, the Company shall also not require an
opinion of counsel, so long as Rule 144 remains in effect in relevant part in
substantially its current form, if (a) in the reasonable judgment of the
Company, based in part upon reasonably detailed representations by the Holder or
the selling broker, as appropriate, there is no material question as to the
availability of current information as referenced in Rule 144(c), Holder has
complied with Rule 144(d) and the selling broker has complied with Rule 144(f),
and (b) the Company is provided with a copy of Holder’s notice of proposed sale.

 

5.4                                 Transfer Procedure.  Upon receipt by Holder
of the executed Warrant, Holder may transfer all of this Warrant to Holder’s
parent company, SVB Financial Group, by execution of an Assignment substantially
in the form of Appendix 2.  Subject to the provisions of Article 5.3 and upon
providing Company with written notice, SVB Financial Group and any subsequent
Holder may transfer all or part of this Warrant or the Shares issuable upon
exercise of this Warrant (or the Shares issuable directly or indirectly, upon
conversion of the Shares, if any) to any transferee, provided, however, in
connection with any such transfer, SVB Financial Group or any subsequent Holder
will give the Company notice of the portion of the Warrant being transferred
with the name, address and taxpayer identification number of the transferee and
Holder will surrender this Warrant to the Company for reissuance to the
transferee(s) (and Holder if applicable).  The Company may refuse to transfer
this Warrant or the Shares to any person who directly competes with the Company,
unless, in either case, the stock of the Company is publicly traded.

 

5.5                                 Notices.  All notices and other
communications from the Company to the Holder, or vice versa, shall be deemed
delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid, at such address as may have been
furnished to the Company or the Holder, as the case may  (or on the first
business day after transmission by facsimile) be, in writing by the Company or
such Holder from time to time.  Effective upon receipt of the fully executed
Warrant and the initial transfer described in Article 5.4 above, all notices to
the Holder shall be addressed as follows until the Company receives notice of a
change of address

 

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in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

 

Notice to the Company shall be addressed as follows until the Holder receives
notice of a change in address:

NORTH AMERICAN SCIENTIFIC, INC.

20200 Sunburst Street

Chatsworth, California 91311

Telephone:  (818) 734-8600

Facsimile:  (818) 734-5223

 

5.6                                 Waiver.  This Warrant and any term hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.

 

5.7                                 Attorney’s Fees.  In the event of any
dispute between the parties concerning the terms and provisions of this Warrant,
the party prevailing in such dispute shall be entitled to collect from the other
party all costs incurred in such dispute, including reasonable attorney’s fees.

 

5.8                                 Automatic Conversion upon Expiration.  In
the event that, upon the Expiration Date, the fair market value of one Share (or
other security issuable upon the exercise hereof) as determined in accordance
with Section 1.3 above is greater than the Exercise Price in effect on such
date, then this Warrant shall automatically be deemed on and as of such date to
be converted pursuant to Section 1.2 above as to all Shares (or such other
securities) for which it shall not previously have been exercised or converted,
and the Company shall promptly deliver a certificate representing the Shares (or
such other securities) issued upon such conversion to the Holder.

 

5.9                                 Counterparts.  This Warrant may be executed
in counterparts, all of which together shall constitute one and the same
agreement.

 

5.10                           Governing Law.  This Warrant shall be governed by
and construed in accordance with the laws of the State of Delaware, without
giving effect to its principles regarding conflicts of law.

 

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“COMPANY”

 

 

 

NORTH AMERICAN SCIENTIFIC, INC.

 

 

 

 

 

By:

/s/L. MICHAEL CUTRER

 

By:

/s/JAMES W. KLINGLER

 

 

 

Name:

L. Michael Cutrer

 

Name:

James W. Klingler

 

 

 

Title:

President & Chief Executive Officer

Title:Sr. VP & Chief Financial Officer

 

 

“HOLDER”

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

/s/BOB MULLER

 

 

 

 

Name:

Bob Muller

 

 

 

 

Title:

Senior Relationship Manager

 

 

 

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APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                       Holder elects to purchase
               shares of the Common/Series          Preferred [strike one] Stock
of                    pursuant to the terms of the attached Warrant, and tenders
payment of the purchase price of the shares in full.

 

[or]

 

1.                                       Holder elects to convert the attached
Warrant into Shares/cash [strike one] in the manner specified in the Warrant. 
This conversion is exercised for                         of the Shares covered
by the Warrant.

 

[Strike paragraph that does not apply.]

 

2.                                       Please issue a certificate or
certificates representing the shares in the name specified below:

 

 

 

 

 

Holders Name

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Address)

 

 

3.                                       By its execution below and for the
benefit of the Company, Holder hereby restates each of the representations and
warranties in Article 4 of the Warrant as the date hereof.

 

 

HOLDER:

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

(Date):

 

 

 

 

 

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APPENDIX 2

 

ASSIGNMENT

 

For value received, Silicon Valley Bank hereby sells, assigns and transfers unto

 

Name:

SVB Financial Group

 

Address:

3003 Tasman Drive (HA-200)

 

 

Santa Clara, CA 95054

 

 

 

 

Tax ID:

91-1962278

 

 

 

 

that certain Warrant to Purchase Stock issued
by                                    (the “Company”), on               ,
200     (the “Warrant”) together with all rights, title and interest therein.

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Date:

 

 

 

 

By its execution below, and for the benefit of the Company, SVB Financial Group
makes each of the representations and warranties set forth in Article 4 of the
Warrant and agrees to all other provisions of the Warrant as of the date hereof.

 

 

SVB FINANCIAL GROUP

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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