Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of the 6th day
of June, 2006 by and among North American Scientific, Inc. (the “Company”), a
Delaware corporation, with its principal offices at 20200 Sunburst Street,
Chatsworth, California 91311, and the purchasers whose names and addresses are
set forth on the signature pages hereto (the “Purchasers”).

IN CONSIDERATION of the mutual covenants contained in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers hereby agree as follows:
 
Section 1. Purchase and Sale of Securities.

Subject to the terms and conditions of this Agreement, on the Closing Date (as
defined herein), each Purchaser agrees to purchase severally and not jointly and
the Company agrees to issue and sell to such Purchaser severally and not jointly
(i) that number of whole shares (the “Shares”) of the Company’s common stock,
$0.01 par value, (the “Common Stock”) and (ii) warrants to purchase shares of
Common Stock (the “Warrants,” together with the Shares, the “Securities”), shown
below such Purchaser’s name on the signature pages hereto at a purchase price
that is equal to $1.9525 per Security, of which $0.0625 is allocated as
consideration for the Warrants.
 
Section 2. The Closing.

2.1 The Closing.

(a) The purchase and sale of the Securities upon the terms and conditions hereof
will take place at a closing (the “Closing”) to be held at the offices of Latham
& Watkins LLP, 12636 High Bluff Drive, Ste. 400, San Diego, CA 92130, or such
other location as the parties may agree, on the date hereof at such time as
shall be agreed upon by the Company and the Purchasers (the “Closing Date”).
 
(b)  The Company shall provide wire transfer instructions for the payment of the
Purchase Price (as defined below) prior to the Closing.
 
(c)  At the Closing, the Company and each Purchaser shall satisfy all of the
conditions set forth in Sections 2.2(a) and (b), respectively.
 
2.2 Conditions to Closing. The Company’s obligation to complete the purchase and
sale of the Securities and deliver such stock certificate(s) and warrant
certificates to each Purchaser is subject to:
 
(i) receipt by the Company of immediately available funds in the full amount of
the purchase price for the Securities being purchased hereunder as set forth
below such Purchaser’s name on such Purchaser’s signature page hereto (the
“Purchase Price”), in accordance with the wire transfer instructions delivered
by the Company pursuant to Section 2.1(b);
 
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(ii) the accuracy in all material respects of the representations and warranties
made by such Purchaser in Section 4 below as of the Closing Date and the
fulfillment in all material respects of those undertakings of such Purchaser in
this Agreement to be fulfilled on or prior to the Closing Date;

(iii) confirmation that the Shares and the Warrant Shares have been approved for
quotation on the Nasdaq National Market; and

(iv) the aggregate Purchase Price to be paid by the Purchasers for the
Securities at the Closing shall be greater than or equal to $24,000,001.
 
(b) Each Purchaser’s obligation to complete the purchase and sale of the
Securities is subject to: 
 
(i) the accuracy in all material respects of the representations and warranties
made by the Company in Section 3 below as of the Closing Date and the
fulfillment in all material respects of those undertakings of the Company in
this Agreement to be fulfilled on or prior to the Closing Date; 
 
(ii) confirmation that the Shares and the Warrant Shares have been approved for
quotation on the Nasdaq National Market;
 
(iii) delivery by the Company to such Purchaser of an opinion, dated as of the
Closing Date, from Seyfarth Shaw LLP, counsel to the Company, in the form
attached hereto as Exhibit A; 

(iv) delivery by the Company to such Purchaser of an opinion related to certain
intellectual property matters, dated as of the Closing Date, from McDermott Will
& Emery LLP, counsel to the Company, in the form attached hereto as Exhibit B;

(v) delivery by the Company to such Purchaser of an opinion related to certain
regulatory, litigation and intellectual property matters, dated as of the
Closing Date, from David King, Vice President, General Counsel to the Company,
in the form attached hereto as Exhibit C;
 
(vi) the Company’s delivery to its transfer agent of irrevocable instructions to
issue, subject to the fulfillment of conditions set forth in Section 2.2(a), to
such Purchaser or in such nominee name(s) as designated by such Purchaser in the
Securities Certificate Questionnaire attached hereto as Appendix I such number
of Shares set forth on such Purchaser’s signature page hereto, or if requested
by the Purchaser, one or more certificates representing such Securities
registered in such name(s) or nominee name(s) requested by such Purchaser; and
 
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(vii) the aggregate Purchase Price to be paid by the Purchasers for the
Securities at the Closing shall be greater than or equal to $24,000,001.

2.3 Election of Directors by Three Arch Partners. On the Closing Date, the
Company shall increase the number of members of its Board of Directors from
seven members to nine members and Three Arch Partners shall have the right but
not the obligation to designate two nominees (the “Three Arch Board Designees”)
who shall be reasonably acceptable to the Company to serve as members of the
Board of Directors. The Company acknowledges that Roderick A.Young and Wilfred
E. Jaeger are deemed acceptable Three Arch Board Designees as of the date
hereof. The Company shall cause the Three Arch Board Designees to become members
of the Board of Directors on the Closing Date or as soon thereafter as may be
reasonably practicable. The Company further covenants and agrees to use
commercially reasonable efforts to place the Three Arch Board Designees on the
slate of directors presented to its stockholders at each meeting at which
directors are elected, subject to compliance with relevant Nasdaq rules and
regulations and subject to the approval of such nominees by the nominating and
corporate governance committee of the Board. If the nominating and corporate
governance committee of the Board does not approve any proposed Three Arch Board
Designee, Three Arch Partners shall be entitled to propose another candidate who
shall be reasonably acceptable to the Company. The Company shall use all
commercially reasonable efforts, including preparation of proxy materials and
solicitation of the Company’s stockholders, to give effect to this Section 2.3.
The Company's obligations under this Section 2.3 shall terminate with respect to
one of the Three Arch Board Designees if at any time Three Arch Partners
beneficially owns less than 3,500,000 shares of Common Stock issued pursuant to
this Agreement (including shares of Common Stock issuable upon exercise of the
Warrants, and as appropriately adjusted for stock splits, stock dividends and
recapitalizations), in such case, one of the Three Arch Board Designees shall
resign from the Board effective immediately. The Company's obligations under
this Section 2.3 shall terminate in their entirety if at any time Three Arch
Partners beneficially owns less than 2,000,000 shares of Common Stock issued
pursuant to this Agreement (including shares of Common Stock issuable upon
exercise of the Warrants, and as appropriately adjusted for stock splits, stock
dividends and recapitalizations), in such case, all Three Arch Board Designees
shall resign from the Board effective immediately.
 
Section 3. Representations, Warranties and Covenants of the Company. Except as
set forth on the corresponding sections of the Company’s disclosure schedule
attached hereto as Exhibit E (the “Disclosure Schedules”), or as specifically
contemplated by this Agreement, the Company hereby represents and warrants to,
and covenants with, each Purchaser as of the Closing Date (or such other date
specified below) as follows:

3.1 No Material Misstatement. The Confidential Private Placement Memorandum,
dated June 5, 2006, relating to the offering of the Securities, including all
exhibits, documents incorporated by reference and annexes thereto, as the same
may be amended or supplemented, (the “Memorandum”), did not, as of its date,
does not as of the date hereof, and will not as of the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

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3.2 Incorporated Documents.

(a) The documents incorporated by reference in the Memorandum or attached as
exhibits thereto and any further documents so filed and incorporated by
reference in the Memorandum filed on or before the Closing Date, at the time
they were filed with the Securities and Exchange Commission (the “Commission”),
as the case may be, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations of the Commission thereunder (the “Rules”), and none of
such documents as of such time contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

(b) In the past 12 calendar months, the Company has filed all documents required
to be filed by it prior to the date hereof with the Commission pursuant to the
reporting requirements of the Exchange Act (the “SEC Documents”) on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Documents prior to the expiration of any such extension.

3.3 Financial Statements. The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in the
Memorandum present fairly and in all material respects the financial position of
the Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified; and such financial
statements and related schedules and notes thereto, and the unaudited financial
information incorporated by reference in the Memorandum, have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved subject, in the case of any unaudited financial
information, to the absence of note disclosure and normal year-end adjustments.
The summary and selected financial data included in the Memorandum present
fairly the information shown therein as at the respective dates and for the
respective periods specified and have been presented on a basis consistent with
the consolidated financial statements set forth in the Memorandum and other
financial information, subject, in the case of any unaudited financial
information, to the absence of note disclosure and normal year-end adjustments.

3.4 Independent Accountants. Singer Lewak Greenbaum & Goldstein LLP and
PricewaterhouseCoopers LLP, whose reports are filed with the Commission as a
part of the information incorporated by reference in the Memorandum, are and,
during the periods covered by their reports, were independent certified public
accountants as required by the Securities Act and the Rules.

3.5 Organization; Good Standing. The Company and each of its subsidiaries is
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization. The Company and each
of its subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased or
licensed by it requires such qualification, except for such jurisdictions where
the failure to so qualify individually or in the aggregate would not have a
material adverse effect on the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business
prospects of the Company and its subsidiaries considered as a whole (a “Material
Adverse Effect”); and to the Company’s knowledge, no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing, or seeking
to revoke, limit or curtail, such power and authority or qualification.

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3.6 Permits. The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity (collectively,
the “Permits”), to own, lease and license its assets and properties and conduct
its business, all of which are valid and in full force and effect, except where
the lack of such Permits, individually or in the aggregate, would not have a
Material Adverse Effect. The Company and each of its subsidiaries has fulfilled
and performed in all material respects all of its material obligations with
respect to such Permits and no event has occurred that allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the Company hereunder. Except as
may be required under the Securities Act and state and foreign Blue Sky laws, no
other Permits are required to enter into, deliver and perform this Agreement and
to issue and sell the Securities.

3.7 Intellectual Property. The Company and each of its subsidiaries owns or
possesses legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how and other similar rights
and proprietary knowledge (collectively, “Intangibles”) necessary for the
conduct of its business. Except as otherwise disclosed in the SEC Documents and
the Memorandum, neither the Company nor any of its subsidiaries has received any
notice of, or is not aware of, any infringement of or conflict with asserted
rights of others with respect to any Intangibles.

3.8 Real and Personal Property. The Company and each of its subsidiaries has
good and marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, in each case free and clear
of all liens, encumbrances, claims, security interests and defects, except such
as do not materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries and except as otherwise disclosed in the Disclosure
Schedules attached hereto. All property held under lease by the Company and its
subsidiaries is held by them under valid, existing and enforceable leases, free
and clear of all liens, encumbrances, claims, security interests and defects,
except such as are not material and do not materially interfere with the use
made or proposed to be made of such property by the Company and its subsidiaries
except as otherwise disclosed in the Disclosure Schedules attached hereto.

3.9 No Material Adverse Change. Since the date of the most recent financial
statements of the Company incorporated by reference in the Memorandum and except
as otherwise discussed in the Memorandum (i) except as otherwise disclosed in
the Disclosure Schedules attached hereto, there has not been any change in the
capital stock or long-term debt of the Company or any of its subsidiaries, or
any dividend or distribution of any kind declared, set aside for payment, paid
or made by the Company on any class of capital stock, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
subsidiaries taken as a whole; (ii) neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority, and
(iii) except as otherwise disclosed in the Disclosure Schedules attached hereto,
since the date of the latest balance sheet included in the Memorandum, neither
the Company nor its subsidiaries has (A) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business or (B)
entered into any transaction not in the ordinary course of business.

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3.10 Material Contracts. Each description of any contract, document or other
agreement in the Memorandum accurately reflects in all respects the terms of the
underlying contract, document or other agreement. Each such contract, document
or other agreement is in full force and effect and is valid and enforceable by
and against the Company or its subsidiary, as the case may be, in accordance
with its terms. Neither the Company nor any of its subsidiaries, if a subsidiary
is a party, nor to the Company’s knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or lapse of time
or both would constitute such a default, in any such case which default or
event, individually or in the aggregate, would have a Material Adverse Effect.
No default exists, and no event has occurred which with notice or lapse of time
or both would constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a subsidiary
is a party thereto, of any other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which Company or its properties or
business or a subsidiary or its properties or business may be bound or affected
which default or event, individually or in the aggregate, would have a Material
Adverse Effect.

3.11 Statistical Data. The statistical and market related data included in the
Memorandum are based on or derived from sources that the Company believes to be
reliable and accurate.

3.12 No Violation. Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or in the
aggregate, would have a Material Adverse Effect.

3.13 Due Authorization. This Agreement and the Warrant Agreement to be entered
into between the Company and the Warrant Agent, dated as of the Closing Date
(the “Warrant Agreement”) have been duly authorized, executed and delivered by
the Company and assuming proper execution by each of the parties thereto other
than the Company, constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with their terms. All necessary corporate
action has been duly and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement, the Warrant Agreement and
the issuance and sale of the Securities by the Company.

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3.14 No Default or Consents. Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Securities) will give rise to a right to terminate or accelerate
the due date of any payment due under, or conflict with or result in the breach
of any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or require
any consent or waiver under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which either the Company or its subsidiaries or any of their
properties or businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the Company or any of
its subsidiaries or violate any provision of the charter or by-laws of the
Company or any of its subsidiaries, except for such consents or waivers which
have already been obtained and are in full force and effect.

3.15 Capitalization. The Company has authorized and outstanding capital stock as
set forth under the caption “Description of Common Stock and Warrants” in the
Memorandum. The certificates evidencing the Shares and the Warrants are in due
and proper legal form and have been duly authorized for issuance by the Company.
All of the issued and outstanding shares of Common Stock have been duly and
validly issued and are fully paid and nonassessable. There are no statutory
preemptive or other similar rights to subscribe for or to purchase or acquire
any shares of Common Stock of the Company or any of its subsidiaries or any such
rights pursuant to its Certificate of Incorporation or by-laws or any agreement
or instrument to or by which the Company or any of its subsidiaries is a party
or bound. The Shares, when issued and delivered and paid for as provided herein,
will be duly and validly issued, and will be fully paid and nonassessable and
will be issued free and clear of any security interests, liens, encumbrances,
equities or claims. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to the
Warrants (the “Warrant Shares”). The Warrant Shares, when issued and delivered
upon exercise of the Warrants in accordance with their terms, will be duly
authorized, validly issued, fully paid and nonassessable and will be issued free
and clear of any security interests, liens, encumbrances, equities or claims.
Except as disclosed in the Memorandum, the SEC Documents and the Disclosure
Schedules attached hereto, there is no outstanding option, warrant or other
right calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of its
subsidiaries or any security convertible into, or exercisable or exchangeable
for, such stock. The Common Stock and the Securities conform in all material
respects to all statements in relation thereto contained in the Memorandum. All
outstanding shares of capital stock of each of the Company’s subsidiaries have
been duly authorized and validly issued, and are fully paid and nonassessable
and are owned directly by the Company or by another wholly-owned subsidiary of
the Company free and clear of any security interests, liens, encumbrances,
equities or claims, except as disclosed in the Disclosure Schedules attached
hereto. The Company has taken all action necessary to exempt (i) the issuance
and sale of the Securities, and (ii) the issuance of the Warrant Shares upon due
exercise of the Warrants, from the provisions of any stockholder rights plan or
other “poison pill” arrangement, any anti-takeover, business combination or
control share law or statute binding on the Company or to which the Company or
any of its assets and properties may be subject and any provision of the
Company’s Certificate of Incorporation or Bylaws that is or could reasonably be
expected to become applicable to any Purchaser as a result of the transactions
contemplated hereby, including without limitation, the issuance of the
Securities and the ownership, disposition or voting of the Securities by each
Purchaser or the exercise of any right granted to each Purchaser pursuant to
this Agreement or the Warrant Agreement. The issuance and sale of the Securities
hereunder will not obligate the Company to issue shares of Common Stock or other
securities to any other Person (other than the Purchasers) and will not result
in the adjustment of the exercise, conversion, exchange or reset price of any
outstanding security, except as disclosed in the Disclosure Schedules attached
hereto.

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3.16 No Registration Rights. Except as otherwise disclosed in the SEC Documents,
the Memorandum and the Disclosure Schedules attached hereto, no holder of any
security of the Company has any right, which has not been waived, to have any
security owned by such holder included in the offering of Securities
contemplated by the Memorandum or to demand registration of any security owned
by such holder for the period from the date of this Agreement through the
ninetieth day following the effective date of the Registration Statement. Each
director and executive officer of the Company has delivered to the Placement
Agent his, her or its enforceable written lock-up agreement in the form attached
to this Agreement as Exhibit D hereto (“Lock-Up Agreement”).

3.17 Legal Proceedings. Except as otherwise disclosed in the SEC Documents and
the Memorandum, there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property of
the Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries could individually or in the
aggregate have a Material Adverse Effect; and to the knowledge of the Company,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others. Except as otherwise disclosed in the SEC Documents and
the Memorandum, the Company is not aware of any threatened or pending litigation
between the Company or its subsidiaries and any of its executive officers which,
if adversely determined, could have a Material Adverse Effect and has no reason
to believe that such officers will not remain in the employment of the Company.

3.18 Employees. Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect. The Company is
not aware of any existing or imminent labor disturbance by the employees of any
of its principal suppliers or contractors which would have a Material Adverse
Effect.

3.19 Market Stabilization. The Company has not taken, nor will it take, directly
or indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of the
Common Stock or any security of the Company to facilitate the sale or resale of
any of the Shares or the Warrant Shares.

3.20 Taxes. The Company and each of its subsidiaries has filed all Federal,
state, local and foreign tax returns which are required to be filed through the
date hereof, which returns are true and correct in all material respects or has
received timely extensions thereof, and has paid all taxes shown on such returns
and all assessments received by it to the extent that the same are material and
have become due. There are no tax audits or investigations pending, which if
adversely determined would have a Material Adverse Effect; nor, to the Company’s
knowledge, are there any material proposed additional tax assessments against
the Company or any of its subsidiaries.

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3.21 Listing Compliance. The Company has taken no action designed to, or likely
to have the effect of, terminating the registration of the Common Stock under
the Exchange Act or the quotation of the Common Stock on the Nasdaq National
Market, nor, except as described in the Memorandum and the SEC Documents, has
the Company received any notification that the Commission or the Nasdaq National
Market is contemplating terminating such registration or quotation. The
transactions contemplated by this Agreement will not contravene the rules and
regulations of the Nasdaq National Market. The Company will use commercially
reasonable efforts to continue the listing and trading of its Common Stock on
the Nasdaq National Market and to comply in all material respects with the
Company’s reporting, filing and other obligations under the rules of the Nasdaq
National Market. The Shares and the Warrant Shares have been duly authorized for
quotation on the Nasdaq National Market.

3.22 Books and Record Keeping. The books, records and accounts of the Company
and its subsidiaries accurately and fairly reflect, in all material respects, in
reasonable detail, the transactions in, and dispositions of, the assets of, and
the results of operations of, the Company and its subsidiaries. The Company and
each of its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

3.23 Internal Controls. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act), which: (i) are designed to ensure that material information
relating to the Company is made known to the Company’s principal executive
officer and its principal financial officer by others within the Company; (ii)
provide for the periodic evaluation of the effectiveness of such disclosure
controls and procedures at the end of the periods in which the periodic reports
are required to be prepared; and (iii) are effective in all material respects to
perform the functions for which they were established.

3.24 No Deficiencies or Frauds. Based on the evaluation of its disclosure
controls and procedures, the Company is not aware of (i) any significant
deficiency in the design or operation of internal controls which could adversely
affect the Company’s ability to record, process, summarize and report financial
data or any material weaknesses in internal controls; or (ii) any fraud, whether
or not material, that involves management or other employees who have a role in
the Company’s internal controls.

3.25 Off Balance Sheet Arrangements. There are no material off-balance sheet
arrangements (as defined in Item 303 of Regulation S-K) that have or are
reasonably likely to have a material current or future effect on the Company’s
financial condition, revenues or expenses, changes in financial condition,
results of operations, liquidity, capital expenditures or capital resources.

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3.26 Audit Committee. The Company’s Board of Directors has validly appointed an
audit committee whose composition satisfies the requirements of Rule 4350(d)(2)
of the Rules of the National Association of Securities Dealers (the “NASD
Rules”) and the Board of Directors and/or the audit committee has adopted a
charter that satisfies the requirements of Rule 4350(d)(1) of the NASD Rules.
The audit committee has reviewed the adequacy of its charter within the past
twelve months.

3.27 Sarbanes-Oxley Act. The Company is in compliance with all other applicable
provisions of the Sarbanes-Oxley Act of 2002, any related rules and regulations
promulgated by the Commission and corporate governance requirements under the
NASD Rules upon the effectiveness of such provisions and has no reason to
believe that it will not be able to comply with such provisions at the time of
effectiveness.

3.28 Insurance. The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary for companies of approximately equal size to the
Company and its subsidiaries which are engaged in the businesses in which they
are engaged or propose to engage after giving effect to the transactions
described in the Memorandum; all policies of insurance and fidelity or surety
bonds insuring the Company or any of its subsidiaries or the Company’s or its
subsidiaries’ respective businesses, assets, employees, officers and directors
are in full force and effect; the Company and each of its subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that is
not materially greater than the current cost. Neither the Company nor any of its
subsidiaries has been denied any insurance coverage which it has sought or for
which it has applied.

3.29 Consents and Approvals. Each approval, consent, order, authorization,
designation, declaration or filing of, by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by the
Company has been obtained or performed.

3.30 Environmental Laws. 

(a) (i) Each of the Company and each of its subsidiaries is in compliance in all
material respects with all rules, laws and regulation relating to the use,
treatment, storage and disposal of toxic substances and protection of health or
the environment (“Environmental Law”) which are applicable to its business; (ii)
neither the Company nor its subsidiaries has received any notice from any
governmental authority or third party of an asserted claim under Environmental
Laws; (iii) each of the Company and each of its subsidiaries has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance with all terms
and conditions of any such permit, license or approval (except where failure to
receive such permits, licenses or approvals would not have a Material Adverse
Effect); (iv) to the Company’s knowledge, no facts currently exist that will
require the Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws; and (v) no property which is or
has been owned, leased or occupied by the Company or its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Environmental
Response, Compensation of Liability Act of 1980, as amended (42 U.S.C. Section
9601, et. seq.) or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its subsidiaries has been
named as a “potentially responsible party” under the CERCLA 1980.

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(b) In the ordinary course of its business, the Company periodically reviews the
effect of Environmental Laws on the business, operations and properties of the
Company and its subsidiaries, in the course of which the Company identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.

3.31 Investment Company. The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Memorandum, will not be an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Investment Company Act”).

3.32 Foreign Corrupt Practices Act. The Company or any other person associated
with or acting on behalf of the Company including, without limitation, any
director, officer, agent or employee of the Company or its subsidiaries, has
not, directly or indirectly, while acting on behalf of the Company or its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any other unlawful payment.

3.33 Foreign Transactions Reporting Act. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations hereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of it
subsidiaries with respect to the Money Laundering Laws is pending, or to the
best knowledge of the Company, threatened.

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3.34 OFAC. Neither the Company nor any of its subsidiaries nor, to the knowledge
of the Company, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”); and the Company will not directly or indirectly use the
proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.

3.35 ERISA. The Company has fulfilled its obligations, if any, under the minimum
funding standards of Section 302 of the U.S. Employee Retirement Income Security
Act of 1974 (“ERISA”) and the regulations and published interpretations
hereunder with respect to each “plan” as defined in Section 3(3) of ERISA and
such regulations and published interpretations in which its employees are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such regulations
and published interpretations. No “Reportable Event” (as defined in 12 ERISA)
has occurred with respect to any “Pension Plan” (as defined in ERISA) for which
the Company could have any liability.

3.36 Brokers or Finders. No broker, investment banker, financial advisor or
other individual, corporation, general or limited partnership, limited liability
company, firm, joint venture, association, enterprise, joint securities company,
trust, unincorporated organization or other entity (each a “Person”), other than
the Placement Agent, the fees and expenses of which will be paid by the Company,
is entitled to any broker’s, finder’s, financial advisor’s financial advisor’s
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.

3.37 Use of Proceeds. The Company intends to use the net proceeds from the sale
of the Securities as described in the Memorandum.

3.38 Solicitation; Other Issuances of Securities. Neither the Company, its
subsidiaries or any affiliates, nor any Person acting on its or their behalf,
(i) has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the Securities, (ii) has, directly or indirectly, made any
offer or sale of any security or solicited any offer to buy any security, under
any circumstances that would require registration of the Securities under the
Securities Act or (iii) has issued any shares of Common Stock or shares of any
series of preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the Securities to such
Purchaser for purposes of the Securities Act or of any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the Nasdaq National Market, nor will the Company or any of its
subsidiaries or affiliates take any action or steps that would require
registration of any of the Securities under the Securities Act or cause the
offering of the Securities to be integrated with other offerings. Assuming the
accuracy of the representations and warranties of Purchasers, the offer and sale
of the Securities by the Company to the Purchasers pursuant to this Agreement
will be exempt from the registration requirements of the Securities Act.

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3.39 No Restrictions on Subsidiaries. Except as otherwise disclosed in the
Disclosure Schedules attached hereto, the subsidiaries of the Company are not
currently prohibited, directly or indirectly, under any agreement or other
instrument to which any subsidiary is a party or is subject, from paying any
dividends to the Company, from making any other distribution on the subsidiary’s
capital stock, from repaying to the Company any loans or advances to the
subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company.

3.40 SEC Filing. The Company shall file not later than one (1) business day from
the date hereof with the SEC a Current Report on Form 8-K under the Exchange Act
describing the transactions contemplated hereby and attaching as exhibits
thereto all material documents relating to the transactions contemplated hereby.
In the event such Form 8-K is not filed by the Company, the Purchasers shall
each have the right to make a public disclosure, in the form of a press release,
of the transactions contemplated hereby only upon the review and approval of
such public disclosure by the Company, which such approval shall not be
unreasonably withheld.

3.41 Registration Statement. The Company meets, and will use reasonable best
efforts to meet upon filing and effectiveness, the requirements for use of Form
S-3 under the Securities Act for secondary offerings.

3.42 Related Party Transactions. Except for those transactions that are not
required to be disclosed by the Company pursuant to the rules and regulations of
the Exchange Act, no transaction has occurred between or among the Company or
its subsidiaries and any of its officers or directors, shareholders or any
affiliate of any such officer or director or shareholder that is not described
in the Memorandum.

Section 4. Representations, Warranties and Covenants of Each Purchaser.

Each Purchaser for itself and no other Purchaser hereby represents and warrants
to, and covenants with, the Company as of the Closing Date (or such other date
specified below) as follows:
 
4.1 Organization. Such Purchaser is an entity duly organized and validly
existing in good standing (to the extent such concepts are applicable) under the
laws of its jurisdiction of organization. Such Purchaser has all requisite
corporate power and authority and all necessary governmental approvals to carry
on its business as now being conducted, except as would not result in a Material
Adverse Effect on such Purchaser’s ability to consummate the transactions
contemplated by this Agreement. Such Purchaser’s principal executive offices are
in the jurisdiction set forth immediate below the Purchaser’s name on the
signature pages hereto.

4.2 Authorization, Enforcement, and Validity. Such Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Such Purchaser has taken all necessary action
to authorize the execution, delivery and performance of this Agreement. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity.
 
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4.3 Consents and Approvals; No Violation. The execution, delivery and
performance of this Agreement by such Purchaser and the consummation by such
Purchaser of the transactions contemplated hereby will not (i) result in a
violation of such Purchaser’s organizational documents; (ii) conflict with, or
constitute a default or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which such Purchaser is a party (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, result in a Material Adverse Effect on
such Purchaser’s ability to consummate the transactions contemplated by this
Agreement); or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree applicable to such Purchaser or any of its Subsidiaries,
except for such violations as would not, individually or in the aggregate,
result in a Material Adverse Effect on such Purchaser’s ability to consummate
the transactions contemplated by this Agreement. Such Purchaser is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement, except where the failure to
obtain such consents, authorization or orders or to make such filings or
registrations would not, individually or in the aggregate, result in a Material
Adverse Effect on such Purchaser’s ability to consummate the transactions
contemplated by this Agreement.
 
4.4 Investment Experience. Such Purchaser is an accredited investor within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares representing an investment
decision like that involved in the purchase of the Securities.
 
4.5 Limitation on Dispositions. (a) Such Purchaser is acquiring Securities for
its own account and has no intention of selling or distributing any of such
Securities or any arrangement or understanding with any other Persons regarding
the sale or distribution of such Securities except in accordance with the
provisions of Section 6 and except as would not result in a violation of the
Securities Act, (b) such Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Securities except
in accordance with the provisions of Section 6 or pursuant to and in accordance
with the Securities Act and (c) such Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of
Appendix I for use in preparation of the Registration Statement, and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the effective date of the Registration Statement and such Purchaser will
notify the Company immediately of any material change in any such information
provided in the Registration Statement Questionnaire until such time as such
Purchaser has sold all of its Securities or until the Company is no longer
required to keep the Registration Statement effective, except that such
Purchaser shall not be required to advise the Company of any sales of the
Registrable Securities pursuant to the Registration Statement.

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4.6 Information and Risk.

(a) Such Purchaser has received and reviewed the Memorandum and has requested,
received, reviewed and considered all other information relevant in making an
informed decision to purchase the Securities. Such Purchaser has had an
opportunity to discuss the Company’s business, management and financial affairs
with its management and also had an opportunity to ask questions of officers of
the Company that were answered to such Purchaser’s satisfaction.
 
(b) Such Purchaser recognizes that an investment in the Securities involves a
high degree of risk, including a risk of total loss of such Purchaser’s
investment. Such Purchaser is able to bear the economic risk of holding the
Securities for an indefinite period, and has knowledge and experience in the
financial and business matters such that it is capable of evaluating the risks
of the investment in the Securities.
 
(c) Such Purchaser has, in connection with such Purchaser’s decision to purchase
Securities, not relied upon any representations or other information (whether
oral or written) other than as set forth in the representations and warranties
of the Company contained herein, the Memorandum, the SEC Documents and the other
information described in Section 4.6(a), and such Purchaser has, with respect to
all matters relating to this Agreement and the offer and sale of the Securities,
relied solely upon the advice of such Purchaser’s own counsel and has not relied
upon or consulted any counsel to the Placement Agents or counsel to the Company.
 
4.7 Disclosures to the Company. Such Purchaser understands that the Company is
relying on the statements contained herein to establish an exemption from
registration under federal and state securities laws. Such Purchaser will
promptly notify the Company of any changes in the information set forth in the
Registration Statement regarding such Purchaser.
 
4.8  Nature of Purchasers. To the knowledge of such Purchaser, such Purchaser:
(i) is not an affiliate (as such term is defined pursuant to Rule 12b-2
promulgated under the Exchange Act) of any other Purchaser, (ii) is not
constituted as a partnership, association, joint venture or any other type of
joint entity with any other Purchaser, and (iii) is not acting as part of a
group (as such term is defined under Section 13(d) of the Exchange Act) with any
other Purchaser. If at any time after the Closing Date such Purchaser becomes an
affiliate (as defined herein) of any other Purchaser, such Purchaser will
provide prompt written notice to the Company.
 
4.9 Ownership. Such Purchaser (including any Person controlling, controlled by,
or under common control with such Purchaser, as the term “control” is defined
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and its implementing regulations (the “HSR Act”)) does not, and upon
the consummation of the transactions contemplated by this Agreement will not,
hold voting securities of the Company exceeding an aggregate fair market value
as of the Closing Date of fifty million dollars ($50,000,000), calculated
pursuant to the HSR Act.
 
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4.10 Brokers or Finders. No broker, investment banker, financial advisor or
other Person is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Purchaser.
 
4.11 Acknowledgement. Such Purchaser acknowledges and agrees that the Company
does not make and has not made any representations or warranties with respect to
the transactions contemplated by this Agreement other than those specifically
set forth in Section 3.

4.12 Confidential Treatment. The Purchasers shall hold in strict confidence all
information concerning this Agreement and the offering of the Securities until
such time as the Company has made a public announcement concerning this
Agreement.

4.13 Short Sales. Between the time such Purchaser obtained knowledge of the
proposed sale of the Securities contemplated hereby and the public announcement
of the transaction, such Purchaser has not taken any action that has caused or
will cause such Purchaser to have, directly or indirectly, sold or agreed to
sell any shares of Common Stock, effected any short sale, whether or not against
the box, established any “put equivalent position” (as defined in Rule 16a-1(h)
under the Securities Exchange Act of 1934, as amended) with respect to the
Common Stock, granted any other right (including, without limitation, any put or
call option) with respect to the Common Stock or with respect to any security
that includes, relates to or derived any significant part of its value from the
Common Stock.

4.14 Restricted Securities. Without limiting the registration rights granted to
the Purchasers under Section 6 hereto, such Purchaser understands that the
Shares upon issuance will be “restricted securities” as such term is defined in
Rule 144 promulgated under the Securities Act and must be held indefinitely
unless the Shares are subsequently registered or qualified under applicable
state and federal securities laws or an exemption from such registration or
qualification is available. Such Purchaser understands that it may resell the
Shares pursuant to Rule 144 only after the satisfaction of certain requirements,
including the requirement that the Shares be held for at least one year prior to
resale.
 
Section 5. Survival of Representations and Warranties.

Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agents, all representations and warranties as to each respective
Closing made by the Company and the Purchasers herein shall survive for a period
of eighteen (18) months following the Closing Date.
 
Section 6. Registration of the Shares and Warrant Shares; Compliance with the
Securities Act.
 
6.1 Registration Procedures and Expenses. (a) Except during a Suspension (as
defined below), the Company will, subject to receipt of necessary information
from the Purchasers:
 
(i) as soon as practicable, but in no event later than forty-five (45) days
following the Closing Date (the “Filing Date”), use reasonable best efforts to
prepare and file with the Commission a registration statement on Form S-3 (the
“Registration Statement”) covering the resale of the Shares and the Warrant
Shares of each Purchaser that has complied with Section 6.4, together with any
shares of capital stock issued or issuable, from time to time, upon any
reclassification, share combination, share subdivision, stock split, share
dividend or similar transaction or event or otherwise as a distribution on, in
exchange for or with respect to any of the foregoing, in each case held at the
relevant time by a Purchaser (the “Registrable Securities”);
 
(ii) use reasonable best efforts to cause the Registration Statement, as
amended, to become effective under the Securities Act as soon as practicable but
in any event no later than 4:00 p.m. Eastern Time on the ninetieth (90) day
after the Closing Date (the “Required Effective Date”);

(iii) use reasonable best efforts to cause the prospectus to be filed with the
Commission pursuant to Rule 424(b) under the Securities Act as soon as
practicable but in any event no later than 9:00 a.m. Eastern Time the next
business day following the date such Registration Statement is declared
effective by the Commission;
 
(iv) use its reasonable best efforts to promptly prepare and file with the
Commission such amendments and supplements to the Registration Statement and the
prospectus used in connection therewith (A) as may be necessary to keep the
Registration Statement continuously effective until the earlier of (i) the
second anniversary of the Closing Date, or (ii) such time as all Shares and
Warrant Shares purchased by the Purchasers have been sold pursuant to the
Registration Statement and (B) as may be reasonably requested by a Purchaser in
order to incorporate information concerning such Purchaser or such Purchaser’s
intended method of distribution;
 
(v) so long as the Registration Statement is effective covering the resale of
Registrable Securities owned by the Purchasers, furnish to each Purchaser with
respect to the Registrable Securities registered under the Registration
Statement (and to each underwriter, if any, of such Registrable Securities) such
reasonable number of copies of prospectuses and such other documents as such
Purchaser may reasonably request in order to facilitate the public sale or other
disposition of all or any of the Registrable Securities by such Purchaser;
 
(vi) use commercially reasonable efforts to file documents required of the
Company for normal Blue Sky clearance in the States of New York and Wisconsin
and any other states specified in writing by the Purchasers; provided, however,
that the Company shall not be required to qualify to do business generally in
any jurisdiction in which the Company is not now so qualified;
 
(vii) bear all expenses in connection with the procedures in paragraphs (i)
through (vi) of this Section 6.1 and the registration of the Registrable
Securities pursuant to the Registration Statement, other than fees and expenses,
if any, of counsel or other advisers to the Purchasers or underwriting
discounts, brokerage fees and commissions incurred by the Purchasers, if any, in
connection with an underwritten offering of the Registrable Securities;
 
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(viii) use all commercially reasonable efforts to prevent the issuance of any
stop order or other order suspending the effectiveness of such Registration
Statement and, if such an order is issued, to obtain the withdrawal thereof at
the earliest possible time and to notify each Purchaser of the issuance of such
order and the resolution thereof;
 
(ix) furnish to each Purchaser, two (2) business days after the date that such
Registration Statement becomes effective, (x) a letter, dated such date, of
outside counsel representing the Company (and reasonably acceptable to such
Purchaser) addressed to such Purchaser, confirming the effectiveness of such
Registration Statement and, to the knowledge of such counsel, the absence of any
stop order, and (y) in the case of an underwriting, an opinion addressed to such
Purchaser, dated such date, of such outside counsel, in such form and substance
as is required to be given to the underwriters; 
 
(x) provide to each Purchaser and its representatives, if requested, the
opportunity to conduct a reasonable inquiry of the Company’s financial and other
records during normal business hours and make available its officers, directors
and employees for questions regarding information which such Purchaser may
reasonably request in order to fulfill any due diligence obligation on its part,
provided, that in the case of this clause (x), the Company shall not be required
to provide, and shall not provide, any Purchaser with material, non-public
information unless such Purchaser agrees to receive such information and enters
into a written confidentiality agreement with the Company; and
 
(xi) not less than three trading days prior to the filing of a Registration
Statement and not less than two trading days prior to the filing of any related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated or deemed to be incorporated therein by reference) or, in
the case of comments made by the staff of the Commission and the Company’s
responses thereto, within a reasonable period of time following the receipt
thereof by the Company, furnish to each Purchaser copies of all such documents
proposed to be filed or copies of such correspondence from and to the Commission
relating to the Registration Statement, as the case may be, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of such Purchasers. The Company shall reflect in each
such document when so filed with the Commission such comments relating to such
Purchaser as such Purchaser may reasonably propose; provided, however, that such
comments from such Purchaser must be received by the Company no later than one
trading day prior to the filing of such document with the Commission.
Notwithstanding any other provision of this Agreement, the Company will have no
obligation to deliver or make available to any Purchaser any Registration
Statement or Prospectus containing any material, nonpublic information unless
such Purchaser specifically consents in advance to receive such material,
nonpublic information in writing and such Purchaser has executed an agreement to
keep such material, nonpublic information confidential and refrain from trading
in any Company security for so long as such information remains material,
nonpublic information.
 
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(b) The Company shall be permitted after the Required Effective Date, to suspend
for one or more periods (each such period, a “Suspension”) the actions required
under Sections 6.1(a)(i) through (iv) to the extent that the Board of Directors
of the Company concludes in good faith and based on the advice of counsel that
the disclosure of additional information in the prospectus is necessary.
Notwithstanding the foregoing, the Company agrees that no Suspension shall be
for a period of an aggregate in any 365-day period of longer than 60 days.
 
(c) With a view to making available to the Purchasers the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the Commission that
may at any time permit the Purchaser to sell Registrable Securities to the
public without registration, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Purchasers’ Registrable Securities may be resold pursuant to Rule 144(k) or any
other rule of similar effect or (B) such date as all of the Purchasers’
Registrable Securities shall have been resold; (ii) file with the Commission in
a timely manner all reports and other documents required of the Company under
the Exchange Act; and (iii) furnish to the Purchaser upon request, as long as
the Purchaser owns any Registrable Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of the Exchange
Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation
of the Commission that permits the selling of any such Registrable Securities
without registration.

6.2 Delay in Filing or Effectiveness of Registration Statement.  If: (a) a
Registration Statement is not filed by the Company with the Commission on or
prior to the Filing Date, or (b) a Registration Statement is not declared
effective by the Commission on or prior to its Required Effective Date, (any
such failure or breach being referred to as an “Event,” and for purposes of
clauses (a) or (b) the date on which such Event occurs, being referred to as
“Event Date”), then, in addition to any other rights available to the
Purchasers, on each such Event Date and on each monthly anniversary of each such
Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Purchaser, as
liquidated damages and not as a penalty, a cash payment equal to one and
one-half percent (1.5%) of the aggregate purchase price paid by such Purchaser
to the Company with respect to the Shares then held by such Purchaser. The
parties agree that the Company will not be liable for liquidated damages under
this Section 6.2 in respect of the Warrants or the Warrant Shares . The
liquidated damages pursuant to the terms hereof shall apply on a pro rata basis
for any portion of a month prior to the cure of an Event; provided that the
maximum aggregate liquidated damages payable to a Purchaser under this
Section 6.2 shall not exceed twelve percent (12%) of the aggregate purchase
price of the Securities purchased by such Purchaser pursuant to this Agreement.
The parties agree that such liquidated damages shall not be the exclusive
damages under this Agreement with respect to the occurrence of such Event.
 
6.3 Restrictions on Transferability. 
 
(a) Each Purchaser agrees that it will not effect any disposition of the
Securities (including the Warrant Shares) or its right to purchase the
Securities (including any Warrant Shares) that would constitute a sale within
the meaning of the Securities Act or pursuant to any applicable state securities
or Blue Sky laws of any state, except (i) as contemplated in the Registration
Statement referred to in Section 6.1 above, (ii) pursuant to the requirements of
Rule 144 (in which case such Purchaser will provide the Company with reasonable
evidence of such Purchaser’s compliance therewith) or (iii) pursuant to a
written opinion of legal counsel reasonably satisfactory to the Company and
addressed to the Company to the effect that registration under Section 5 of the
Securities Act is not required in connection with the proposed transfer;
whereupon the holder of such securities shall be entitled to transfer such
securities. Each certificate evidencing the securities transferred as above
provided shall bear the appropriate restrictive legends as may be required by
Section 7.
 
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(b) Each Purchaser acknowledges that there may occasionally be times when the
Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment or supplement to the
Registration Statement has been filed by the Company and declared effective, or
until such time as the Company has filed an appropriate report with the
Commission pursuant to the Exchange Act. Each Purchaser hereby covenants that
such Purchaser will not sell any Securities (including the Warrant Shares)
pursuant to said prospectus during the period commencing at the time at which
the Company gives the Purchasers written notice of the suspension of the use of
said prospectus and ending at the time the Company gives the Purchasers written
notice that the Purchasers may thereafter effect sales pursuant to said
prospectus. The Company agrees to file such amendment, supplement or report as
soon as practicable following such notice of Suspension.
 
(c) None of the Securities (including the Warrant Shares) shall be transferable
except upon the conditions specified in this Section 6, which are intended to
ensure compliance with the provisions of the Securities Act. Each Purchaser will
cause any proposed transferee of the Securities (including the Warrant Shares)
held by such Purchaser to agree to take and hold such Securities (including the
Warrant Shares) subject to the provisions and upon the conditions specified in
this Section 6 if and to the extent that such Securities continue to be
restricted securities in the hands of the transferee. 

(d) Such Purchaser covenants that such Purchaser will sell or transfer the
Securities (including the Warrant Shares) in accordance with such Registration
Statement, the Securities Act, applicable state securities laws and, to the
extent the exemption from prospectus delivery requirements in Rule 172 under the
Securities Act is not available, satisfy the requirement of delivering a current
prospectus in connection with any proposed transfer or sale of the Securities
(including the Warrant Shares).
 
6.4 Furnish Information. It shall be a condition to the Company’s obligations to
take any action under this Agreement with respect to the registration of a
Purchaser’s Registrable Securities that such Purchaser shall promptly furnish to
the Company, upon request, such reasonable and customary information regarding
itself, such Purchaser’s Registrable Securities, and the intended method of
disposition of such Registrable Securities if such intended method of
distribution is different from the Plan of Distribution in form of Appendix II
attached hereto. In connection therewith, each Purchaser shall be required to
represent to the Company that all such information which is given is both
complete and accurate in all material respects when made.

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6.5 Termination of Conditions and Obligations.

(a) The conditions precedent imposed by Section 6.3 above regarding the
transferability of the Securities (including the Warrant Shares) shall cease and
terminate as to any particular number of Securities (including the Warrant
Shares) upon the passage of two years from the date hereof or at such time as an
opinion of counsel satisfactory in form and substance to the Company shall have
been rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.

(b) The expiration or termination of this Agreement for any reason will have no
effect on the rights of any of the parties under the provisions of this Section
6.
 
Section 7. Legends.

(a) Such Purchaser understands and agrees that each certificate or other
document evidencing any of the Securities (including the Warrant Shares) shall
be endorsed with the legend in the form set forth below, and such Purchaser
covenants that such Purchaser will not transfer the Securities (including the
Warrant Shares) represented by any such certificate without complying with the
restrictions on transfer described in the legend endorsed on such certificate
(unless there is in effect a registration statement under the Securities Act
covering such proposed transfer, such Securities (including the Warrant Shares)
have been sold under Rule 144 promulgated under the Securities Act (“Rule 144”)
or as otherwise permitted by the provisions of Section 6.3 above) and
understands that the Company will refuse to register a transfer of any
Securities (including the Warrant Shares) unless the conditions specified in the
following legend are satisfied:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. EXCEPT AS
SPECIFIED IN THIS LEGEND, SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR
TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION AND ANY APPLICABLE STATE
SECURITIES LAWS. THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH SALE OR OTHER TRANSFER.”
 
(b) Such certificates shall not contain any legend (i) while a Registration
Statement covering the resale of the Securities (including the Warrant Shares)
is effective under the Securities Act, (ii) following any sale of the Securities
(including the Warrant Shares) pursuant to an effective Registration Statement
or Rule 144, or (iii) if the Securities (including the Warrant Shares) are
eligible for sale under Rule 144(k). Following the effective date of the
Registration Statement or at such earlier time as a legend is no longer required
for certain Securities (including the Warrant Shares), the Company will, no
later than three trading days following the delivery by a Purchaser to the
Company of a written request for an unlegended certificate representing such
securities, take such actions as are necessary for the Company’s transfer agent
to deliver or cause to be delivered to such Purchaser a certificate representing
such securities that is free from all restrictive and other legends.
 
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(c) Such Purchaser covenants that such Purchaser will not transfer the
Securities (including the Warrant Shares) represented by any such certificate
without complying with any applicable requirements under the Securities Act to
deliver the final prospectus included in the effective Registration Statement to
any offeree of the Registrable Securities. 
 
Section 8. Indemnification.
 
(a) For purposes of this Section 8 only: 
 
(i) the term “Purchaser” shall include the Purchaser and any affiliate (as such
term is defined pursuant to Rule 12b-2 promulgated under the Exchange Act) of
such Purchaser; 
 
(ii) the term “Prospectus” shall mean the prospectus and any amendment or
supplement thereto in the form first filed with the Commission pursuant to Rule
424(b) promulgated under the Securities Act or, if no Rule 424(b) filing is
required, filed as part of the Registration Statement at the time of
effectiveness, as supplemented or amended from time to time; and 
 
(iii) the term “Registration Statement” shall include any final prospectus,
exhibit, supplement or amendment included in or relating to the Registration
Statement. 
 
(b) The Company agrees to indemnify and hold harmless each of the Purchasers and
each Person, if any, who controls any Purchaser within the meaning of the
Securities Act, against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Purchasers or such controlling Person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or arise out
of or are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained in this Agreement, or arise out of the
Company’s failure to provide written notice of a Suspension, or any failure of
the Company to perform its obligations hereunder, and will reimburse each
Purchaser and each such controlling Person for any legal and other expenses
reasonably incurred as such expenses are reasonably incurred by such Purchaser
or such controlling Person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
Prospectus in reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Purchaser expressly for use therein, (ii)
the failure of such Purchaser to comply with the covenants and agreements
contained in Section 6 above respecting sale of the Securities (including the
Warrant Shares), (iii) the inaccuracy of any representations made by such
Purchaser herein.
 
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(c) Each Purchaser will severally, and not jointly, indemnify and hold harmless
the other Purchasers and the Company, each of its directors, each of its
officers who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of the Securities Act, against any
losses, claims, damages, liabilities or expenses to which the Company, each of
its directors, each of its officers who signed the Registration Statement or
controlling Person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Purchaser) insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any failure by such
Purchaser to comply with the covenants and agreements contained in Section 6.3
above respecting the sale of the Securities (including the Warrant Shares)
unless such failure by such Purchaser is directly caused by the Company’s
failure to provide written notice of a Suspension to such Purchaser, (ii) the
inaccuracy of any representation made by such Purchaser herein or (iii) any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Purchaser expressly for use therein, and will reimburse the Company, each
of its directors, each of its officers who signed the Registration Statement or
controlling Person for any legal and other expense reasonably incurred, as such
expenses are reasonably incurred by the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling Person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the aggregate liability of any Purchaser hereunder shall not exceed the net
proceeds received by such Purchaser upon the sale of the Registrable Securities
included in the Registration Statement or Prospectus giving rise to such
indemnification obligation. No Purchaser shall be liable for the indemnification
obligations of any other Purchaser.
 
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(d) Promptly after receipt by an indemnified party under this Section 8 of
notice of the threat or commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this Section 8, promptly notify the indemnifying party in writing thereof, but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party hereunder or otherwise to
the extent it is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
reasonably satisfactory to the indemnifying party, representing the indemnified
parties who are parties to such action) or (ii) the indemnified party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the reasonable fees and expenses
of counsel shall be at the expense of the indemnifying party. No indemnifying
party, in the defense of any claim covered by this Section 8, shall, except with
the prior written consent of the indemnified party, which consent shall not be
unreasonably conditioned, withheld or delayed, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim. An indemnified party shall
not consent to entry of any judgment or enter into any settlement without the
prior written consent of the indemnifying party.
 
Section 9. Notices.

(a) All notices, requests, consents and other communications hereunder shall be
in writing, shall be mailed by first-class registered or certified airmail,
confirmed facsimile or nationally recognized overnight express courier postage
prepaid, and shall be as addressed as follows: 
 
if to the Company, to:

North American Scientific, Inc.
20200 Sunburst Street
Chatsworth, California 91311
Attention: David King
Telephone No.: (818) 734-8600
Telecopy No.: (818) 734-5224

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with a copy to:

Prior to September 1, 2006:
Seyfarth Shaw LLP
55 East Monroe Street, Ste. 4200
Chicago, Illinois 60603
Attention: Allan Reich
Telephone No.: (312) 781-8650
Telecopy No.: (312) 269-8869

After September 1, 2006:
Seyfarth Shaw LLP
131 South Dearborn Street, Ste. 2400
Chicago, Illinois 60603
Attention: Allan Reich
Telephone No.: (312) 460-5000
Telecopy No.: (312) 460-7000

and if to any Purchaser, at its address as set forth in Appendix I hereto, or at
such other address or addresses as may have been previously furnished to the
Company in writing in accordance with this Section 9.
 
(b) Such notices or other communications shall be deemed delivered upon receipt,
in the case of overnight delivery, personal delivery, facsimile transmission (as
evidenced by the confirmation thereof), or mail. 
 
Section 10. Miscellaneous. 
 
10.1 Amendments. Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the Company and each Purchaser. Any amendment or waiver effected in
accordance with this Section 10.1 shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
 
10.2 Headings. The headings of the various sections of this Agreement are for
convenience of reference only and shall not be deemed to be part of this
Agreement.
 
10.3 Severability. In the event that any provision in this Agreement is held to
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
 
10.4 Governing Law and Forum. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be fully performed therein. The parties hereto agree to submit to
the exclusive jurisdiction of the federal and state courts of the State of New
York with respect to the interpretation of this Agreement or for the purposes of
any action arising out of or related to this Agreement.
 
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10.5 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall constitute an original, and all of which together shall
constitute one and the same instrument. In the event that any signature is
delivered via facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original hereof.
 
10.6 Entire Agreement. This Agreement contains the entire understanding of the
parties with respect to the matters covered herein, supersede all prior
agreements and understandings with respect to such matters and executed by and
among the Company and any of the Purchasers, and, except as specifically set
forth herein or therein, neither the Company nor the Purchasers make any
representation, warranty, covenant or undertaking with respect to such matters.
 
10.7 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the obligations of any other Purchaser under this
Agreement. Nothing contained herein and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group,
or are deemed affiliates (as such term is defined under the Exchange Act) with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to independently protect and enforce its
rights, including without limitation the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
 
10.8 Expenses. Each party hereto shall pay all costs and expenses incurred by it
in connection with the execution and delivery of this Agreement, and all the
transactions contemplated thereby, including fees of legal counsel. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the day and year
first above written.
 

 
NORTH AMERICAN SCIENTIFIC, INC.

By: /s/ L.Michael Cutrer                                 
Name: L. Michael Cutrer
Title:   President and Chief Executive Officer

 
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[Investor Signature Page]

PURCHASER:

Print or Type:
Name of Purchaser (Individual or Institution):

_________________________________________

Name of Individual representing Purchaser (if an Institution):

_________________________________________

Title of Individual representing Purchaser (if an Institution):

_________________________________________

Signature by Individual Purchaser or Individual Representing Purchaser:

_________________________________________

Address: _______________________________________

  _______________________________________

Telephone: ______________________________________

Telecopier: ______________________________________

e-mail: __________________________________________

Shares to be Purchased
Warrants to be Purchased
Price Per Share in Dollars
Aggregate Price
               

 
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Appendix I
(Page 1 of 4)

SECURITIES CERTIFICATE QUESTIONNAIRE

Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:

1.
The exact name that your Shares and Warrant Shares are to be registered in (this
is the name that will appear on your stock certificate(s) and warrant
certificate).

 
You may use a nominee name if appropriate:

___________________________________

2.
The relationship between the Purchaser

of the Securities and the Registered Holder listed
in response to item 1 above:

___________________________________

3.
The mailing address of the Registered Holder

listed in response to item 1 above:

___________________________________

4.
The Social Security Number or Tax

Identification Number of the Registered
Holder listed in response to item 1 above:

___________________________________

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Appendix I
(Page 2 of 4)

NORTH AMERICAN SCIENTIFIC, INC.
REGISTRATION STATEMENT QUESTIONNAIRE

In connection with the preparation of the Registration Statement, please provide
us with the following information:

Plan of Distribution

Attached as Appendix II hereto is a draft of the "Plan of Distribution" section
of the Registration Statement. Do you propose to offer or sell any shares of
Common Stock to be registered on the Registration Statement by means other than
those described in Appendix II?

o Yes  o No

If "yes", please describe the manner in which you propose to offer or sell such
Shares of Common Stock:

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

Selling Stockholders

Pursuant to the “Selling Stockholder” section of the Registration Statement,
please state your or your organization’s name exactly as it should appear in the
Registration Statement:

___________________________________

Please provide the number of shares that you or your organization will own
immediately after Closing, including those Securities purchased by you or your
organization pursuant to this Purchase Agreement and those shares purchased by
you or your organization through other transactions:

___________________________________

Have you or your organization had any position, office or other material
relationship within the past three years with the Company or its affiliates?

Yes             No

If yes, please indicate the nature of any such relationships below:
____________________________________________________
____________________________________________________
____________________________________________________

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Appendix I
(Page 3 of 4)
 
 
Are you (i) an NASD Member (see definition), (ii) a Controlling (see definition)
shareholder of an NASD Member, (iii) a Person Associated with a Member of the
NASD (see definition), (iv) an Underwriter or a Related Person (see definition)
with respect to the proposed offering; (v) do you own any shares or other
securities of any NASD Member not purchased in the open market; or (vi) have you
made any outstanding subordinated loans to any NASD Member?

Answer: o Yes o No If “yes”, please describe below:

________________________________________
________________________________________
________________________________________
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Appendix I 
(Page 4 of 4)

NASD Member. The term “NASD member” means either any broker or dealer admitted
to membership in the National Association of Securities Dealers, Inc. (“NASD”).
(NASD Manual, By-laws Article I, Definitions)

Control. The term “control” (including the terms “controlling,” “controlled by”
and “under common control with”) means the possession, direct or indirect, of
the power, either individually or with others, to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract, or otherwise. (Rule 405 under the Securities Act
of 1933, as amended)

Person Associated with a member of the NASD. The term “person associated with a
member of the NASD” means every sole proprietor, partner, officer, director,
branch manager or executive representative of any NASD Member, or any natural
person occupying a similar status or performing similar functions, or any
natural person engaged in the investment banking or securities business who is
directly or indirectly controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its by-laws. (NASD Manual, By-laws Article I, Definitions)

Underwriter or a Related Person. The term “underwriter or a related person”
means, with respect to a proposed offering, underwriters, underwriters’ counsel,
financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related to
any of such persons. (NASD Interpretation)

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Appendix II

FORM OF PLAN OF DISTRIBUTION

The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares received after the
date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their shares on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These dispositions may be at fixed prices, at prevailing
market prices at the time of sale, at prices related to the prevailing market
price, at varying prices determined at the time of sale, or at negotiated
prices.

The selling stockholders may use any one or more of the following methods when
disposing of shares:

 
•
ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 
•
block trades in which the broker-dealer will attempt to sell the shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;

 
•
purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;

 
•
an exchange distribution in accordance with the rules of the applicable
exchange;

 
•
privately negotiated transactions;

 
•
short sales effected after the date the registration statement of which this
Prospectus is a part is declared effective by the SEC;

 
•
through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;

 
•
broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;

 
•
a combination of any such methods of sale; or

•
any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholders are not obligated to, and there is no assurance that the selling
stockholders will, sell all or any of the shares we are registering. The selling
stockholders may transfer, devise or gift such shares by other means not
described in this prospectus.

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In connection with the sale of our shares, the selling stockholders may enter
into hedging transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the common stock in the course of
hedging the positions they assume. The selling stockholders may also sell shares
of our common stock short and deliver these securities to close out their short
positions, or loan or pledge the common stock to broker-dealers that in turn may
sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).

The aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.

Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares by a broker-dealer acting as principal might be
deemed to be underwriting discounts or commissions under the Securities Act.
Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by a selling stockholder. The
selling stockholders may agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of the shares if liabilities
are imposed on that person under the Securities Act.

The Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to indemnify
the selling stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

The selling stockholders, broker-dealers or agents that participate in the sale
of the common stock may be “underwriters” within the meaning of Section 2(11) of
the Securities Act. Any discounts, commissions, concessions or profit they earn
on any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling stockholders who are “underwriters” within the
meaning of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the selling stockholders.

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The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares owned by them and, if they default in the
performance of any of their secured obligations, the pledgees or secured parties
may offer and sell the shares from time to time under this prospectus as it may
be supplemented from time to time, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus.

To the extent required, the shares to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the
names of any agents, dealer or underwriter, any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.

In order to comply with the securities laws of some states, if applicable, the
common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.

The anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this prospectus (as it
may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.

We have agreed with the selling stockholders to keep the registration statement
of which this prospectus constitutes a part effective until the earlier of (1)
such time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (2) the date on
which the shares may be sold pursuant to Rule 144(k) of the Securities Act.

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EXHIBIT A

FORM OF COMPANY COUNSEL OPINION

35

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EXHIBIT B

FORM OF MCDERMOTT, WILL & EMERY IP OPINION

36

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EXHIBIT C

FORM OF GENERAL COUNSEL OF THE COMPANY IP. REGULATORY AND LITIGATION OPINION
 

37

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EXHIBIT D

FORM OF LOCK-UP AGREEMENT

38

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EXHIBIT E

DISCLOSURE SCHEDULES
 

 
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