**EXHIBIT 10.25**

 

**FIRST AMENDMENT**

 

**TO**

 

**LOAN AND SECURITY AGREEMENT**

 

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

 

SILICON VALLEY BANK (“Bank”)

 

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

 

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

 

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

 

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

 

 

**RECITALS**

 

**A.**                                    Bank and Borrowerhave entered into that certain Loan and Security Agreement, with an EffectiveDate of October 5, 2005 (as the same may from time to time be furtheramended, modified, supplemented or restated, the “Loan Agreement”).

 

**B.**                                    Bank has extendedcredit to Borrower for the purposes permitted in the Loan Agreement.

 

**C.**                                    The parties desireto amend the Loan Agreement as herein set forth.

 

**AGREEMENT**

 

**NOW, THEREFORE,** inconsideration of the foregoing recitals and other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, andintending to be legally bound, the parties hereto agree as follows:

 

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

 

**2.****                                     ****Amendmentsto Loan Agreement.**

 

**2.1****                              ****Amendedand Restated Schedule 2**.  Schedule 2 to the Loan Agreement isamended and restated to read as set forth in Schedule 2 hereto, which isbeing signed by Borrower and Bank concurrently herewith.

 

**2.2****                              ****AssetBased Terms Effective**.

 

**(a)****                                 **The Asset BasedTerms (as defined in the Loan Agreement) shall be fully effective on the datehereof and shall continue in full force and effect at all times hereafter,

 

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notwithstanding anything in the LoanAgreement to the contrary.  Withoutlimiting the generality of the foregoing, all provisions in the Loan Agreementwhich state that they are effective “while the Asset Based Terms are in effect”or words of similar effect shall be fully effective on the date hereof andshall continue in full force and effect at all times hereafter.

 

**(b)****                                 **Withoutlimiting Section 2.2(a) above, Section 9.8 of the Loan Agreementis amended in its entirety to read as follows:

 

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

 

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

 

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

 

is amended to read as follows:

 

“8.3.                        FinancialCovenant Default.  If Borrowerfails to comply with the Financial Covenants set forth in Schedule 2hereto.

 

“8.3A.              Officers.  The persons presently serving in thecapacities of Chief Executive Officer or Chief Financial Officer shall ceaseserving in such capacities for any reason, and shall not be replaced with aperson satisfactory to Bank in its good faith business judgment within 60 daysthereafter.

 

 “8.3B.             Other Defaults.  If Borrower fails to perform or comply withany other term, condition or covenant in this Agreement (other than as setforth in Section 8.1, 8.2,8.3, or 8.3A above), and such failure is notcured within five days after the date it occurs.”

 

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

 

**2.5****                              ****Exhibits.**

 

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

 

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**(b)****                                 **Exhibit Dto the Loan Agreement, the form of Compliance Certificate, is hereby replacedby Exhibit D hereto.

 

**3.****                                     ****Limitationof Amendments.**

 

**3.1****                              **The amendmentsset forth in Section 2, above, are effective for the purposes set forthherein and shall be limited precisely as written and shall not be deemed to (a) bea consent to any amendment, waiver or modification of any other term orcondition of any Loan Document, or (b) otherwise prejudice any right orremedy which Bank may now have or may have in the future under or in connectionwith any Loan Document.

 

**3.2****                              **This Amendmentshall be construed in connection with and as part of the Loan Documents and allterms, conditions, representations, warranties, covenants and agreements setforth in the Loan Documents, except as herein amended, are hereby ratified andconfirmed and shall remain in full force and effect.

 

**4.****                                     ****Representationsand Warranties.**  To induceBank to enter into this Amendment, Borrower hereby represents and warrants toBank as follows:

 

**4.1****                              **Immediatelyafter giving effect to this Amendment (a) the representations andwarranties contained in the Loan Documents are true, accurate and complete inall material respects as of the date hereof (except to the extent suchrepresentations and warranties relate to an earlier date, in which case theyare true and correct as of such date), and (b) no Event of Default hasoccurred and is continuing;

 

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

 

**4.3****                              **Theorganizational documents of Borrower delivered to Bank on the Effective Dateremain accurate and complete and have not been amended, supplemented orrestated since the Effective Date and are, and continue to be, in full forceand effect;

 

**4.4****                              **The executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Agreement, as amended by this Amendment, havebeen duly authorized;

 

**4.5****                              **The executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Agreement, as amended by this Amendment, do notand will not contravene (a) any law or regulation binding on or affectingBorrower, (b) any material agreement by which Borrower or its property isbound, (c) any order, judgment or decree of any court or othergovernmental or public body or authority, or subdivision thereof, binding onBorrower, or (d) the organizational documents of Borrower;

 

**4.6****                              **The executionand delivery by Borrower of this Amendment and the performance by Borrower ofits obligations under the Loan Agreement, as amended by this Amendment, do notrequire any order, consent, approval, license, authorization or validation of,or filing, recording or registration with, or exemption by any governmental orpublic body or authority, or subdivision thereof, binding on either Borrower,except as already has been obtained or made; and

 

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**4.7****                              **This Amendmenthas been duly executed and delivered by Borrower and is the binding obligationof Borrower, enforceable against Borrower in accordance with its terms, exceptas such enforceability may be limited by bankruptcy, insolvency,reorganization, liquidation, moratorium or other similar laws of generalapplication and equitable principles relating to or affecting creditors’rights.

 

**5.****                                     ****Counterparts.**  This Amendment may be executed in any numberof counterparts and all of such counterparts taken together shall be deemed toconstitute one and the same instrument.

 

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

 

 [Signature page follows.]

 

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**IN WITNESS WHEREOF,** theparties hereto have caused this First Amendment to be duly executed anddelivered as of the date first written above.

 

 
| “Borrower”:                                         | “Bank”:           |
|---------------------------------------------------------------|-----------------------------|
|                                                          |                        |
|                                                          |                        |
| **NORTH  AMERICAN SCIENTIFIC,  INC.**A Delaware corporation   | **SILICON  VALLEY BANK**    |
| ** **                                                    | ** **                  |
| ** **                                                    | By                          | /s/BOB MULLER | ** ** |
| By                                                            | /s/L. MICHAEL CUTRER        |   | Title | Senior Relationship Manager |   |
|                                                          | President or Vice President |   |
|                                                          |                        |
|                                                          |                        |
| “Borrower”:                                         |                        |
|                                                          |                        |
| **NORTH  AMERICAN SCIENTIFIC,  INC.**A California corporation |                        |
| ** **                                                    |                        |
| ** **                                                    |                        |
| By                                                            | /s/L. MICHAEL CUTRER        |   |   |
|                                                          | President or Vice President |   |   |
|                                                          |                        |
|                                                          |                        |
| “Borrower”:                                         | ** **                  |
|                                                          | ** **                  |
| **NOMOS  CORPORATION**                                        |                        |
|                                                          |                        |
|                                                          |                        |
| By                                                            | /s/L. MICHAEL CUTRER        |   |   |
|                                                          | President or Vice President |   |   |
|                                                               |                             |  |  |  |  |  |

 

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**Amended and Restated Schedule 2**

** **

**to**

** **

**Loan and Security Agreement**

 
| **Borrower:** | ** ** | **North American Scientific, Inc., a Delaware Corporation**   |
|---------------|------------|--------------------------------------------------------------------|
|          |       | **North American Scientific, Inc., a California Corporation** |
|          |       | **NOMOS Corporation, a Delaware corporation**                      |
|          |       |                                                               |
| **Date:**     | ** ** | **January 12, 2006**                                          |

 

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

 
| **1.   CREDIT LIMIT** |                                                                                                                                                                                                                |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Section 2.1.1):                | An amount not to exceed:                                                                                                                                                                                            |
|                                 |                                                                                                                                                                                                                |
|                                 | (a)          the lesser of  (1) **$5,000,000** at any one time  outstanding (the “Revolving Line Credit Amount”) or (2) the sum  of the following: |
|                                 |                                                                                                                                                                                                                |
|                                 | (i)           up to **80%**(an “Advance Rate”) of the amount of NASI Eligible  Accounts, plus                                                           |
|                                 | (ii)        up to **80%**(an “Advance Rate”) of the amount of NASI-CA Eligible  Accounts, plus                                                                         |
|                                 | (iii)     up to **65%**(an  “Advance Rate”) of the amount of NOMOS Eligible Accounts;                                                                                                 |
|                                 |                                                                                                                                                                                                                |
| minus                                |                                                                                                                                                                                                                |
| (b)                                  | the sum of the following:                                                                                                                                                                                           |
|                                 |                                                                                                                                                                                                                |
|                                 | (i)           the amount of all  outstanding Letters of Credit (including drawn but unreimbursed Letters of  Credit); plus                                        |
|                                 | (ii)        the FX Reserve; and plus                                                                                                                                             |
|                                 | (iii         the aggregate amount of  Cash Management Services utilizations.                                                                                                |
|                                 | provided, however, that Bank shall  have the right, in Bank’s discretion, to modify the above Advance Rates based  upon the results of field audits conducted by Bank.                                         |

 

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| **Letter  of Credit Sublimit**         | ** ** | ** ** | ** **   |
|----------------------------------------|------------|------------|--------------|
| **(Section 2.1.2):**              | ** ** | **$**      | **500,000.** | ** ** |
| **Foreign Exchange Sublimit**          | ** ** | ** ** | ** **   |
| **(Section 2.1.3):**              |       | **$**      | **500,000.** |   |
| **Cash Management Services Sublimit:** | ** ** | ** ** | ** **   |
| **(Section 2.1.4):**              |       | **$**      | **500,000.** |   |

 
| **2.   INTEREST.**                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Interest  Rate**                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (Section 2.3(a)):                               | A per annum rate equal to the “Prime Rate”  in effect from time to time, plus 1.50% per annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **3.   FEES**  (Section 2.4(a)): |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Facility Fee:                                        | In addition to the fees previously paid,  Borrower shall pay to Bank an additional facility fee of $25,000, plus a loan  fee of $5,000, concurrently herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Collateral Handling Fee:                             | Borrower  shall pay Bank a collateral handling fee in an amount equal to $2,000 per  month, payable in arrears on the first day of each month with respect to the  prior month.                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Unused Line Fee:                                     | Borrower shall pay to Bank an unused line  fee equal to the rate of one-half of one percentage point (.50%) per annum  multiplied by the amount by which the Revolving Line Credit Amount exceeds  the average daily principal balance of the outstanding aggregate amount of  the sum, without duplication, of Advances, Letters of Credit, FX Reserve and  Cash Management Services utilizations during the immediately preceding  calendar month (or part thereof), which fee shall be payable monthly in  arrears on the first day of each month, beginning on the first day of the  month following the date hereof. |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Termination Fee:                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                 | The “Termination Fee” that is  payable as set forth in Section 2.1.1(d) shall be equal to one  percent (1%) of the Revolving Line Credit Amount in effect from time to time,  provided that no termination fee shall be charged if the credit  facility hereunder is replaced with a new facility from another division of  Silicon Valley Bank.                                                                                                                                                                                                                                                      |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **4.    MATURITY DATE**               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (Section 13.1):                                 | October 4, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

 

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| **5.  FINANCIAL COVENANTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Section 6.7):                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Borrower shall comply with the following  financial covenant at all times during the term of this Agreement, measured  on a monthly basis, and, monthly and otherwise at the request of Bank from  time to time, Borrower shall provide evidence of compliance therewith.                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Minimum Tangible                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Net Worth:                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Borrower shall maintain a Tangible Net  Worth of not less than $1,500,000 *plus*  (i) 50% of Borrower’s net quarterly income, realized after  October 31, 2005, *plus*  (ii) 50% of all consideration received by Borrower for the issuance of  equity securities after October 31, 2005.                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Increases in the Minimum Tangible Net Worth Covenant based on  consideration received for equity securities of Borrower shall be effective  as of the end of the month in which such consideration is received, and shall  continue effective thereafter. Increases in the Minimum Tangible Net Worth  Covenant based on net income shall be effective on the last day of the fiscal  quarter in which said net income is realized, and shall continue effective  thereafter***.*** In no event shall the  Minimum Tangible Net Worth Covenant be decreased. |
| “Tangible Net Worth” shall mean the excess  of total assets less total liabilities, determined in accordance with GAAP,  with                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | the following adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (A) there  shall be excluded from assets: (i) notes, accounts receivable and other  obligations owing to Borrower from its officers or other Affiliates, and  (ii) all assets which would be classified as intangible assets under  GAAP, including without limitation goodwill, licenses, patents, trademarks,  trade names, copyrights, capitalized software and organizational costs,  licenses and franchises, and (iii) minority investments in other  Persons. |
| (B) there  shall be excluded from liabilities: all indebtedness which is subordinated to  the Obligations under a subordination agreement in form specified by Bank or  by language in the instrument evidencing the indebtedness which Bank agrees  in writing is acceptable to Bank in its good faith business judgment.                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **6.  ADDITIONAL PROVISIONS**                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (a)                                  Collections of  Accounts.  As provided in the Loan  Agreement, all collections of Accounts shall be remitted to the Bank.  Promptly following receipt by Bank of such collections in immediately  available funds, Bank shall apply the same to the Obligations                                                                               |

 

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|   | in such order as Bank shall determine, provided that Bank shall  instead deposit the same into Borrower’s operating account at Bank, if  (i) no Default or an Event of Default has occurred and is continuing,  and (ii) Borrower has Advances available to it under the formulas and  provisions of this Loan Agreement of at least $1,000,000, as confirmed by the  latest Transaction Report received by the Bank. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | (b)                                 Warrant.  Borrower shall concurrently with the  execution hereof issue to Bank a Warrant to Purchase Shares of Borrower’s  Common Stock in the form being executed and delivered concurrently herewith.                |

 

***Signatures on Next Page***

 

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

 
| “Borrower”:                | “Bank”:           |
|--------------------------------------|-----------------------------|
|                                 |                        |
| **NORTH  AMERICAN SCIENTIFIC, INC.** | **SILICON  VALLEY BANK**    |
| A  Delaware corporation              |                        |
|                                 |                        |
|                                 |                        |
| By                                   | /s/L. MICHAEL CUTRER        |   | By | /s/BOB MULLER |   |
|                                 | President or Vice President |   | Title | Senior Relationship Manager |   |
|                                 |                        |
|                                 |                        |
| **NORTH  AMERICAN SCIENTIFIC, INC.** |                        |
| A  California corporation            |                        |
|                                 |                        |
|                                 |                        |
| By                                   | /s/L. MICHAEL CUTRER        |   |   |
|                                 | President or Vice President |   |   |
|                                 |                        |
| **NOMOS  CORPORATION**               |                        |
|                                 |                        |
|                                 |                        |
| By                                   | /s/L. MICHAEL CUTRER        |   |   |
|                                 | President or Vice President |   |   |
|                                      |                             |  |  |  |  |  |

 

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THIS WARRANTAND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND,EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BEOFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS ANDUNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THEOPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUEROF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION ISEXEMPT FROM REGISTRATION.

 

# **WARRANT TO PURCHASE STOCK**

# ** **

Company: **NORTH AMERICAN SCIENTIFIC, INC.**, aDelaware corporation.

Number of Shares: As provided below.

Class of Stock: Common Stock.

Warrant Price: As provided below.

Issue Date:  January 12,2006

Expiration Date:  January 12,2011

 

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

 

ARTICLE A.                            NUMBER OF SHARES ANDPRICE.

 

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

 

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

 

ARTICLE 1. EXERCISE.

 

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

 

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

 

1.3                                 Fair Market Value.  If the Company’s common stock is traded in apublic market and the Shares are common stock, the fair market value of eachShare shall be the closing price of a Share reported for the business dayimmediately before Holder delivers its Notice of Exercise to the Company...  If the Company’s common stock is nottraded in a public market, the Board of Directors of the Company shalldetermine fair market value in its reasonable good faith judgment.

 

1.4                                 Delivery ofCertificate and New Warrant. Promptly after Holder exercises or converts this Warrant and, ifapplicable, the Company receives payment of the aggregate Warrant Price, theCompany shall deliver to Holder certificates for the Shares acquired and, ifthis Warrant has not been fully exercised or converted and has not expired, anew Warrant representing the Shares not so acquired.

 

1.5                                 Replacement ofWarrants.  On receipt of evidencereasonably satisfactory to the Company of the loss, theft, destruction ormutilation of this Warrant and, in the case of loss, theft or destruction, ondelivery of an indemnity agreement reasonably satisfactory in form and amountto the Company or, in the case of mutilation on surrender and cancellation ofthis Warrant, the Company shall execute and deliver, in lieu of this Warrant, anew warrant of like tenor.

 

1.6                                 Treatment ofWarrant Upon Acquisition of Company.

 

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

 

1.6.2                        Treatment of Warrant atAcquisition.

 

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

 

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

 

C)                                    Uponthe closing of any Acquisition other than those particularly described insubsections (A) and (B) above, the successor entity shall assume theobligations of this Warrant, and this Warrant shall be exercisable for the samesecurities, cash, and property as would be payable for the Shares issuable uponexercise of the unexercised portion of this Warrant as if such Shares wereoutstanding on the record date for the Acquisition and subsequent closing.  The Warrant Price and/or number of Sharesshall be adjusted accordingly.

 

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

 

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

 

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

 

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

 

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Warrant, Holder shall be entitled to receive,upon exercise or conversion of this Warrant, the number and kind of securitiesand property that Holder would have received for the Shares if this Warrant hadbeen exercised immediately before such reclassification, exchange,substitution, or other event. The Company or its successor shall promptly issueto Holder an amendment to this Warrant setting forth the number and kind ofsuch new securities or other property issuable upon exercise or conversion ofthis Warrant as a result of such reclassification, exchange, substitution orother event that results in a change of the number and/or class of securitiesissuable upon exercise or conversion of this Warrant.  The amendment to this Warrant shall providefor adjustments which shall be as nearly equivalent as may be practicable tothe adjustments provided for in this Article 2 including, withoutlimitation, adjustments to the Warrant Price (but not to the aggregate purchaseprice payable for the total number of Shares purchasable under this Warrant (asadjusted), which shall remain the same) and to the number of securities orproperty issuable upon exercise of the new Warrant.  The provisions of this Article 2.2 shallsimilarly apply to successive reclassifications, exchanges, substitutions, orother events.

 

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

 

2.4                                 No Impairment.  The Company shall not, by amendment of itsCertificate of Incorporation or through a reorganization, transfer of assets,consolidation, merger, dissolution, issue, or sale of securities or any othervoluntary action, avoid or seek to avoid the observance or performance of anyof the terms to be observed or performed under this Warrant by the Company, butshall at all times in good faith assist in carrying out of all the provisionsof this Article 2 and in taking all such action as may be necessary orappropriate to protect Holder’s rights under this Article againstimpairment.

 

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

 

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

 

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

 

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1                                 Representations andWarranties.  The Company representsand warrants to the Holder as follows: All Shares which may be issued upon theexercise of the purchase right represented by this Warrant, and all securities,if any, issuable upon conversion of the Shares, shall, upon issuance, be dulyauthorized, validly issued, fully paid and nonassessable, and free of any liensand encumbrances except for restrictions on transfer provided for herein orunder applicable federal and state securities laws.

 

3.2                                 Noticeof Certain Events.  If the Companyproposes at any time (a) to declare any dividend or distribution upon anyof its stock, whether in cash, property, stock, or other securities and whetheror not a regular cash dividend; (b) to offer for sale any shares of theCompany’s capital stock (or other securities convertible into such capitalstock), other than (i) pursuant to the Company’s stock option or othercompensatory plans, (ii) in connection with commercial credit arrangementsor equipment financings, or (iii) in connection with strategictransactions for purposes other than capital raising; (c) to effect anyreclassification or recapitalization of any of its stock; (d) to merge orconsolidate with or into any other corporation, or sell, lease, license, orconvey all or substantially all of its assets, or to liquidate, dissolve orwind up; or (e) offer holders of registration rights the opportunity toparticipate in an underwritten public offering of the Company’s securities forcash, then, in connection with each such event, the Company shall give Holder: (1) atleast 10 days prior written notice of the date on which a record will be takenfor such dividend, distribution, or subscription rights (and specifying thedate on which the holders of common stock will be entitled thereto) or fordetermining rights to vote, if any, in respect of the matters referred to in (a) and(b) above; (2) in the case of the matters referred to in (c) and(d) above at least 10 days prior written notice of the date when the samewill take place (and specifying the date on which the holders of common stockwill be entitled to exchange their common stock for securities or otherproperty deliverable upon the occurrence of such event); and (3) in thecase of the matter referred to in (e) above, the same notice as is givento the holders of such registration rights.

 

3.3                                 RegistrationUnder Securities Act of 1933, as amended. The Company represents and warrants that no shareholders or warrantholders of the Company have contractual rights to cause the Company to registertheir shares under the Securities Act of 1933, as amended, and accordingly nosuch rights are being granted to Holder with respect to the Shares.

 

3.4                                 NoShareholder Rights.  Except asprovided in this Warrant, the Holder will not have any rights as a shareholderof the Company until the exercise of this Warrant.

 

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

 

4.1                                 Purchasefor Own Account.  This Warrant andthe securities to be

 

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

 

4.2                                 Disclosureof Information.  The Holder hasreceived or has had full access to all the information it considers necessaryor appropriate to make an informed investment decision with respect to theacquisition of this Warrant and its underlying securities.  The Holder further has had an opportunity toask questions and receive answers from the Company regarding the terms andconditions of the offering of this Warrant and its underlying securities and toobtain additional information (to the extent the Company possessed suchinformation or could acquire it without unreasonable effort or expense)necessary to verify any information furnished to the Holder or to which theHolder has access.

 

4.3                                 InvestmentExperience.  The Holder understandsthat the purchase of this Warrant and its underlying securities involvessubstantial risk.  The Holder hasexperience as an investor in securities of companies in the development stageand acknowledges that the Holder can bear the economic risk of such Holder’sinvestment in this Warrant and its underlying securities and has such knowledgeand experience in financial or business matters that the Holder is capable ofevaluating the merits and risks of its investment in this Warrant and itsunderlying securities and/or has a preexisting personal or businessrelationship with the Company and certain of its officers, directors orcontrolling persons of a nature and duration that enables the Holder to beaware of the character, business acumen and financial circumstances of suchpersons.

 

4.4                                 AccreditedInvestor Status.  The Holder is an “accreditedinvestor” within the meaning of Regulation D promulgated under the Act.

 

4.5                                 TheAct.  The Holder understands thatthis Warrant and the Shares issuable upon exercise or conversion hereof havenot been registered under the Act in reliance upon a specific exemptiontherefrom, which exemption depends upon, among other things, the bona fidenature of the Holder’s investment intent as expressed herein.  The Holder understands that this Warrant andthe Shares issued upon any exercise or conversion hereof must be heldindefinitely unless subsequently registered under the Act and qualified underapplicable state securities laws, or unless exemption from such registrationand qualification are otherwise available.

 

ARTICLE 5. MISCELLANEOUS.

 

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

 

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

 

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

 

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

 

5.3                                 Compliance withSecurities Laws on Transfer.  ThisWarrant and the Shares issuable upon exercise of this Warrant (and thesecurities issuable, directly or indirectly, upon conversion of the Shares, ifany) may not be transferred or assigned in whole or in part without compliancewith applicable federal and state securities laws by the transferor and thetransferee (including, without limitation, the delivery of investmentrepresentation letters and legal opinions reasonably satisfactory to theCompany, as reasonably requested by the Company).  The Company shall not require Holder toprovide an opinion of counsel if the transfer is to Holder’s parent company,SVB Financial Group (formerly Silicon Valley Bancshares), or any otheraffiliate of Holder.  Additionally, theCompany shall also not require an opinion of counsel, so long as Rule 144remains in effect in relevant part in substantially its current form, if (a) inthe reasonable judgment of the Company, based in part upon reasonably detailedrepresentations by the Holder or the selling broker, as appropriate, there isno material question as to the availability of current information asreferenced in Rule 144(c), Holder has complied with Rule 144(d) andthe selling broker has complied with Rule 144(f), and (b) the Companyis provided with a copy of Holder’s notice of proposed sale.

 

5.4                                 TransferProcedure.  Upon receipt by Holder ofthe executed Warrant, Holder may transfer all of this Warrant to Holder’sparent company, SVB Financial Group, by execution of an Assignmentsubstantially in the form of Appendix 2. Subject to the provisions of Article 5.3 and upon providing Companywith written notice, SVB Financial Group and any subsequent Holder may transferall or part of this Warrant or the Shares issuable upon exercise of thisWarrant (or the Shares issuable directly or indirectly, upon conversion of theShares, if any) to any transferee, provided, however, in connection with anysuch transfer, SVB Financial Group or any subsequent Holder will give theCompany notice of the portion of the Warrant being transferred with the name,address and taxpayer identification number of the transferee and Holder willsurrender this Warrant to the Company for reissuance to the transferee(s) (andHolder if applicable).  The Company mayrefuse to transfer this Warrant or the Shares to any person who directlycompetes with the Company, unless, in either case, the stock of the Company ispublicly traded.

 

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

 

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in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

 

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

NORTH AMERICAN SCIENTIFIC, INC.

20200 Sunburst Street

Chatsworth, California 91311

Telephone: (818) 734-8600

Facsimile: (818) 734-5223

 

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

 

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

 

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

 

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

 

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

 

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| “COMPANY”                 |                                          |
|-------------------------------------|-----------------------------------------------|
|                                |                                          |
| **NORTH AMERICAN SCIENTIFIC, INC.** |                                          |
| ** **                          |                                          |
| ** **                          |                                          |
| By:                                 | /s/L.  MICHAEL CUTRER                         |   | By: | /s/JAMES W.  KLINGLER |   |
|                                |                                          |
| Name:                               | L. Michael  Cutrer                            |   | Name: | James W.  Klingler |   |
|                                |                                          |
| Title:                              | President &  Chief Executive Officer | Title:Sr. VP & Chief Financial Officer |
|                                |                                          |
| “HOLDER”                  |                                          |
|                                |                                          |
| SILICON VALLEY BANK                 |                                          |
|                                |                                          |
|                                |                                          |
| By:                                 | /s/BOB  MULLER                                |   |   |
|                                |                                          |
| Name:                               | Bob Muller                                    |   |   |
|                                |                                          |
| Title:                              | Senior  Relationship Manager                  |   |   |
|                                     |                                               |  |  |  |  |  |  |  |  |  |

 

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**APPENDIX 1**

 

**NOTICE OF EXERCISE**

 

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

 

[or]

 

1.                                       Holder elects toconvert the attached Warrant into Shares/cash [strike one] in the manner specifiedin the Warrant.  This conversion isexercised for                        of the Shares covered by the Warrant.

 

[Strike paragraph that does not apply.]

 

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

 
|   |         |   |
|--------|--------------|--------|
|   | Holders Name |   |
|   |         |   |
|   |         |   |
|   |         |   |
|   |         |   |
|   | (Address)    |   |

 

3.                                       Byits execution below and for the benefit of the Company, Holder hereby restateseach of the representations and warranties in Article 4 of the Warrant asthe date hereof.

 
|   | HOLDER: |
|--------|---------|
|   |    |
|   |    |   |
|   |    |
|   | By:     |   |
|   |    |   |
|   | Name:   |   |
|   |    |   |
|   | Title:  |   |
|   |    |   |
|   | (Date): |   |
|   |    |   |
|        |         |  |  |  |  |

 

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**APPENDIX 2**

 

**ASSIGNMENT**

 

**For value received, Silicon Valley Bank hereby sells,assigns and transfers unto**
| ** ** | **Name:**    | **SVB Financial Group**        |
|------------|--------------|--------------------------------|
| ** ** | **Address:** | **3003 Tasman Drive (HA-200)** |
| ** ** | ** **   | **Santa Clara, CA 95054**      |
| ** ** | ** **   | ** **                     |
| ** ** | **Tax ID:**  | **91-1962278**                 |
| ** ** | ** **   | ** **                     |

** **

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

** **
|   | SILICON  VALLEY BANK |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  |   |   |
|   | Name:                |   |   |
|   | Title:               |   |   |
|   |                 |
| Date:  |                 |   |
|        |                      |  |  |  |  |  |

 

 

By itsexecution below, and for the benefit of the Company, SVB Financial Group makeseach of the representations and warranties set forth in Article 4 of theWarrant and agrees to all other provisions of the Warrant as of the datehereof.

 
|   | SVB  FINANCIAL GROUP |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  |   |   |
|   | Name:                |   |   |
|   | Title:               |   |   |
|        |                      |  |  |  |  |

 

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