Document:

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EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this "Agreement") is dated as of March
15, 2007, between ATS Medical, Inc., a Minnesota corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers").

     WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

          "Action" shall have the meaning ascribed to such term in Section
     3.1(j).

          "Affiliate" means any Person that, directly or indirectly through one
     or more intermediaries, controls or is controlled by or is under common
     control with a Person as such terms are used in and construed under Rule
     405 under the Securities Act. With respect to a Purchaser, any investment
     fund or managed account that is managed on a discretionary basis by the
     same investment manager as such Purchaser will be deemed to be an Affiliate
     of such Purchaser.

          "Business Day" means any day except Saturday, Sunday, any day which is
     a federal legal holiday in the United States or any day on which banking
     institutions in the State of New York are authorized or required by law or
     other governmental action to close.

          "Closing" means the closing of the purchase and sale of the Securities
     pursuant to Section 2.1.

          "Closing Date" means the Trading Day when all of the Transaction
     Documents have been executed and delivered by the applicable parties
     thereto, and all conditions precedent to (i) the Purchasers' obligations to
     pay the Subscription Amount and (ii) the Company's obligations to deliver
     the Securities have been satisfied or waived.

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          "Closing Price" means on any particular date (a) the last reported
     closing bid price per share of Common Stock on such date on the Trading
     Market (as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)),
     or (b) if there is no such price on such date, then the closing bid price
     on the Trading Market on the date nearest preceding such date (as reported
     by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c) if the Common
     Stock is not then listed or quoted on a Trading Market and if prices for
     the Common Stock are then reported in the "pink sheets" published by Pink
     Sheets LLC (or a similar organization or agency succeeding to its functions
     of reporting prices), the most recent bid price per share of the Common
     Stock so reported, or (d) if the shares of Common Stock are not then
     publicly traded the fair market value of a share of Common Stock as
     determined by an independent appraiser selected in good faith by the
     Purchasers of a majority in interest of the Shares then outstanding and
     reasonably acceptable to the Company, the fees and expenses of which shall
     be paid by the Company.

          "Commission" means the Securities and Exchange Commission.

          "Common Stock" means the common stock of the Company, par value $0.01
     per share, and any other class of securities into which such securities may
     hereafter be reclassified or changed into.

          "Common Stock Equivalents" means any securities of the Company or the
     Subsidiaries which would entitle the holder thereof to acquire at any time
     Common Stock, including, without limitation, any debt, preferred stock,
     rights, options, warrants or other instrument that is at any time
     convertible into or exercisable or exchangeable for, or otherwise entitles
     the holder thereof to receive, Common Stock.

          "Company Counsel" means Dorsey & Whitney LLP, with offices located at
     50 South Sixth Street, Suite 500, Minneapolis, MN 55402.

          "Disclosure Schedules" means the Disclosure Schedules of the Company
     delivered concurrently herewith.

          "Effective Date" means the date that the initial Registration
     Statement filed by the Company pursuant to the Registration Rights
     Agreement is first declared effective by the Commission.

          "Evaluation Date" shall have the meaning ascribed to such term in
     Section 3.1(r).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended,
     and the rules and regulations promulgated thereunder.

          "Exempt Issuance" means the issuance of (a) shares of Common Stock or
     options to employees, officers or directors of the Company pursuant to any
     stock or option plan duly adopted for such purpose, by a majority of the
     non-employee members of the Board of Directors of the Company or a majority
     of the members of a committee of non-employee directors established, (b)
     securities upon the exercise or exchange of or conversion of any Securities
     issued hereunder and/or other securities exercisable or exchangeable for or
     convertible into shares of Common Stock issued and outstanding on

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     the date of this Agreement, provided that such securities have not been
     amended since the date of this Agreement to increase the number of such
     securities or to decrease the exercise, exchange or conversion price of
     such securities, and (c) securities issued pursuant to acquisitions or
     strategic transactions approved by a majority of the disinterested
     directors of the Company, provided that any such issuance shall only be to
     a Person which is, itself or through its subsidiaries, an operating company
     in a business synergistic with the business of the Company and in which the
     Company receives benefits in addition to the investment of funds, but shall
     not include a transaction in which the Company is issuing securities
     primarily for the purpose of raising capital or to an entity whose primary
     business is investing in securities.

          "FWS" means Feldman Weinstein & Smith LLP with offices located at 420
     Lexington Avenue, Suite 2620, New York, New York 10170-0002.

          "GAAP" shall have the meaning ascribed to such term in Section 3.1(h).

          "Indebtedness" shall have the meaning ascribed to such term in Section
     3.1(aa).

          "Intellectual Property Rights" shall have the meaning ascribed to such
     term in Section 3.1(o).

          "Legend Removal Date" shall have the meaning ascribed to such term in
     Section 4.1(c).

          "Liens" means a lien, charge, security interest, encumbrance, right of
     first refusal, preemptive right or other restriction.

          "Material Adverse Effect" shall have the meaning assigned to such term
     in Section 3.1(b).

          "Material Permits" shall have the meaning ascribed to such term in
     Section 3.1(m).

          "Per Share Purchase Price" equals $2.00, subject to adjustment for
     reverse and forward stock splits, stock dividends, stock combinations and
     other similar transactions of the Common Stock that occur after the date of
     this Agreement.

          "Person" means an individual or corporation, partnership, trust,
     incorporated or unincorporated association, joint venture, limited
     liability company, joint stock company, government (or an agency or
     subdivision thereof) or other entity of any kind.

          "Proceeding" means an action, claim, suit, investigation or proceeding
     (including, without limitation, an informal investigation or partial
     proceeding, such as a deposition), whether commenced or threatened.

          "Purchaser Party" shall have the meaning ascribed to such term in
     Section 4.8.

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          "Registration Rights Agreement" means the Registration Rights
     Agreement, dated the date hereof, among the Company and the Purchasers, in
     the form of Exhibit A attached hereto.

          "Registration Statement" means a registration statement meeting the
     requirements set forth in the Registration Rights Agreement and covering
     the resale by the Purchasers of the Shares and the Warrant Shares.

          "Required Approvals" shall have the meaning ascribed to such term in
     Section 3.1(e).

          "Rule 144" means Rule 144 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same effect as such Rule.

          "SEC Reports" shall have the meaning ascribed to such term in Section
     3.1(h).

          "Securities" means the Shares, the Warrants and the Warrant Shares.

          "Securities Act" means the Securities Act of 1933, as amended, and the
     rules and regulations promulgated thereunder.

          "Shareholder Approval" means such approval as may be required by the
     applicable rules and regulations of the Nasdaq Stock Market (or any
     successor entity) from the shareholders of the Company with respect to the
     transactions contemplated by the Transaction Documents, including the
     issuance of all of the Shares and Warrant Shares in excess of 19.99% of the
     issued and outstanding Common Stock on the Closing Date.

          "Shares" means the shares of Common Stock issued or issuable to each
     Purchaser pursuant to this Agreement.

          "Short Sales" means all "short sales" as defined in Rule 200 of
     Regulation SHO under the Exchange Act (but shall not be deemed to include
     the location and/or reservation of borrowable shares of Common Stock).

          "Subscription Amount" means, as to each Purchaser, the aggregate
     amount to be paid for Shares and Warrants purchased hereunder as specified
     below such Purchaser's name on the signature page of this Agreement and
     next to the heading "Subscription Amount," in United States dollars and in
     immediately available funds.

          "Subsidiary" means any subsidiary of the Company as set forth on
     Schedule 3.1(a), and shall, where applicable, include any subsidiary of the
     Company formed or acquired after the date hereof.

          "Trading Day" means a day on which the New York Stock Exchange is open
     for trading.

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          "Trading Market" means the following markets or exchanges on which the
     Common Stock is listed or quoted for trading on the date in question: the
     American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global
     Market, the Nasdaq Global Select Market, the New York Stock Exchange or the
     OTC Bulletin Board.

          "Transaction Documents" means this Agreement, the Warrants, the
     Registration Rights Agreement and any other documents or agreements
     executed in connection with the transactions contemplated hereunder.

          "Transfer Agent" means Wells Fargo Bank National Association, with a
     mailing address of 161 North Concord Exchange, South Street, St. Paul, MN
     55075-0738 and a facsimile number of 651-450-2452, and any successor
     transfer agent of the Company.

          "VWAP" means, for any date, the price determined by the first of the
     following clauses that applies: (a) if the Common Stock is then listed or
     quoted on a Trading Market, the daily volume weighted average price of the
     Common Stock for such date (or the nearest preceding date) on the Trading
     Market on which the Common Stock is then listed or quoted for trading as
     reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
     City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board
     is not a Trading Market, the volume weighted average price of the Common
     Stock for such date (or the nearest preceding date) on the OTC Bulletin
     Board; (c) if the Common Stock is not then quoted for trading on the OTC
     Bulletin Board and if prices for the Common Stock are then reported in the
     "Pink Sheets" published by Pink Sheets, LLC (or a similar organization or
     agency succeeding to its functions of reporting prices), the most recent
     bid price per share of the Common Stock so reported; or (d) in all other
     cases, the fair market value of a share of Common Stock as determined by an
     independent appraiser selected in good faith by the Purchasers of a
     majority in interest of the Shares then outstanding and reasonably
     acceptable to the Company, the fees and expenses of which shall be paid by
     the Company.

          "Warrants" means collectively the Common Stock purchase warrants
     delivered to the Purchasers at the Closing in accordance with Section
     2.2(a) hereof, which Warrants shall be exercisable 181 days after the
     Closing Date and have a term of exercise equal to 5 years from the initial
     exercise date, in the form of Exhibit C attached hereto.

          "Warrant Shares" means the shares of Common Stock issuable upon
     exercise of the Warrants.

                                  ARTICLE II.
                               PURCHASE AND SALE

     2.1 Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, in the
aggregate, up to $16,250,000 of Shares and Warrants. Each Purchaser shall
deliver to the Company, via wire transfer or a certified check, immediately
available funds equal to its Subscription Amount and the Company shall deliver
to each Purchaser its respective Shares

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and a Warrant as determined pursuant to Section 2.2(a), and the Company and each
Purchaser shall deliver the other items set forth in Section 2.2 deliverable at
the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS, or such
other location as the parties shall mutually agree.

     2.2 Deliveries.

          (a) On or prior to the Closing Date, the Company shall deliver or
     cause to be delivered to each Purchaser the following:

               (i) this Agreement duly executed by the Company;

               (ii) a legal opinion of Company Counsel, substantially in the
          form of Exhibit B attached hereto;

               (iii) a copy of the irrevocable instructions to the Transfer
          Agent instructing the Transfer Agent to deliver, on an expedited
          basis, a certificate evidencing a number of Shares equal to such
          Purchaser's Subscription Amount divided by the Per Share Purchase
          Price, registered in the name of such Purchaser;

               (iv) a Warrant registered in the name of such Purchaser to
          purchase up to a number of shares of Common Stock equal to 40% of such
          Purchaser's Subscription Amount divided by 2.00, with an exercise
          price equal to $2.40, subject to adjustment therein; and

               (v) the Registration Rights Agreement duly executed by the
          Company.

          (b) On or prior to the Closing Date, each Purchaser shall deliver or
     cause to be delivered to the Company the following:

               (i)  this Agreement duly executed by such Purchaser;

               (ii) such Purchaser's Subscription Amount by wire transfer to the
          account as specified in writing by the Company; and

               (iii) the Registration Rights Agreement duly executed by such
          Purchaser.

     2.3 Closing Conditions.

          (a) The obligations of the Company hereunder in connection with the
     Closing are subject to the following conditions being met:

               (i) the accuracy in all material respects on the Closing Date of
          the representations and warranties of the Purchasers contained herein;

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               (ii) all obligations, covenants and agreements of each Purchaser
          required to be performed at or prior to the Closing Date shall have
          been performed; and

               (iii) the delivery by each Purchaser of the items set forth in
          Section 2.2(b) of this Agreement.

          (b) The respective obligations of the Purchasers hereunder in
     connection with the Closing are subject to the following conditions being
     met:

               (i) the accuracy in all material respects on the Closing Date of
          the representations and warranties of the Company contained herein;

               (ii) all obligations, covenants and agreements of the Company
          required to be performed at or prior to the Closing Date shall have
          been performed;

               (iii) the delivery by the Company of the items set forth in
          Section 2.2(a) of this Agreement;

               (iv) there shall have been no Material Adverse Effect with
          respect to the Company since the date hereof; and

               (v) from the date hereof to the Closing Date, trading in the
          Common Stock shall not have been suspended by the Commission or the
          Company's principal Trading Market (except for any suspension of
          trading of limited duration agreed to by the Company, which suspension
          shall be terminated prior to the Closing), and, at any time prior to
          the Closing Date, trading in securities generally as reported by
          Bloomberg L.P. shall not have been suspended or limited, or minimum
          prices shall not have been established on securities whose trades are
          reported by such service, or on any Trading Market, nor shall a
          banking moratorium have been declared either by the United States or
          New York State authorities nor shall there have occurred any material
          outbreak or escalation of hostilities or other national or
          international calamity of such magnitude in its effect on, or any
          material adverse change in, any financial market which, in each case,
          in the reasonable judgment of each Purchaser, makes it impracticable
          or inadvisable to purchase the Securities at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. Except as set forth in
the Disclosure Schedules which Disclosure Schedules are being delivered at the
same time as this Agreement, and shall qualify any representation included or
otherwise made herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the
following representations and warranties to each Purchaser:

          (a) Subsidiaries. All of the direct and indirect subsidiaries of the
     Company are set forth on Schedule 3.1(a). The Company owns, directly or
     indirectly, all of the

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     capital stock or other equity interests of each Subsidiary free and clear
     of any Liens, and all of the issued and outstanding shares of capital stock
     of each Subsidiary are validly issued and are fully paid, non-assessable
     and free of preemptive and similar rights to subscribe for or purchase
     securities. If the Company has no subsidiaries, then all other references
     to the Subsidiaries or any of them in the Transaction Documents shall be
     disregarded.

          (b) Organization and Qualification. The Company and each of the
     Subsidiaries is an entity duly incorporated or otherwise organized, validly
     existing and in good standing under the laws of the jurisdiction of its
     incorporation or organization (as applicable), with the requisite power and
     authority to own and use its properties and assets and to carry on its
     business as currently conducted. Neither the Company nor any Subsidiary is
     in violation or default of any of the provisions of its respective
     certificate or articles of incorporation, bylaws or other organizational or
     charter documents. Each of the Company and the Subsidiaries is duly
     qualified to conduct business and is in good standing as a foreign
     corporation or other entity in each jurisdiction in which the nature of the
     business conducted or property owned by it makes such qualification
     necessary, except where the failure to be so qualified or in good standing,
     as the case may be, could not have or reasonably be expected to result in
     (i) a material adverse effect on the legality, validity or enforceability
     of any Transaction Document, (ii) a material adverse effect on the results
     of operations, assets, business, or condition (financial or otherwise) of
     the Company and the Subsidiaries, taken as a whole, or (iii) a material
     adverse effect on the Company's ability to perform in any material respect
     on a timely basis its obligations under any Transaction Document (any of
     (i), (ii) or (iii), a "Material Adverse Effect") and 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.

          (c) Authorization; Enforcement. The Company has the requisite
     corporate power and authority to enter into and to consummate the
     transactions contemplated by each of the Transaction Documents and
     otherwise to carry out its obligations hereunder and thereunder. The
     execution and delivery of each of the Transaction Documents by the Company
     and the consummation by it of the transactions contemplated hereby and
     thereby have been duly authorized by all necessary action on the part of
     the Company and no further action is required by the Company, its board of
     directors or its stockholders in connection therewith other than in
     connection with the Required Approvals. Each Transaction Document has been
     (or upon delivery will have been) duly executed by the Company and, when
     delivered in accordance with the terms hereof and thereof, will constitute
     the valid and binding obligation of the Company enforceable against the
     Company in accordance with its terms except (i) as limited by general
     equitable principles and applicable bankruptcy, insolvency, reorganization,
     moratorium and other laws of general application affecting enforcement of
     creditors' rights generally, (ii) as limited by laws relating to the
     availability of specific performance, injunctive relief or other equitable
     remedies and (iii) insofar as indemnification and contribution provisions
     may be limited by applicable law.

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          (d) No Conflicts. The execution, delivery and performance of the
     Transaction Documents by the Company, the issuance and sale of the
     Securities and the consummation by the Company of the other transactions
     contemplated hereby and thereby do not and will not (i) conflict with or
     violate any provision of the Company's or any Subsidiary's certificate or
     articles of incorporation, bylaws or other organizational or charter
     documents, or (ii) conflict with, or constitute a default (or an event that
     with notice or lapse of time or both would become a default) under, result
     in the creation of any Lien upon any of the properties or assets of the
     Company or any Subsidiary, or give to others any rights of termination,
     amendment, acceleration or cancellation (with or without notice, lapse of
     time or both) of, any agreement, credit facility, debt or other instrument
     (evidencing a Company or Subsidiary debt or otherwise) or other
     understanding to which the Company or any Subsidiary is a party or by which
     any property or asset of the Company or any Subsidiary is bound or
     affected, or (iii) subject to the Required Approvals, conflict with or
     result in a violation of any law, rule, regulation, order, judgment,
     injunction, decree or other restriction of any court or governmental
     authority to which the Company or a Subsidiary is subject (including
     federal and state securities laws and regulations), or by which any
     property or asset of the Company or a Subsidiary is bound or affected;
     except in the case of each of clauses (ii) and (iii), such as could not
     have or reasonably be expected to result in a Material Adverse Effect.

          (e) Filings, Consents and Approvals. The Company is not required to
     obtain any consent, waiver, authorization or order of, give any notice to,
     or make any filing or registration with, any court or other federal, state,
     local or other governmental authority or other Person in connection with
     the execution, delivery and performance by the Company of the Transaction
     Documents, other than (i) filings required pursuant to Section 4.4 of this
     Agreement, (ii) the filing with the Commission of the Registration
     Statement, (iii) application(s) to each applicable Trading Market for the
     listing of the Securities for trading thereon in the time and manner
     required thereby, and (iv) the filing of Form D with the Commission and
     such filings as are required to be made under applicable state securities
     laws (collectively, the "Required Approvals").

          (f) Issuance of the Securities. The Securities are duly authorized
     and, when issued and paid for in accordance with the applicable Transaction
     Documents, will be duly and validly issued, fully paid and nonassessable,
     free and clear of all Liens imposed by the Company other than restrictions
     on transfer provided for in the Transaction Documents. The Warrant Shares,
     when issued in accordance with the terms of the Transaction Documents, will
     be validly issued, fully paid and nonassessable, free and clear of all
     Liens imposed by the Company other than restrictions on transfer provided
     for in the Transaction Documents. The Company has reserved from its duly
     authorized capital stock the maximum number of shares of Common Stock
     issuable pursuant to this Agreement and the Warrants.

          (g) Capitalization. The capitalization of the Company is as set forth
     on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of
     shares of Common Stock owned of record, and, to the knowledge of the
     Company, beneficially, by Affiliates of the Company as of the date hereof.
     The Company has not issued any capital

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     stock since its most recently filed periodic report under the Exchange Act,
     other than pursuant to the exercise of employee stock options under the
     Company's stock option plans, the issuance of shares of Common Stock to
     employees pursuant to the Company's employee stock purchase plans and
     pursuant to the conversion or exercise of Common Stock Equivalents
     outstanding as of the date of the most recently filed periodic report under
     the Exchange Act. No Person has any right of first refusal, preemptive
     right, right of participation, or any similar right to participate in the
     transactions contemplated by the Transaction Documents. Except as set forth
     on Schedule 3.1(g) or as a result of the purchase and sale of the
     Securities, there are no outstanding options, warrants, scrip rights to
     subscribe to, calls or commitments of any character whatsoever relating to,
     or securities, rights or obligations convertible into or exercisable or
     exchangeable for, or giving any Person any right to subscribe for or
     acquire, any shares of Common Stock, or contracts, commitments,
     understandings or arrangements by which the Company or any Subsidiary is or
     may become bound to issue additional shares of Common Stock or Common Stock
     Equivalents. The issuance and sale of the Securities will not obligate the
     Company to issue shares of Common Stock or other securities to any Person
     (other than the Purchasers) and will not result in a right of any holder of
     Company securities to adjust the exercise, conversion, exchange or reset
     price under any of such securities. All of the outstanding shares of
     capital stock of the Company are validly issued, fully paid and
     nonassessable, have been issued in compliance with all federal and state
     securities laws, and none of such outstanding shares was issued in
     violation of any preemptive rights or similar rights to subscribe for or
     purchase securities. No further approval or authorization of any
     stockholder, the Board of Directors of the Company or others is required
     for the issuance and sale of the Securities. There are no stockholders
     agreements, voting agreements or other similar agreements with respect to
     the Company's capital stock to which the Company is a party or, to the
     knowledge of the Company, between or among any of the Company's
     stockholders.

          (h) SEC Reports; Financial Statements. The Company has filed all
     reports, schedules, forms, statements and other documents required to be
     filed by the Company under the Securities Act and the Exchange Act,
     including pursuant to Section 13(a) or 15(d) thereof, for the two years
     preceding the date hereof (or such shorter period as the Company was
     required by law or regulation to file such material) (the foregoing
     materials, including the exhibits thereto and documents incorporated by
     reference therein, being collectively referred to herein as the "SEC
     Reports") on a timely basis or has received a valid extension of such time
     of filing and has filed any such SEC Reports prior to the expiration of any
     such extension. As of their respective dates, the SEC Reports complied in
     all material respects with the requirements of the Securities Act and the
     Exchange Act, as applicable, and none of the SEC Reports, when filed,
     contained any 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. The financial statements of the Company included
     in the SEC Reports comply in all material respects with applicable
     accounting requirements and the rules and regulations of the Commission
     with respect thereto as in effect at the time of filing. Such financial
     statements have been prepared in accordance with United States generally
     accepted accounting principles applied on a consistent basis during the
     periods involved ("GAAP"), except as may be otherwise

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     specified in such financial statements or the notes thereto and except that
     unaudited financial statements may not contain all footnotes required by
     GAAP, and fairly present in all material respects the financial position of
     the Company and its consolidated subsidiaries as of and for the dates
     thereof and the results of operations and cash flows for the periods then
     ended, subject, in the case of unaudited statements, to normal, immaterial,
     year-end audit adjustments.

          (i) Material Changes; Undisclosed Events, Liabilities or Developments.
     Since the date of the latest audited financial statements included within
     the SEC Reports, except as specifically disclosed in a subsequent SEC
     Report filed prior to the date hereof, (i) there has been no event,
     occurrence or development that has had or that could reasonably be expected
     to result in a Material Adverse Effect, (ii) the Company has not incurred
     any liabilities (contingent or otherwise) other than (A) trade payables and
     accrued expenses incurred in the ordinary course of business consistent
     with past practice and (B) liabilities not required to be reflected in the
     Company's financial statements pursuant to GAAP or disclosed in filings
     made with the Commission, (iii) the Company has not altered its method of
     accounting, (iv) the Company has not declared or made any dividend or
     distribution of cash or other property to its stockholders or purchased,
     redeemed or made any agreements to purchase or redeem any shares of its
     capital stock and (v) the Company has not issued any equity securities to
     any officer, director or Affiliate, except pursuant to existing Company
     stock option plans. The Company does not have pending before the Commission
     any request for confidential treatment of information. Except for the
     issuance of the Securities contemplated by this Agreement or as set forth
     on Schedule 3.1(i), no event, liability or development has occurred or
     exists with respect to the Company or its Subsidiaries or their respective
     business, properties, operations or financial condition, that would be
     required to be disclosed by the Company under applicable securities laws at
     the time this representation is made or deemed made that has not been
     publicly disclosed at least 1 Trading Day prior to the date that this
     representation is made.

          (j) Litigation. There is no action, suit, inquiry, notice of
     violation, proceeding or investigation pending or, to the knowledge of the
     Company, threatened against or affecting the Company, any Subsidiary or any
     of their respective properties before or by any court, arbitrator,
     governmental or administrative agency or regulatory authority (federal,
     state, county, local or foreign) (collectively, an "Action") which (i)
     adversely affects or challenges the legality, validity or enforceability of
     any of the Transaction Documents or the Securities or (ii) could, if there
     were an unfavorable decision, have or reasonably be expected to result in a
     Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
     director or officer thereof, is or has been the subject of any Action which
     has resulted in a final judgment involving a claim of violation of or
     liability under federal or state securities laws or a claim of breach of
     fiduciary duty. There has not been, and to the knowledge of the Company,
     there is not pending or contemplated, any investigation by the Commission
     involving the Company or any current or former director or officer of the
     Company. The Commission has not issued any stop order or other order
     suspending the effectiveness of any registration statement filed by the
     Company or any Subsidiary under the Exchange Act or the Securities Act.

                                       11
<PAGE>

          (k) Labor Relations. No material labor dispute exists or, to the
     knowledge of the Company, is imminent with respect to any of the employees
     of the Company which could reasonably be expected to result in a Material
     Adverse Effect. None of the Company's or its Subsidiaries' employees is a
     member of a union that relates to such employee's relationship with the
     Company or such Subsidiary, and neither the Company nor any of its
     Subsidiaries is a party to a collective bargaining agreement, and the
     Company and its Subsidiaries believe that their relationships with their
     employees are good. No executive officer, to the knowledge of the Company,
     is, or is now expected to be, in violation of any material term of any
     employment contract, confidentiality, disclosure or proprietary information
     agreement or non-competition agreement, or any other contract or agreement
     or any restrictive covenant in favor of any third party, and the continued
     employment of each such executive officer does not subject the Company or
     any of its Subsidiaries to any liability with respect to any of the
     foregoing matters. The Company and its Subsidiaries are in compliance with
     all U.S. federal, state, local and foreign laws and regulations relating to
     employment and employment practices, terms and conditions of employment and
     wages and hours, except where the failure to be in compliance could not,
     individually or in the aggregate, reasonably be expected to have a Material
     Adverse Effect.

          (l) Compliance. Neither the Company nor any Subsidiary (i) is in
     default under or in violation of (and no event has occurred that has not
     been waived that, with notice or lapse of time or both, would result in a
     default by the Company or any Subsidiary under), nor has the Company or any
     Subsidiary received notice of a claim that it is in default under or that
     it is in violation of, any indenture, loan or credit agreement or any other
     agreement or instrument to which it is a party or by which it or any of its
     properties is bound (whether or not such default or violation has been
     waived), (ii) is in violation of any order of any court, arbitrator or
     governmental body, or (iii) is or has been in violation of any statute,
     rule or regulation of any governmental authority, including without
     limitation all foreign, federal, state and local laws applicable to its
     business and all such laws that affect the environment, except in each case
     as could not have or reasonably be expected to result in a Material Adverse
     Effect.

          (m) Regulatory Permits. The Company and the Subsidiaries possess all
     certificates, authorizations and permits issued by the appropriate federal,
     state, local or foreign regulatory authorities necessary to conduct their
     respective businesses as described in the SEC Reports, except where the
     failure to possess such permits could not reasonably be expected to result
     in a Material Adverse Effect ("Material Permits"), and neither the Company
     nor any Subsidiary has received any notice of proceedings relating to the
     revocation or modification of any Material Permit.

          (n) Title to Assets. The Company and the Subsidiaries have good and
     marketable title in fee simple to all real property owned by them and good
     and marketable title in all personal property owned by them that is
     material to the business of the Company and the Subsidiaries, in each case
     free and clear of all Liens, except for Liens that do not materially affect
     the value of such property and do not materially interfere with the use
     made and proposed to be made of such property by the Company and the
     Subsidiaries and Liens for the payment of federal, state or other taxes,
     the

                                       12

<PAGE>

     payment of which is neither delinquent nor subject to penalties. Any real
     property and facilities held under lease by the Company and the
     Subsidiaries are held by them under valid, subsisting and enforceable
     leases with which the Company and the Subsidiaries are in compliance in all
     material respects.

          (o) Patents and Trademarks. The Company and the Subsidiaries have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications, service marks, trade names, trade secrets, inventions,
     copyrights, licenses and other intellectual property rights and similar
     rights necessary or material for use in connection with their respective
     businesses as described in the SEC Reports and which the failure to so have
     could have a Material Adverse Effect (collectively, the "Intellectual
     Property Rights"). Neither the Company nor any Subsidiary has received a
     notice (written or otherwise) that any of the Intellectual Property Rights
     used by the Company or any Subsidiary violates or infringes upon the rights
     of any Person. To the knowledge of the Company, all such Intellectual
     Property Rights are enforceable and there is no existing infringement by
     another Person of any of the Intellectual Property Rights. The Company and
     its Subsidiaries have taken reasonable security measures to protect the
     secrecy, confidentiality and value of all of their intellectual properties,
     except where failure to do so could not, individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect.

          (p) Insurance. The Company and the Subsidiaries are insured by
     insurers of recognized financial responsibility against such losses and
     risks and in such amounts as are prudent and customary in the businesses in
     which the Company and the Subsidiaries are engaged, including, but not
     limited to, directors and officers insurance coverage at least equal to the
     aggregate Subscription Amount. Neither the Company nor any Subsidiary 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
     without a significant increase in cost.

          (q) Transactions With Affiliates and Employees. Except as set forth in
     the SEC Reports, none of the officers or directors of the Company and, to
     the knowledge of the Company, none of the employees of the Company is
     presently a party to any transaction with the Company or any Subsidiary
     (other than for services as employees, officers and directors), including
     any contract, agreement or other arrangement providing for the furnishing
     of services to or by, providing for rental of real or personal property to
     or from, or otherwise requiring payments to or from any officer, director
     or such employee or, to the knowledge of the Company, any entity in which
     any officer, director, or any such employee has a substantial interest or
     is an officer, director, trustee or partner, in each case in excess of
     $120,000 other than for (i) payment of salary or consulting fees for
     services rendered, (ii) reimbursement for expenses incurred on behalf of
     the Company and (iii) other employee benefits, including stock option
     agreements under any stock option plan of the Company.

          (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
     material compliance with all provisions of the Sarbanes-Oxley Act of 2002
     which are

                                       13

<PAGE>

     applicable to it as of the Closing Date. The Company and the Subsidiaries
     maintain a system of internal accounting controls sufficient to provide
     reasonable assurance 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
     conformity with GAAP 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. The Company has
     established disclosure controls and procedures (as defined in Exchange Act
     Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
     controls and procedures to ensure that information required to be disclosed
     by the Company in the reports it files or submits under the Exchange Act is
     recorded, processed, summarized and reported, within the time periods
     specified in the Commission's rules and forms. The Company's certifying
     officers have evaluated the effectiveness of the Company's disclosure
     controls and procedures as of the end of the period covered by the
     Company's most recently filed periodic report under the Exchange Act (such
     date, the "Evaluation Date"). The Company presented in its most recently
     filed periodic report under the Exchange Act the conclusions of the
     certifying officers about the effectiveness of the disclosure controls and
     procedures based on their evaluations as of the Evaluation Date. Since the
     Evaluation Date, there have been no changes in the Company's internal
     control over financial reporting (as such term is defined in the Exchange
     Act) that has materially affected, or is reasonably likely to materially
     affect, the Company's internal control over financial reporting.

          (s) Certain Fees. Except for fees payable to RBC Capital Markets
     Corporation, no brokerage or finder's fees or commissions are or will be
     payable by the Company to any broker, financial advisor or consultant,
     finder, placement agent, investment banker, bank or other Person with
     respect to the transactions contemplated by the Transaction Documents. The
     Purchasers shall have no obligation with respect to any fees or with
     respect to any claims made by or on behalf of other Persons for fees of a
     type contemplated in this Section that may be due in connection with the
     transactions contemplated by the Transaction Documents.

          (t) Private Placement. Assuming the accuracy of the Purchasers
     representations and warranties set forth in Section 3.2, no registration
     under the Securities Act is required for the offer and sale of the
     Securities by the Company to the Purchasers as contemplated hereby. The
     issuance and sale of the Securities hereunder does not contravene the rules
     and regulations of the Trading Market.

          (u) Investment Company. The Company is not, and is not an Affiliate
     of, and immediately after receipt of payment for the Securities, will not
     be or be an Affiliate of, an "investment company" within the meaning of the
     Investment Company Act of 1940, as amended. The Company shall conduct its
     business in a manner so that it will not become subject to the Investment
     Company Act of 1940, as amended.

          (v) Registration Rights. Other than each of the Purchasers, no Person
     has any right to cause the Company to effect the registration under the
     Securities Act of any

                                       14

<PAGE>

     securities of the Company, other than registration statements which have
     already been filed and declared effective.

          (w) Listing and Maintenance Requirements. The Company's Common Stock
     is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and
     the Company has taken no action designed to, or which to its knowledge is
     likely to have the effect of, terminating the registration of the Common
     Stock under the Exchange Act nor has the Company received any notification
     that the Commission is contemplating terminating such registration. The
     Company has not, in the 12 months preceding the date hereof, received
     notice from any Trading Market on which the Common Stock is or has been
     listed or quoted to the effect that the Company is not in compliance with
     the listing or maintenance requirements of such Trading Market. The Company
     is, and has no reason to believe that it will not in the foreseeable future
     continue to be, in compliance with all such listing and maintenance
     requirements.

          (x) Application of Takeover Protections. The Company and its board of
     directors have taken all necessary action, if any, in order to render
     inapplicable any control share acquisition, business combination, poison
     pill (including any distribution under a rights agreement) or other similar
     anti-takeover provision under the Company's certificate of incorporation
     (or similar charter documents) or the laws of its state of incorporation
     that is or could become applicable to the Purchasers as a result of the
     Purchasers and the Company fulfilling their obligations or exercising their
     rights under the Transaction Documents, including without limitation as a
     result of the Company's issuance of the Securities and the Purchasers'
     ownership of the Securities.

          (y) Disclosure. Except with respect to the material terms and
     conditions of the transactions contemplated by the Transaction Documents,
     the Company confirms that neither it nor any other Person acting on its
     behalf has provided any of the Purchasers or their agents or counsel with
     any information that it believes constitutes or might constitute material,
     non-public information. The Company understands and confirms that the
     Purchasers will rely on the foregoing representation in effecting
     transactions in securities of the Company. All disclosure furnished by or
     on behalf of the Company to the Purchasers regarding the Company, its
     business and the transactions contemplated hereby, including the SEC
     Reports and the Disclosure Schedules to this Agreement, is true and correct
     and does not contain any untrue statement of a material fact or omit to
     state any material fact necessary in order to make the statements made
     therein, in light of the circumstances under which they were made, not
     misleading. The press releases and the SEC Reports filed or disseminated by
     the Company during the twelve months preceding the date of this Agreement
     taken as a whole do not contain any untrue statement of a material fact or
     omit to state a 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 and when made, not misleading. The Company
     acknowledges and agrees that no Purchaser makes or has made any
     representations or warranties with respect to the transactions contemplated
     hereby other than those specifically set forth in Section 3.2 hereof.

                                       15

<PAGE>

          (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
     representations and warranties set forth in Section 3.2, neither the
     Company, nor any of its Affiliates, nor any Person acting on its or their
     behalf has, directly or indirectly, made any offers or sales of any
     security or solicited any offers to buy any security, under circumstances
     that would cause this offering of the Securities to be integrated with
     prior offerings by the Company for purposes of (i) the Securities Act which
     would require the registration of any such securities under the Securities
     Act, or (ii) any applicable shareholder approval provisions of any Trading
     Market on which any of the securities of the Company are listed or
     designated.

          (aa) Solvency. Based on the consolidated financial condition of the
     Company as of the Closing Date, after giving effect to the receipt by the
     Company of the proceeds from the sale of the Securities hereunder, (i) the
     fair saleable value of the Company's assets exceeds the amount that will be
     required to be paid on or in respect of the Company's existing debts and
     other liabilities (including known contingent liabilities) as they mature;
     (ii) the Company's assets do not constitute unreasonably small capital to
     carry on its business as now conducted and as proposed to be conducted
     including its capital needs taking into account the particular capital
     requirements of the business conducted by the Company, and projected
     capital requirements and capital availability thereof; and (iii) the
     current cash flow of the Company, together with the proceeds the Company
     would receive, were it to liquidate all of its assets, after taking into
     account all anticipated uses of the cash, would be sufficient to pay all
     amounts on or in respect of its liabilities when such amounts are required
     to be paid. The Company does not intend to incur debts beyond its ability
     to pay such debts as they mature (taking into account the timing and
     amounts of cash to be payable on or in respect of its debt). The Company
     has no knowledge of any facts or circumstances which lead it to believe
     that it will file for reorganization or liquidation under the bankruptcy or
     reorganization laws of any jurisdiction within one year from the Closing
     Date. Schedule 3.1(aa) sets forth as of the date thereof all outstanding
     secured and unsecured Indebtedness of the Company or any Subsidiary, or for
     which the Company or any Subsidiary has commitments. For the purposes of
     this Agreement, "Indebtedness" means (a) any liabilities for borrowed money
     or amounts owed in excess of $50,000 (other than trade accounts payable
     incurred in the ordinary course of business), (b) all guaranties,
     endorsements and other contingent obligations in respect of Indebtedness of
     others, whether or not the same are or should be reflected in the Company's
     balance sheet (or the notes thereto), except guaranties by endorsement of
     negotiable instruments for deposit or collection or similar transactions in
     the ordinary course of business; and (c) the present value of any lease
     payments in excess of $50,000 due under leases required to be capitalized
     in accordance with GAAP. Neither the Company nor any Subsidiary is in
     default with respect to any Indebtedness.

          (bb) Tax Status. Except for matters that would not, individually or in
     the aggregate, have or reasonably be expected to result in a Material
     Adverse Effect, the Company and each Subsidiary has filed all necessary
     federal, state and foreign income and franchise tax returns and has paid or
     accrued all taxes shown as due thereon, and the Company has no knowledge of
     a tax deficiency which has been asserted or threatened against the Company
     or any Subsidiary.

                                       16

<PAGE>

          (cc) No General Solicitation. Neither the Company nor any person
     acting on behalf of the Company has offered or sold any of the Securities
     by any form of general solicitation or general advertising. The Company has
     offered the Securities for sale only to the Purchasers and certain other
     "accredited investors" within the meaning of Rule 501 under the Securities
     Act.

          (dd) Foreign Corrupt Practices. Neither the Company, nor to the
     knowledge of the Company, any agent or other person acting on behalf of the
     Company, has (i) directly or indirectly, used any funds for unlawful
     contributions, gifts, entertainment or other unlawful expenses related to
     foreign or domestic political activity, (ii) made any unlawful payment to
     foreign or domestic government officials or employees or to any foreign or
     domestic political parties or campaigns from corporate funds, (iii) failed
     to disclose fully any contribution made by the Company (or made by any
     person acting on its behalf of which the Company is aware) which is in
     violation of law, or (iv) violated in any material respect any provision of
     the Foreign Corrupt Practices Act of 1977, as amended.

          (ee) Accountants. The Company's accounting firm is set forth on
     Schedule 3.1(ee) of the Disclosure Schedule. To the knowledge and belief of
     the Company, such accounting firm (i) is a registered public accounting
     firm as required by the Exchange Act and (ii) shall express its opinion
     with respect to the financial statements to be included in the Company's
     Annual Report on Form 10-K for the year ending December 31, 2006.

          (ee) No Disagreements with Accountants and Lawyers. There are no
     disagreements of any kind presently existing, or reasonably anticipated by
     the Company to arise, between the Company and the accountants and lawyers
     formerly or presently employed by the Company which could affect the
     Company's ability to perform any of its obligations under any of the
     Transaction Documents, and the Company is current with respect to any fees
     owed to its accountants and lawyers.

          (ff) Acknowledgment Regarding Purchasers' Purchase of Securities. The
     Company acknowledges and agrees that each of the Purchasers is acting
     solely in the capacity of an arm's length purchaser with respect to the
     Transaction Documents and the transactions contemplated thereby. The
     Company further acknowledges that no Purchaser is acting as a financial
     advisor or fiduciary of the Company (or in any similar capacity) with
     respect to the Transaction Documents and the transactions contemplated
     thereby and any advice given by any Purchaser or any of their respective
     representatives or agents in connection with the Transaction Documents and
     the transactions contemplated thereby is merely incidental to the
     Purchasers' purchase of the Securities. The Company further represents to
     each Purchaser that the Company's decision to enter into this Agreement and
     the other Transaction Documents has been based solely on the independent
     evaluation of the transactions contemplated hereby by the Company and its
     representatives.

          (gg) Acknowledgement Regarding Purchaser's Trading Activity. Anything
     in this Agreement or elsewhere herein to the contrary notwithstanding
     (except for Sections 3.2(f) and 4.14 hereof), it is understood and
     acknowledged by the Company (i) that none of the Purchasers have been asked
     by the Company to agree, nor has any Purchaser

                                       17

<PAGE>

     agreed, to desist from purchasing or selling, long and/or short, securities
     of the Company, or "derivative" securities based on securities issued by
     the Company or to hold the Securities for any specified term; (ii) that
     past or future open market or other transactions by any Purchaser,
     including Short Sales, and specifically including, without limitation,
     Short Sales or "derivative" transactions, before or after the closing of
     this or future private placement transactions, may negatively impact the
     market price of the Company's publicly-traded securities; (iii) that any
     Purchaser, and counter-parties in "derivative" transactions to which any
     such Purchaser is a party, directly or indirectly, presently may have a
     "short" position in the Common Stock, and (iv) that each Purchaser shall
     not be deemed to have any affiliation with or control over any arm's length
     counter-party in any "derivative" transaction. The Company further
     understands and acknowledges that (a) one or more Purchasers may engage in
     hedging activities at various times during the period that the Securities
     are outstanding, including, without limitation, during the periods that the
     value of the Warrant Shares deliverable with respect to Securities are
     being determined and (b) such hedging activities (if any) could reduce the
     value of the existing stockholders' equity interests in the Company at and
     after the time that the hedging activities are being conducted. The Company
     acknowledges that such aforementioned hedging activities do not constitute
     a breach of any of the Transaction Documents.

          (hh) Regulation M Compliance. The Company has not, and to its
     knowledge no one acting on its behalf has, (i) taken, directly or
     indirectly, any action designed to cause or to result in the stabilization
     or manipulation of the price of any security of the Company to facilitate
     the sale or resale of any of the Securities, (ii) sold, bid for, purchased,
     or, paid any compensation for soliciting purchases of, any of the
     Securities, or (iii) paid or agreed to pay to any Person any compensation
     for soliciting another to purchase any other securities of the Company,
     other than, in the case of clauses (ii) and (iii), compensation paid to the
     Company's placement agent in connection with the placement of the
     Securities.

          (ii) FDA. As to each product subject to the jurisdiction of the U.S.
     Food and Drug Administration ("FDA") under the Federal Food, Drug and
     Cosmetic Act, as amended, and the regulations thereunder ("FDCA") that is
     manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
     by the Company or any of its Subsidiaries (each such product, a "Medical
     Device"), such Medical Device is being manufactured, packaged, labeled,
     tested, distributed, sold and/or marketed by the Company in compliance with
     all applicable requirements under FDCA and similar laws, rules and
     regulations relating to registration, investigational use, premarket
     clearance, licensure, or application approval, good manufacturing
     practices, good laboratory practices, good clinical practices, product
     listing, quotas, labeling, advertising, record keeping and filing of
     reports, except where the failure to be in compliance would not have a
     Material Adverse Effect. There is no pending, completed or, to the
     Company's knowledge, threatened, action (including any lawsuit,
     arbitration, or legal or administrative or regulatory proceeding, charge,
     complaint, or investigation) against the Company or any of its
     Subsidiaries, and none of the Company or any of its Subsidiaries has
     received any notice, warning letter or other communication from the FDA or
     any other governmental entity, which (i) contests the premarket clearance,
     licensure,

                                       18

<PAGE>

     registration, or approval of, the uses of, the distribution of, the
     manufacturing or packaging of, the testing of, the sale of, or the labeling
     and promotion of any Medical Device, (ii) withdraws its approval of,
     requests the recall, suspension, or seizure of, or withdraws or orders the
     withdrawal of advertising or sales promotional materials relating to, any
     Medical Device, (iii) imposes a clinical hold on any clinical investigation
     by the Company or any of its Subsidiaries, (iv) enjoins production at any
     facility of the Company or any of its Subsidiaries, (v) enters or proposes
     to enter into a consent decree of permanent injunction with the Company or
     any of its Subsidiaries, or (vi) otherwise alleges any violation of any
     laws, rules or regulations by the Company or any of its Subsidiaries, and
     which, either individually or in the aggregate, would have a Material
     Adverse Effect. The properties, business and operations of the Company have
     been and are being conducted in all material respects in accordance with
     all applicable laws, rules and regulations of the FDA. The Company has not
     been informed by the FDA that the FDA will prohibit the marketing, sale,
     license or use in the United States of any product proposed to be
     developed, produced or marketed by the Company nor has the FDA expressed
     any concern as to approving or clearing for marketing any product being
     developed or proposed to be developed by the Company.

          (jj) Form S-3 Eligibility. The Company is eligible to register the
     resale of the Securities for resale by the Purchaser on Form S-3
     promulgated under the Securities Act.

     3.2 Representations and Warranties of the Purchasers. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:

          (a) Organization; Authority. Such Purchaser is an entity duly
     organized, validly existing and in good standing under the laws of the
     jurisdiction of its organization with full right, corporate or partnership
     power and authority to enter into and to consummate the transactions
     contemplated by the Transaction Documents and otherwise to carry out its
     obligations hereunder and thereunder. The execution and delivery of the
     Transaction Documents and performance by such Purchaser of the transactions
     contemplated by the Transaction Documents have been duly authorized by all
     necessary corporate or similar action on the part of such Purchaser. Each
     Transaction Document to which it is a party has been duly executed by such
     Purchaser, and when delivered by such Purchaser in accordance with the
     terms hereof, will constitute the valid and legally binding obligation of
     such Purchaser, enforceable against it in accordance with its terms, except
     (i) as limited by general equitable principles and applicable bankruptcy,
     insolvency, reorganization, moratorium and other laws of general
     application affecting enforcement of creditors' rights generally, (ii) as
     limited by laws relating to the availability of specific performance,
     injunctive relief or other equitable remedies and (iii) insofar as
     indemnification and contribution provisions may be limited by applicable
     law.

          (b) Own Account. Such Purchaser understands that the Securities are
     "restricted securities" and have not been registered under the Securities
     Act or any applicable state securities law and is acquiring the Securities
     as principal for its own account and not with a view to or for distributing
     or reselling such Securities or any part thereof in violation of the
     Securities Act or any applicable state securities law, has no

                                       19

<PAGE>

     present intention of distributing any of such Securities in violation of
     the Securities Act or any applicable state securities law and has no direct
     or indirect arrangement or understandings with any other persons to
     distribute or regarding the distribution of such Securities (this
     representation and warranty not limiting such Purchaser's right to sell the
     Securities pursuant to the Registration Statement or otherwise in
     compliance with applicable federal and state securities laws) in violation
     of the Securities Act or any applicable state securities law. Such
     Purchaser is acquiring the Securities hereunder in the ordinary course of
     its business.

          (c) Purchaser Status. At the time such Purchaser was offered the
     Securities, it was, and at the date hereof it is, and on each date on which
     it exercises any Warrants, it will be either: (i) an "accredited investor"
     as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
     Securities Act or (ii) a "qualified institutional buyer" as defined in Rule
     144A(a) under the Securities Act. Such Purchaser is not required to be
     registered as a broker-dealer under Section 15 of the Exchange Act.

          (d) Experience of Such Purchaser. Such Purchaser, either alone or
     together with its representatives, has such knowledge, sophistication and
     experience in business and financial matters so as to be capable of
     evaluating the merits and risks of the prospective investment in the
     Securities, and has so evaluated the merits and risks of such investment.
     Such Purchaser is able to bear the economic risk of an investment in the
     Securities and, at the present time, is able to afford a complete loss of
     such investment.

          (e) General Solicitation. Such Purchaser is not purchasing the
     Securities as a result of any advertisement, article, notice or other
     communication regarding the Securities published in any newspaper, magazine
     or similar media or broadcast over television or radio or presented at any
     seminar or any other general solicitation or general advertisement.

          (f) Short Sales and Confidentiality Prior To The Date Hereof. Other
     than consummating the transactions contemplated hereunder, such Purchaser
     has not, nor has any Person acting on behalf of or pursuant to any
     understanding with such Purchaser, directly or indirectly executed any
     purchases or sales, including Short Sales, of the securities of the Company
     during the period commencing from the time that such Purchaser was first
     contacted by RBC Capital Markets or any other Person representing the
     Company with respect to the transactions contemplated hereunder until the
     date hereof ("Discussion Time"). Notwithstanding the foregoing, in the case
     of a Purchaser that is a multi-managed investment vehicle whereby separate
     portfolio managers manage separate portions of such Purchaser's assets and
     the portfolio managers have no direct knowledge of the investment decisions
     made by the portfolio managers managing other portions of such Purchaser's
     assets, the representation set forth above shall only apply with respect to
     the portion of assets managed by the portfolio manager that made the
     investment decision to purchase the Securities covered by this Agreement.
     Other than to other Persons party to this Agreement, such Purchaser has
     maintained the confidentiality of all disclosures made to it in connection
     with this transaction (including the existence and terms of this
     transaction).

                                       20

<PAGE>

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) The Securities may only be disposed of in compliance with state
     and federal securities laws. In connection with any transfer of Securities
     other than pursuant to an effective registration statement or Rule 144, to
     the Company or to an Affiliate of a Purchaser or in connection with a
     pledge as contemplated in Section 4.1(b), the Company may require the
     transferor thereof to provide to the Company an opinion of counsel selected
     by the transferor and reasonably acceptable to the Company, the form and
     substance of which opinion shall be reasonably satisfactory to the Company,
     to the effect that such transfer does not require registration of such
     transferred Securities under the Securities Act. As a condition of
     transfer, any such transferee shall agree in writing to be bound by the
     terms of this Agreement and shall have the rights of a Purchaser under this
     Agreement and the Registration Rights Agreement.

          (b) The Purchasers agree to the imprinting, so long as is required by
     this Section 4.1, of a legend on any of the Securities in the following
     form:

          THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
          COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
          AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
          AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
          OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
          THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
          TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
          SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
          AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
          EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
          COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
          MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
          FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
          RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
          SECURITIES.

          The Company acknowledges and agrees that a Purchaser may from time to
     time pledge pursuant to a bona fide margin agreement with a registered
     broker-dealer or grant a security interest in some or all of the Securities
     to a financial institution that is an "accredited investor" as defined in
     Rule 501(a) under the Securities Act and who agrees to be bound by the
     provisions of this Agreement and the Registration Rights Agreement and, if
     required under the terms of such arrangement, such Purchaser may transfer
     pledged or secured Securities to the pledgees or secured parties. Such a
     pledge or

                                       21

<PAGE>

     transfer would not be subject to approval of the Company and no legal
     opinion of legal counsel of the pledgee, secured party or pledgor shall be
     required in connection therewith. Further, no notice shall be required of
     such pledge. At the appropriate Purchaser's expense, the Company will
     execute and deliver such reasonable documentation as a pledgee or secured
     party of Securities may reasonably request in connection with a pledge or
     transfer of the Securities, including, if the Securities are subject to
     registration pursuant to the Registration Rights Agreement, the preparation
     and filing of any required prospectus supplement under Rule 424(b)(3) under
     the Securities Act or other applicable provision of the Securities Act to
     appropriately amend the list of Selling Stockholders thereunder.

          (c) Certificates evidencing the Shares and Warrant Shares shall not
     contain any legend (including the legend set forth in Section 4.1(b)), (i)
     while a registration statement (including the Registration Statement)
     covering the resale of such security is effective under the Securities Act,
     or (ii) following any sale of such Shares or Warrant Shares pursuant to
     Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale
     under Rule 144(k), or (iv) if such legend is not required under applicable
     requirements of the Securities Act (including judicial interpretations and
     pronouncements issued by the staff of the Commission). The Company shall
     cause its counsel to issue a legal opinion to the Transfer Agent promptly
     after the Effective Date if required by the Transfer Agent to effect the
     removal of the legend hereunder. If all or any portion of a Warrant is
     exercised at a time when there is an effective registration statement to
     cover the resale of the Warrant Shares, such Warrant Shares shall be issued
     free of all legends. The Company agrees that following the Effective Date
     or at such time as such legend is no longer required under this Section
     4.1(c), it will, no later than three Trading Days following the delivery by
     a Purchaser to the Company or the Transfer Agent of a certificate
     representing Shares or Warrant Shares, as the case may be, issued with a
     restrictive legend (such third Trading Day, the "Legend Removal Date"),
     deliver or cause to be delivered to such Purchaser a certificate
     representing such shares that is free from all restrictive and other
     legends. The Company may not make any notation on its records or give
     instructions to the Transfer Agent that enlarge the restrictions on
     transfer set forth in this Section. Certificates for Securities subject to
     legend removal hereunder shall be transmitted by the Transfer Agent to the
     Purchaser by crediting the account of the Purchaser's prime broker with the
     Depository Trust Company System as directed by such Purchaser.

          (d) In addition to such Purchaser's other available remedies, the
     Company shall pay to a Purchaser, in cash, as partial liquidated damages
     and not as a penalty, for each $1,000 of Shares or Warrant Shares (based on
     the VWAP of the Common Stock on the date such Securities are submitted to
     the Transfer Agent) delivered for removal of the restrictive legend and
     subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per
     Trading Day five (5) Trading Days after such damages have begun to accrue)
     for each Trading Day commencing on the third Trading Day after the Legend
     Removal Date until such certificate is delivered without a legend. Nothing
     herein shall limit such Purchaser's right to pursue actual damages for the
     Company's failure to deliver certificates representing any Securities as
     required by the Transaction Documents, and such Purchaser shall have the
     right to pursue all remedies available to it at law or in

                                       22

<PAGE>

     equity including, without limitation, a decree of specific performance
     and/or injunctive relief.

          (e) Each Purchaser, severally and not jointly with the other
     Purchasers, agrees that such Purchaser will sell any Securities pursuant to
     either the registration requirements of the Securities Act, including any
     applicable prospectus delivery requirements, or an exemption therefrom, and
     that if Securities are sold pursuant to a Registration Statement, they will
     be sold in compliance with the plan of distribution set forth therein, and
     acknowledges that the removal of the restrictive legend from certificates
     representing Securities as set forth in this Section 4.1 is predicated upon
     the Company's reliance upon this understanding.

     4.2 Furnishing of Information. Until the earliest of the time that (i) no
Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act. As long
as any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, to the extent required from time to time to
enable such Person to sell such Securities without registration under the
Securities Act within the requirements of the exemption provided by Rule 144.

     4.3 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities to the Purchasers for
purposes of the rules and regulations of any Trading Market such that it would
require shareholder approval prior to the closing of such other transaction
unless shareholder approval is obtained before the closing of such subsequent
transaction.

     4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
(New York City time) on the Trading Day immediately following the date hereof,
issue a Current Report on Form 8-K, disclosing the material terms of the
transactions contemplated hereby, and filing the Transaction Documents as
exhibits thereto. The Company and each Purchaser shall consult with each other
in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company, with respect to any press release of any Purchaser, or
without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party
shall promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the

                                       23
<PAGE>

Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (i) as required by federal securities law in
connection with (A) any registration statement contemplated by the Registration
Rights Agreement and (B) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).

     4.5 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

     4.6 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

     4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and shall not use such proceeds for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
or to redeem any Common Stock or Common Stock Equivalents or to settle any
outstanding litigation.

     4.8 Indemnification of Purchasers. Subject to the provisions of this
Section 4.8, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is

                                       24

<PAGE>

not an Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser's representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such
separate counsel. The Company will not be liable to any Purchaser Party under
this Agreement (i) for any settlement by a Purchaser Party effected without the
Company's prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Purchaser Party's breach of any of
the representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.

     4.9 Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

     4.10 Listing of Common Stock.(a) The Company hereby agrees to use best
efforts to maintain the listing of the Common Stock on a Trading Market, and as
soon as reasonably practicable following the Closing (but not later than the
earlier of the Effective Date and the first anniversary of the Closing Date) to
list all of the Shares and Warrant Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application all of the Shares and
Warrant Shares, and will take such other action as is necessary to cause all of
the Shares and Warrant Shares to be listed on such other Trading Market as
promptly as possible. The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

     4.11 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right

                                       25

<PAGE>

granted to each Purchaser by the Company and negotiated separately by each
Purchaser, and is intended for the Company to treat the Purchasers as a class
and shall not in any way be construed as the Purchasers acting in concert or as
a group with respect to the purchase, disposition or voting of Securities or
otherwise.

     4.12 Subsequent Equity Sales. From the date hereof until 12 months from the
Effective Date, the Company shall be prohibited from effecting or entering into
an agreement to effect any Subsequent Financing involving a Variable Rate
Transaction. "Variable Rate Transaction" means a transaction in which the
Company issues or sells (i) any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (A) at a conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities, or (B) with a conversion,
exercise or exchange price that is subject to being reset at some future date
after the initial issuance of such debt or equity security or upon the
occurrence of specified or contingent events directly or indirectly related to
the business of the Company or the market for the Common Stock or (ii) enters
into any agreement, including, but not limited to, an equity line of credit,
whereby the Company may sell securities at a future determined price. Any
Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to
collect damages.

     4.13 Short Sales and Confidentiality After The Date Hereof. Each Purchaser
severally and not jointly with the other Purchasers, covenants that neither it
nor any Affiliate acting on its behalf or pursuant to any understanding with it
will execute any Short Sales during the period commencing at the Discussion Time
and ending at the time that the transactions contemplated by this Agreement are
first publicly announced as described in Section 4.4. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Each Purchaser understands and
acknowledges, and agrees, severally and not jointly with any other Purchaser, to
act in a manner that will not violate the positions of the Commission as set
forth in Item 65, Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding the foregoing, no Purchaser
makes any representation, warranty or covenant hereby that it will not engage in
Short Sales in the securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4.4. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

                                       26

<PAGE>

     4.14 Delivery of Securities After Closing. The Company shall deliver, or
cause to be delivered, the respective Securities purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

     4.15 Form D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of any Purchaser. The Company shall take
such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

     4.16 Capital Changes. Until the one year anniversary of the Effective Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares.

                                   ARTICLE V.
                                  MISCELLANEOUS

     5.1 Termination. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before March
23, 2007; provided, however, that no such termination will affect the right of
any party to sue for any breach by the other party (or parties).

     5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Securities to the Purchasers.

     5.3 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than

                                       27

<PAGE>

5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto.

     5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers of at least 85% of the Shares still held by the
Purchasers or, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

     5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

     5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
"Purchasers."

     5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

     5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to

                                       28

<PAGE>

such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law. If either party
shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable attorneys' fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

     5.10 Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Shares and Warrant Shares.

     5.11 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.

     5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; provided,
however, in the case of a rescission of an exercise of a Warrant, the Purchaser
shall be required to return any shares of Common Stock delivered in connection
with any such rescinded exercise notice.

     5.14 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party

                                       29

<PAGE>

costs (including customary indemnity) associated with the issuance of such
replacement Securities.

     5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.

     5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     5.17 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document. Nothing contained herein
or in any other Transaction Document, 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
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in their review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, Purchasers and their
respective counsel have chosen to communicate with the Company through FWS. FWS
does not represent all of the Purchasers but only the placement agent, RBC
Capital Markets Corporation. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the Purchasers.

     5.18 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to

                                       30

<PAGE>

which such partial liquidated damages or other amounts are due and payable shall
have been canceled.

     5.19 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

     5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

                            (Signature Pages Follow)

                                       31

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

ATS MEDICAL, INC.                       Address for Notice:

By:                                     FAX:
    ---------------------------------        -----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

With a copy to (which shall not constitute notice):

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       32

<PAGE>

        [PURCHASER SIGNATURE PAGES TO ATSI SECURITIES PURCHASE AGREEMENT]

     IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of Purchaser: _____________________________________________________________

Signature of Authorized Signatory of Purchaser: ________________________________

Name of Authorized Signatory: __________________________________________________

Title of Authorized Signatory: _________________________________________________

Email Address of Purchaser:_____________________________________________________

Fax Number of Purchaser: _______________________________________________________

Address for Notice of Purchaser: _______________________________________________

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount: ___________________________________________________________

$: ___________________________________________

Shares: _______________________________________

#: ____________________________________________

Warrant Shares: _______________________________

#: ____________________________________________

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       33<PAGE>

EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 15, 2007, between ATS Medical, a Minnesota corporation (the
"Company") and each of the several purchasers signatory hereto (each such
purchaser, a "Purchaser" and, collectively, the "Purchasers").

     This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date hereof, between the Company and each Purchaser (the "Purchase
Agreement").

     The Company and each Purchaser hereby agrees as follows:

     1. Definitions

     CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN THAT ARE DEFINED IN
THE PURCHASE AGREEMENT SHALL HAVE THE MEANINGS GIVEN SUCH TERMS IN THE PURCHASE
AGREEMENT. As used in this Agreement, the following terms shall have the
following meanings:

          "Advice" shall have the meaning set forth in Section 6(d).

          "Effectiveness Date" means, with respect to the initial Registration
     Statement required to be filed hereunder, the 90th calendar day following
     the date hereof (or, in the event of a "full review" by the Commission, the
     120th calendar day following the date hereof) and with respect to any
     additional Registration Statements which may be required pursuant to
     Section 3(c), the 90th calendar day following the date on which an
     additional Registration Statement is required to be filed hereunder;
     provided, however, that in the event the Company is notified by the
     Commission that one or more of the above Registration Statements will not
     be reviewed or is no longer subject to further review and comments, the
     Effectiveness Date as to such Registration Statement shall be the fifth
     Trading Day following the date on which the Company is so notified if such
     date precedes the dates otherwise required above.

          "Effectiveness Period" shall have the meaning set forth in Section
     2(a).

          "Event" shall have the meaning set forth in Section 2(b).

          "Event Date" shall have the meaning set forth in Section 2(b).

          "Filing Date" means, with respect to the initial Registration
     Statement required hereunder, the 30th calendar day following the date
     hereof and, with respect to any additional Registration Statements which
     may be required pursuant to Section 3(c), the earliest practical date on
     which the Company is permitted by SEC Guidance to file such additional
     Registration Statement related to the Registrable Securities.

                                        1

<PAGE>

          "Holder" or "Holders" means the holder or holders, as the case may be,
     from time to time of Registrable Securities.

          "Indemnified Party" shall have the meaning set forth in Section 5(c).

          "Indemnifying Party" shall have the meaning set forth in Section 5(c).

          "Initial Registration Statement" means the initial Registration
     Statement filed pursuant to this Agreement.

          "Initial Shares" means a number of shares of Common Stock equal to the
     lesser of the Registrable Securities or one-third of the number of shares
     of Common Stock issued and outstanding and held by non-affiliates of the
     Company immediately prior to the filing date of the Initial Registration
     Statement.

          "Losses" shall have the meaning set forth in Section 5(a).

          "Plan of Distribution" shall have the meaning set forth in Section
     2(a).

          "Prospectus" means the prospectus included in a Registration Statement
     (including, without limitation, a prospectus that includes any information
     previously omitted from a prospectus filed as part of an effective
     registration statement in reliance upon Rule 430A promulgated under the
     Securities Act), as amended or supplemented by any prospectus supplement,
     with respect to the terms of the offering of any portion of the Registrable
     Securities covered by a Registration Statement, and all other amendments
     and supplements to the Prospectus, including post-effective amendments, and
     all material incorporated by reference or deemed to be incorporated by
     reference in such Prospectus.

          "Registrable Securities" means (i) all Shares, (ii) all Warrant Shares
     (assuming on the date of determination the Warrants are exercised in full
     without regard to any exercise limitations therein), and (iii) any
     securities issued or issuable upon any stock split, dividend or other
     distribution, recapitalization or similar event with respect to the
     foregoing.

          "Registration Statement" means the registration statement required to
     be filed hereunder and any additional registration statements required by
     Section 3(c), if any, including (in each case) the Prospectus, amendments
     and supplements to such registration statement or Prospectus, including
     pre- and post-effective amendments, all exhibits thereto, and all material
     incorporated by reference or deemed to be incorporated by reference in such
     registration statement.

          "Rule 415" means Rule 415 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended or interpreted from time to
     time, or any similar rule or regulation hereafter adopted by the Commission
     having substantially the same purpose and effect as such Rule.

                                        2

<PAGE>

          "Rule 424" means Rule 424 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended or interpreted from time to
     time, or any similar rule or regulation hereafter adopted by the Commission
     having substantially the same purpose and effect as such Rule.

          "Selling Shareholder Questionnaire" shall have the meaning set forth
     in Section 3(a).

          "SEC Guidance" means (i) any publicly-available written or oral
     guidance, comments, requirements or requests of the Commission staff and
     (ii) the Securities Act.

     2. Shelf Registration

          (a) On or prior to each Filing Date, the Company shall prepare and
     file with the Commission a Registration Statement covering the resale of
     all or such portion of the Registrable Securities as permitted by SEC
     Guidance (provided that the Company shall use diligent efforts to advocate
     with the Commission for the registration of all of the Registrable
     Securities in accordance with the SEC Guidance, including without
     limitation, the Manual of Publicly Available Telephone Interpretations
     D.29) that are not then registered on an effective Registration Statement
     for an offering to be made on a continuous basis pursuant to Rule 415. The
     Registration Statement shall be on Form S-3 (except if the Company is not
     then eligible to register for resale the Registrable Securities on Form
     S-3, in which case such registration shall be on another appropriate form
     in accordance herewith) and shall contain (unless otherwise directed by at
     least an 85% majority in interest of the Holders) substantially the "Plan
     of Distribution" attached hereto as Annex A. Subject to the terms of this
     Agreement, the Company shall use its best efforts to cause a Registration
     Statement to be declared effective under the Securities Act as promptly as
     possible after the filing thereof, but in any event prior to the applicable
     Effectiveness Date, and shall use its best efforts to keep such
     Registration Statement continuously effective under the Securities Act
     until all Registrable Securities covered by such Registration Statement
     have been sold, or may be sold without volume restrictions pursuant to Rule
     144(k), as determined by the counsel to the Company pursuant to a written
     opinion letter to such effect, addressed and acceptable to the Company's
     transfer agent and the affected Holders (the "Effectiveness Period"). The
     Company shall telephonically request effectiveness of a Registration
     Statement as of 5:00 p.m. New York City time on a Trading Day. The Company
     shall immediately notify the Holders via facsimile or by e-mail delivery of
     a ".pdf" format data file of the effectiveness of a Registration Statement
     on the same Trading Day that the Company telephonically confirms
     effectiveness with the Commission, which shall be the date requested for
     effectiveness of a Registration Statement. The Company shall, by 9:30 a.m.
     New York City time on the second Trading Day after the Effective Date, file
     a final Prospectus with the Commission as required by Rule 424. Failure to
     so notify the Holder within 2 Trading Days of such notification of
     effectiveness or failure to file a final Prospectus as foresaid shall be
     deemed an Event under Section 2(b). Notwithstanding any other provision of
     this Agreement and subject to the payment of liquidated damages in Section
     2(b), if any SEC Guidance sets forth a limitation of the number of
     Registrable

                                        3

<PAGE>

     Securities permitted to be registered on a particular Registration
     Statement (and notwithstanding that the Company used diligent efforts to
     advocate with the Commission for the registration of all or a greater
     number of Registrable Securities), unless otherwise directed in writing by
     a Holder as to its Registrable Securities, the number of Registrable
     Securities to be registered on such Registration Statement will first be
     reduced by Registrable Securities represented by Warrant Shares (applied,
     in the case that some Warrant Shares may be registered, to the Holders on a
     pro rata basis based on the total number of unregistered Warrant Shares
     held by such Holders), and second by Registrable Securities represented by
     Shares (applied, in the case that some Shares may be registered, to the
     Holders on a pro rata basis based on the total number of unregistered
     Shares held by such Holders).

          (b) If: (i) the Initial Registration Statement is not filed on or
     prior to its Filing Date (if the Company files the Initial Registration
     Statement without affording the Holders the opportunity to review and
     comment on the same as required by Section 3(a) herein, the Company shall
     be deemed to have not satisfied this clause (i)), or (ii) the Company fails
     to file with the Commission a request for acceleration of a Registration
     Statement in accordance with Rule 461 promulgated under the Securities Act,
     within five Trading Days of the date that the Company is notified (orally
     or in writing, whichever is earlier) by the Commission that such
     Registration Statement will not be "reviewed" or not be subject to further
     review, or (iii) prior to the Effectiveness Date of a Registration
     Statement, the Company fails to file a pre-effective amendment and
     otherwise respond in writing to comments made by the Commission in respect
     of such Registration Statement within 20 Trading Days after the receipt of
     comments by or notice from the Commission that such amendment is required
     in order for such Registration Statement to be declared effective, or (iv)
     as to, in the aggregate among all Holders on a pro-rata basis based on
     their purchase of the Securities pursuant to the Purchase Agreement, a
     Registration Statement registering for resale all of the Initial Shares is
     not declared effective by the Commission by the Effectiveness Date of the
     Initial Registration Statement, or (v) all of the Registrable Securities
     are not registered for resale pursuant to one or more effective
     Registration Statements on or before November 30, 2007, or (vi) after the
     Effectiveness Date of a Registration Statement, such Registration Statement
     ceases for any reason to remain continuously effective as to all
     Registrable Securities included in such Registration Statement, or the
     Holders are otherwise not permitted to utilize the Prospectus therein to
     resell such Registrable Securities, for more than 10 consecutive calendar
     days or more than an aggregate of 15 calendar days during any 12-month
     period (which need not be consecutive calendar days) (any such failure or
     breach being referred to as an "Event", and for ----- purposes of clause
     (i), (iv) or (v) the date on which such Event occurs, or for purposes of
     clause (ii) the date on which such five Trading Day period is exceeded, or
     for purposes of clause (iii) the date which such 20 Trading Day period is
     exceeded, or for purposes of clause (vi) the date on which such 10 or 15
     calendar day period, as applicable, is exceeded being referred to as "Event
     Date"), then, in addition to any other rights the Holders may have
     hereunder or under applicable law, 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 Holder an amount in cash, as partial liquidated
     damages and

                                        4

<PAGE>

     not as a penalty, equal to 1.0% of the aggregate purchase price paid by
     such Holder pursuant to the Purchase Agreement for any unregistered
     Registrable Securities then held by such Holder. The parties agree that (1)
     the Company shall not be liable for liquidated damages under this Agreement
     with respect to any Warrants or Warrant Shares and (2) the maximum
     aggregate liquidated damages payable to a Holder under this Agreement shall
     be 12% of the aggregate Subscription Amount paid by such Holder pursuant to
     the Purchase Agreement. If the Company fails to pay any partial liquidated
     damages pursuant to this Section in full within seven days after the date
     payable, the Company will pay interest thereon at a rate of 18% per annum
     (or such lesser maximum amount that is permitted to be paid by applicable
     law) to the Holder, accruing daily from the date such partial liquidated
     damages are due until such amounts, plus all such interest thereon, are
     paid in full. The partial liquidated damages pursuant to the terms hereof
     shall apply on a daily pro rata basis for any portion of a month prior to
     the cure of an Event.

     3. Registration Procedures.

     In connection with the Company's registration obligations hereunder, the
Company shall:

          (a) Not less than 5 Trading Days prior to the filing of each
     Registration Statement and not less than one Trading Day 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), the Company shall (i) furnish to each
     Holder copies of all such documents proposed to be filed, which documents
     (other than those incorporated or deemed to be incorporated by reference)
     will be subject to the review of such Holders and (ii) cause its officers
     and directors, counsel and independent certified public accountants to
     respond to such inquiries as shall be necessary, in the reasonable opinion
     of respective counsel to each Holder, to conduct a reasonable investigation
     within the meaning of the Securities Act. The Company shall not file a
     Registration Statement or any such Prospectus or any amendments or
     supplements thereto to which the Holders of a majority of the Registrable
     Securities shall reasonably object in good faith, provided that the Company
     is notified of such objection in writing no later than 5 Trading Days after
     the Holders have been so furnished copies of a Registration Statement or 1
     Trading Day after the Holders have been so furnished copies of any related
     Prospectus or amendments or supplements thereto. Each Holder agrees to
     furnish to the Company a completed questionnaire in the form attached to
     this Agreement as Annex B (a "Selling Shareholder Questionnaire") not less
     than two Trading Days prior to the Filing Date or by the end of the fourth
     Trading Day following the date on which such Holder receives draft
     materials in accordance with this Section.

          (b) (i) Prepare and file with the Commission such amendments,
     including post-effective amendments, to a Registration Statement and the
     Prospectus used in connection therewith as may be necessary to keep a
     Registration Statement continuously effective as to the applicable
     Registrable Securities for the Effectiveness Period and prepare and file
     with the Commission such additional Registration Statements in order to
     register for resale under the Securities Act all of the Registrable
     Securities; (ii) cause the

                                        5

<PAGE>

     related Prospectus to be amended or supplemented by any required Prospectus
     supplement (subject to the terms of this Agreement), and, as so
     supplemented or amended, to be filed pursuant to Rule 424; (iii) respond as
     promptly as reasonably possible to any comments received from the
     Commission with respect to a Registration Statement or any amendment
     thereto and provide as promptly as reasonably possible to the Holders true
     and complete copies of all correspondence from and to the Commission
     relating to a Registration Statement (provided that the Company may excise
     any information contained therein which would constitute material
     non-public information as to any Holder which has not executed a
     confidentiality agreement with the Company); and (iv) comply in all
     material respects with the provisions of the Securities Act and the
     Exchange Act with respect to the disposition of all Registrable Securities
     covered by a Registration Statement during the applicable period in
     accordance (subject to the terms of this Agreement) with the intended
     methods of disposition by the Holders thereof set forth in such
     Registration Statement as so amended or in such Prospectus as so
     supplemented.

          (c) If during the Effectiveness Period, the number of Registrable
     Securities at any time exceeds 100% of the number of shares of Common Stock
     then registered in a Registration Statement, then the Company shall file as
     soon as reasonably practicable, but in any case prior to the applicable
     Filing Date, an additional Registration Statement covering the resale by
     the Holders of not less than the number of such Registrable Securities.

          (d) Notify the Holders of Registrable Securities to be sold (which
     notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied
     by an instruction to suspend the use of the Prospectus until the requisite
     changes have been made) as promptly as reasonably possible (and, in the
     case of (i)(A) below, not less than one Trading Day prior to such filing)
     and (if requested by any such Person) confirm such notice in writing no
     later than one Trading Day following the day (i)(A) when a Prospectus or
     any Prospectus supplement or post-effective amendment to a Registration
     Statement is proposed to be filed; (B) when the Commission notifies the
     Company whether there will be a "review" of such Registration Statement and
     whenever the Commission comments in writing on such Registration Statement;
     and (C) with respect to a Registration Statement or any post-effective
     amendment, when the same has become effective; (ii) of any request by the
     Commission or any other federal or state governmental authority for
     amendments or supplements to a Registration Statement or Prospectus or for
     additional information; (iii) of the issuance by the Commission or any
     other federal or state governmental authority of any stop order suspending
     the effectiveness of a Registration Statement covering any or all of the
     Registrable Securities or the initiation of any Proceedings for that
     purpose; (iv) of the receipt by the Company of any notification with
     respect to the suspension of the qualification or exemption from
     qualification of any of the Registrable Securities for sale in any
     jurisdiction, or the initiation or threatening of any Proceeding for such
     purpose; (v) of the occurrence of any event or passage of time that makes
     the financial statements included in a Registration Statement ineligible
     for inclusion therein or any statement made in a Registration Statement or
     Prospectus or any document incorporated or deemed to be incorporated
     therein by reference untrue in any material respect or that requires any
     revisions to a Registration Statement, Prospectus or other documents so
     that, in the case

                                       6

<PAGE>

     of a Registration Statement or the Prospectus, as the case may be, it will
     not contain any untrue statement of a material fact or omit to state any
     material fact required to be stated therein or necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading; and (vi) of the occurrence or existence of any
     pending corporate development with respect to the Company that the Company
     believes may be material and that, in the determination of the Company,
     makes it not in the best interest of the Company to allow continued
     availability of a Registration Statement or Prospectus, provided that any
     and all of such information shall remain confidential to each Holder until
     such information otherwise becomes public, unless disclosure by a Holder is
     required by law; provided, further, that notwithstanding each Holder's
     agreement to keep such information confidential, each such Holder makes no
     acknowledgement that any such information is material, non-public
     information.

          (e) Use its reasonable best efforts to avoid the issuance of, or, if
     issued, obtain the withdrawal of (i) any order suspending the effectiveness
     of a Registration Statement, or (ii) any suspension of the qualification
     (or exemption from qualification) of any of the Registrable Securities for
     sale in any jurisdiction, at the earliest practicable moment.

          (f) Furnish to each Holder, without charge, at least one conformed
     copy of each such Registration Statement and each amendment thereto,
     including financial statements and schedules, all documents incorporated or
     deemed to be incorporated therein by reference to the extent requested by
     such Person, and all exhibits to the extent requested by such Person
     (including those previously furnished or incorporated by reference)
     promptly after the filing of such documents with the Commission; provided,
     that any such item which is available on the EDGAR system need not be
     furnished in physical form.

          (g) Subject to the terms of this Agreement, the Company hereby
     consents to the use of such Prospectus and each amendment or supplement
     thereto by each of the selling Holders in connection with the offering and
     sale of the Registrable Securities covered by such Prospectus and any
     amendment or supplement thereto, except after the giving of any notice
     pursuant to Section 3(d).

          (h) The Company shall effect a filing with respect to the public
     offering contemplated by each Registration Statement (an "Issuer Filing")
     with the National Association of Securities Dealers, Inc. ("NASD")
     Corporate Financing Department pursuant to NASD Rule 2710(b)(10)(A)(i)
     within one Trading Day of the date that the Registration Statement is first
     filed with the Commission and pay the filing fee required by such Issuer
     Filing. The Company shall use commercially reasonable efforts to pursue the
     Issuer Filing until the NASD issues a letter confirming that it does not
     object to the terms of the offering contemplated by the Registration
     Statement as described in the Plan of Distribution attached hereto as Annex
     A. A copy of the Issuer Filing and all related correspondence to or from
     the NASD with respect thereto shall be provided to FWS.

          (i) Prior to any resale of Registrable Securities by a Holder, use its
     commercially reasonable efforts to register or qualify or cooperate with
     the selling

                                        7

<PAGE>

     Holders in connection with the registration or qualification (or exemption
     from the Registration or qualification) of such Registrable Securities for
     the resale by the Holder under the securities or Blue Sky laws of such
     jurisdictions within the United States as any Holder reasonably requests in
     writing, to keep each registration or qualification (or exemption
     therefrom) effective during the Effectiveness Period and to do any and all
     other acts or things reasonably necessary to enable the disposition in such
     jurisdictions of the Registrable Securities covered by each Registration
     Statement; provided, that the Company shall not be required to qualify
     generally to do business in any jurisdiction where it is not then so
     qualified, subject the Company to any material tax in any such jurisdiction
     where it is not then so subject or file a general consent to service of
     process in any such jurisdiction.

          (j) If requested by a Holder, cooperate with such Holders to
     facilitate the timely preparation and delivery of certificates representing
     Registrable Securities to be delivered to a transferee pursuant to a
     Registration Statement, which certificates shall be free, to the extent
     permitted by the Purchase Agreement, of all restrictive legends, and to
     enable such Registrable Securities to be in such denominations and
     registered in such names as any such Holder may request.

          (k) Upon the occurrence of any event contemplated by Section 3(d), as
     promptly as reasonably possible under the circumstances taking into account
     the Company's good faith assessment of any adverse consequences to the
     Company and its stockholders of the premature disclosure of such event,
     prepare a supplement or amendment, including a post-effective amendment, to
     a Registration Statement or a supplement to the related Prospectus or any
     document incorporated or deemed to be incorporated therein by reference,
     and file any other required document so that, as thereafter delivered,
     neither a Registration Statement nor such Prospectus will contain an untrue
     statement of a material fact or omit to state a material fact required to
     be stated therein or necessary to make the statements therein, in light of
     the circumstances under which they were made, not misleading. If the
     Company notifies the Holders in accordance with clauses (iii) through (vi)
     of Section 3(d) above to suspend the use of any Prospectus until the
     requisite changes to such Prospectus have been made, then the Holders shall
     suspend use of such Prospectus. The Company will use its reasonable best
     efforts to ensure that the use of the Prospectus may be resumed as promptly
     as is practicable. The Company shall be entitled to exercise its right
     under this Section 3(k) to suspend the availability of a Registration
     Statement and Prospectus, subject to the payment of partial liquidated
     damages otherwise required pursuant to Section 2(b), for a period not to
     exceed 60 calendar days (which need not be consecutive days) in any 12
     month period.

          (l) Comply with all applicable rules and regulations of the
     Commission.

          (m) The Company may require each selling Holder to furnish to the
     Company a certified statement as to the number of shares of Common Stock
     beneficially owned by such Holder and, if required by the Commission, the
     natural persons thereof that have voting and dispositive control over the
     Shares. During any periods that the Company is

                                        8

<PAGE>

     unable to meet its obligations hereunder with respect to the registration
     of the Registrable Securities solely because any Holder fails to furnish
     such information within three Trading Days of the Company's request, any
     liquidated damages that are accruing at such time as to such Holder only
     shall be tolled and any Event that may otherwise occur solely because of
     such delay shall be suspended as to such Holder only, until such
     information is delivered to the Company, and the Company shall be permitted
     to exclude such Holder from the Registration Statement, provided that as
     soon as such information and/or questionnaire is furnished, the Company
     shall use its best efforts to in include such Holder on the Registration
     Statement after filing.

     4. Registration Expenses. All fees and expenses incident to the performance
of or compliance with this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company's counsel and
auditors) (A) with respect to filings made with the Commission, (B) with respect
to filings required to be made with any Trading Market on which the Common Stock
is then listed for trading, (C) in compliance with applicable state securities
or Blue Sky laws reasonably agreed to by the Company in writing (including,
without limitation, fees and disbursements of counsel for the Company in
connection with Blue Sky qualifications or exemptions of the Registrable
Securities) and (D) if not previously paid by the Company in connection with an
Issuer Filing, with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable Securities
with the NASD pursuant to NASD Rule 2710, so long as the broker is receiving no
more than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company, (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit and the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder. In no event shall the Company be responsible for any broker
or similar commissions of any Holder or, except to the extent provided for in
the Transaction Documents, any legal fees or other costs of the Holders.

     5. Indemnification.

          (a) Indemnification by the Company. The Company shall, notwithstanding
     any termination of this Agreement, indemnify and hold harmless each Holder,
     the officers, directors, members, partners, agents, brokers (including
     brokers who offer and sell Registrable Securities as principal as a result
     of a pledge or any failure to perform under a margin call of Common Stock),
     investment advisors and employees (and any other Persons with a
     functionally equivalent role of a Person holding such titles,

                                        9

<PAGE>

     notwithstanding a lack of such title or any other title) of each of them,
     each Person who controls any such Holder (within the meaning of Section 15
     of the Securities Act or Section 20 of the Exchange Act) and the officers,
     directors, members, shareholders, partners, agents and employees (and any
     other Persons with a functionally equivalent role of a Person holding such
     titles, notwithstanding a lack of such title or any other title) of each
     such controlling Person, to the fullest extent permitted by applicable law,
     from and against any and all losses, claims, damages, liabilities, costs
     (including, without limitation, reasonable attorneys' fees) and expenses
     (collectively, "Losses"), as incurred, arising out of or relating to (1)
     any untrue or alleged untrue statement of a material fact contained in a
     Registration Statement, any Prospectus or any form of prospectus or in any
     amendment or supplement thereto or in any preliminary prospectus, or
     arising out of or relating to any omission or alleged omission of a
     material fact required to be stated therein or necessary to make the
     statements therein (in the case of any Prospectus or supplement thereto, in
     light of the circumstances under which they were made) not misleading or
     (2) any violation or alleged violation by the Company of the Securities
     Act, the Exchange Act or any state securities law, or any rule or
     regulation thereunder, in connection with the performance of its
     obligations under this Agreement, except to the extent, but only to the
     extent, that (i) such untrue statements or omissions are based solely upon
     information regarding such Holder furnished in writing to the Company by
     such Holder expressly for use therein, or to the extent that such
     information relates to such Holder or such Holder's proposed method of
     distribution of Registrable Securities and was reviewed and expressly
     approved in writing by such Holder expressly for use in a Registration
     Statement, such Prospectus or in any amendment or supplement thereto (it
     being understood that the Holder has approved Annex A hereto for this
     purpose) or (ii) in the case of an occurrence of an event of the type
     specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
     or defective Prospectus after the Company has notified such Holder in
     writing that the Prospectus is outdated or defective and prior to the
     receipt by such Holder of the Advice contemplated in Section 6(d). The
     Company shall notify the Holders promptly of the institution, threat or
     assertion of any Proceeding arising from or in connection with the
     transactions contemplated by this Agreement of which the Company is aware.

          (b) Indemnification by Holders. Each Holder shall, severally and not
     jointly, indemnify and hold harmless the Company, its directors, officers,
     agents and employees, each Person who controls the Company (within the
     meaning of Section 15 of the Securities Act and Section 20 of the Exchange
     Act), and the directors, officers, agents or employees of such controlling
     Persons, to the fullest extent permitted by applicable law, from and
     against all Losses, as incurred, to the extent arising out of or based
     solely upon: (x) such Holder's failure to comply with the prospectus
     delivery requirements of the Securities Act or (y) any untrue or alleged
     untrue statement of a material fact contained in any Registration
     Statement, any Prospectus, or in any amendment or supplement thereto or in
     any preliminary prospectus, or arising out of or relating to any omission
     or alleged omission of a material fact required to be stated therein or
     necessary to make the statements therein not misleading (i) to the extent,
     but only to the extent, that such untrue statement or omission is contained
     in any information so furnished in writing by such Holder to the Company
     specifically for inclusion in such Registration Statement or such

                                       10

<PAGE>

     Prospectus or (ii) to the extent that such information relates to such
     Holder's proposed method of distribution of Registrable Securities and was
     reviewed and expressly approved in writing by such Holder expressly for use
     in a Registration Statement (it being understood that the Holder has
     approved Annex A hereto for this purpose), such Prospectus or in any
     amendment or supplement thereto or (ii) in the case of an occurrence of an
     event of the type specified in Section 3(d)(iii)-(vi), the use by such
     Holder of an outdated or defective Prospectus after the Company has
     notified such Holder in writing that the Prospectus is outdated or
     defective and prior to the receipt by such Holder of the Advice
     contemplated in Section 6(d). In no event shall the liability of any
     selling Holder hereunder be greater in amount than the dollar amount of the
     net proceeds received by such Holder upon the sale of the Registrable
     Securities giving rise to such indemnification obligation.

          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
     brought or asserted against any Person entitled to indemnity hereunder (an
     "Indemnified Party"), such Indemnified Party shall promptly notify the
     Person from whom indemnity is sought (the "Indemnifying Party") in writing,
     and the Indemnifying Party shall have the right to assume the defense
     thereof, including the employment of counsel reasonably satisfactory to the
     Indemnified Party and the payment of all fees and expenses incurred in
     connection with defense thereof; provided, that the failure of any
     Indemnified Party to give such notice shall not relieve the Indemnifying
     Party of its obligations or liabilities pursuant to this Agreement, except
     (and only) to the extent that it shall be finally determined by a court of
     competent jurisdiction (which determination is not subject to appeal or
     further review) that such failure shall have prejudiced the Indemnifying
     Party.

          An Indemnified Party shall have the right to employ separate counsel
     in any such Proceeding and to participate in the defense thereof, but the
     fees and expenses of such counsel shall be at the expense of such
     Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
     in writing to pay such fees and expenses; (2) the Indemnifying Party shall
     have failed promptly to assume the defense of such Proceeding and to employ
     counsel reasonably satisfactory to such Indemnified Party in any such
     Proceeding; or (3) the named parties to any such Proceeding (including any
     impleaded parties) include both such Indemnified Party and the Indemnifying
     Party, and counsel to the Indemnified Party shall reasonably believe that a
     material conflict of interest is likely to exist if the same counsel were
     to represent such Indemnified Party and the Indemnifying Party (in which
     case, if such Indemnified Party notifies the Indemnifying Party in writing
     that it elects to employ separate counsel at the expense of the
     Indemnifying Party, the Indemnifying Party shall not have the right to
     assume the defense thereof and the reasonable fees and expenses of no more
     than one separate counsel shall be at the expense of the Indemnifying
     Party). The Indemnifying Party shall not be liable for any settlement of
     any such Proceeding effected without its written consent, which consent
     shall not be unreasonably withheld or delayed. No Indemnifying Party shall,
     without the prior written consent of the Indemnified Party, effect any
     settlement of any pending Proceeding in respect of which any Indemnified
     Party is a party, unless such settlement includes an unconditional release
     of such Indemnified Party from all liability on claims that are the subject
     matter of such Proceeding.

                                       11

<PAGE>

          Subject to the terms of this Agreement, all reasonable fees and
     expenses of the Indemnified Party (including reasonable fees and expenses
     to the extent incurred in connection with investigating or preparing to
     defend such Proceeding in a manner not inconsistent with this Section)
     shall be paid to the Indemnified Party, as incurred, within ten Trading
     Days of written notice thereof to the Indemnifying Party; provided, that
     the Indemnified Party shall promptly reimburse the Indemnifying Party for
     that portion of such fees and expenses applicable to such actions for which
     such Indemnified Party is judicially determined to be not entitled to
     indemnification hereunder.

          (d) Contribution. If the indemnification under Section 5(a) or 5(b) is
     unavailable to an Indemnified Party or insufficient to hold an Indemnified
     Party harmless for any Losses, then each Indemnifying Party shall
     contribute to the amount paid or payable by such Indemnified Party, in such
     proportion as is appropriate to reflect the relative fault of the
     Indemnifying Party and Indemnified Party in connection with the actions,
     statements or omissions that resulted in such Losses as well as any other
     relevant equitable considerations. The relative fault of such Indemnifying
     Party and Indemnified Party shall be determined by reference to, among
     other things, whether any action in question, including any untrue or
     alleged untrue statement of a material fact or omission or alleged omission
     of a material fact, has been taken or made by, or relates to information
     supplied by, such Indemnifying Party or Indemnified Party, and the parties'
     relative intent, knowledge, access to information and opportunity to
     correct or prevent such action, statement or omission. The amount paid or
     payable by a party as a result of any Losses shall be deemed to include,
     subject to the limitations set forth in this Agreement, any reasonable
     attorneys' or other fees or expenses incurred by such party in connection
     with any Proceeding to the extent such party would have been indemnified
     for such fees or expenses if the indemnification provided for in this
     Section was available to such party in accordance with its terms.

          The parties hereto agree that it would not be just and equitable if
     contribution pursuant to this Section 5(d) were determined by pro rata
     allocation or by any other method of allocation that does not take into
     account the equitable considerations referred to in the immediately
     preceding paragraph. Notwithstanding the provisions of this Section 5(d),
     no Holder shall be required to contribute, in the aggregate, any amount in
     excess of the amount by which the net proceeds actually received by such
     Holder from the sale of the Registrable Securities subject to the
     Proceeding exceeds the amount of any damages that such Holder has otherwise
     been required to pay by reason of such untrue or alleged untrue statement
     or omission or alleged omission.

          The indemnity and contribution agreements contained in this Section
     are in addition to any liability that the Indemnifying Parties may have to
     the Indemnified Parties.

     6. Miscellaneous.

                                       12

<PAGE>

          (a) Remedies. In the event of a breach by the Company or by a Holder
     of any of their respective obligations under this Agreement, each Holder or
     the Company, as the case may be, in addition to being entitled to exercise
     all rights granted by law and under this Agreement, including recovery of
     damages, shall be entitled to specific performance of its rights under this
     Agreement. The Company and each Holder agree that monetary damages would
     not provide adequate compensation for any losses incurred by reason of a
     breach by it of any of the provisions of this Agreement and hereby further
     agrees that, in the event of any action for specific performance in respect
     of such breach, it shall not assert or shall waive the defense that a
     remedy at law would be adequate.

          (b) No Piggyback on Registrations. Except as set forth on Schedule
     6(b) attached hereto, neither the Company nor any of its security holders
     (other than the Holders in such capacity pursuant hereto) may include
     securities of the Company in any Registration Statements other than the
     Registrable Securities.

          (c) Compliance. Each Holder covenants and agrees that it will comply
     with the prospectus delivery requirements of the Securities Act as
     applicable to it in connection with sales of Registrable Securities
     pursuant to a Registration Statement.

          (d) Discontinued Disposition. By its acquisition of Registrable
     Securities, each Holder agrees that, upon receipt of a notice from the
     Company of the occurrence of any event of the kind described in Section
     3(d)(iii) through (vi), such Holder will forthwith discontinue disposition
     of such Registrable Securities under a Registration Statement until it is
     advised in writing (the "Advice") by the Company that the use of the
     applicable Prospectus (as it may have been supplemented or amended) may be
     resumed. The Company will use its best efforts to ensure that the use of
     the Prospectus may be resumed as promptly as it practicable. The Company
     agrees and acknowledges that any periods during which the Holder is
     required to discontinue the disposition of the Registrable Securities
     hereunder shall be subject to the provisions of Section 2(b).

          (e) Piggy-Back Registrations. If at any time during the Effectiveness
     Period there is not an effective Registration Statement covering all of the
     Registrable Securities and the Company shall determine to prepare and file
     with the Commission a registration statement relating to an offering for
     its own account or the account of others under the Securities Act of any of
     its equity securities, other than on Form S-4 or Form S-8 (each as
     promulgated under the Securities Act) or their then equivalents relating to
     equity securities to be issued solely in connection with any acquisition of
     any entity or business or equity securities issuable in connection with the
     Company's stock option or other employee benefit plans, then the Company
     shall send to each Holder a written notice of such determination and, if
     within fifteen days after the date of such notice, any such Holder shall so
     request in writing, the Company shall include in such registration
     statement all or any part of such Registrable Securities such Holder
     requests to be registered; provided, however, that the Company shall not be
     required to register any Registrable Securities pursuant to this Section
     6(e) that are eligible for resale pursuant to Rule 144(k) promulgated under
     the Securities Act or that are the subject of a then effective Registration
     Statement.

                                       13

<PAGE>

          (f) Amendments and Waivers. The provisions of this Agreement,
     including the provisions of this sentence, may not be amended, modified or
     supplemented, and waivers or consents to departures from the provisions
     hereof may not be given, unless the same shall be in writing and signed by
     the Company and the Holders of a majority of the then outstanding
     Registrable Securities (including, for this purpose any Registrable
     Securities issuable upon exercise or conversion of any Security). If a
     Registration Statement does not register all of the Registrable Securities
     pursuant to a waiver or amendment done in compliance with the previous
     sentence, then the number of Registrable Securities to be registered for
     each Holder shall be reduced pro rata among all Holders and each Holder
     shall have the right to designate which of its Registrable Securities shall
     be omitted from such Registration Statement. Notwithstanding the foregoing,
     a waiver or consent to depart from the provisions hereof with respect to a
     matter that relates exclusively to the rights of some Holders and that does
     not directly or indirectly affect the rights of other Holders may be given
     by Holders of all of the Registrable Securities to which such waiver or
     consent relates; provided, however, that the provisions of this sentence
     may not be amended, modified, or supplemented except in accordance with the
     provisions of the first sentence of this Section 6(f).

          (g) Notices. Any and all notices or other communications or deliveries
     required or permitted to be provided hereunder shall be delivered as set
     forth in the Purchase Agreement.

          (h) Successors and Assigns. This Agreement shall inure to the benefit
     of and be binding upon the successors and permitted assigns of each of the
     parties and shall inure to the benefit of each Holder. The Company may not
     assign (except by merger) its rights or obligations hereunder without the
     prior written consent of all of the Holders of the then-outstanding
     Registrable Securities. Each Holder may assign their respective rights
     hereunder in the manner and to the Persons as permitted under the Purchase
     Agreement.

          (i) No Inconsistent Agreements. Neither the Company nor any of its
     Subsidiaries has entered, as of the date hereof, nor shall the Company or
     any of its Subsidiaries, on or after the date of this Agreement, enter into
     any agreement with respect to its securities, that would have the effect of
     impairing the rights granted to the Holders in this Agreement or otherwise
     conflicts with the provisions hereof. Except as set forth on Schedule 6(i),
     neither the Company nor any of its subsidiaries has previously entered into
     any agreement granting any registration rights with respect to any of its
     securities to any Person that have not been satisfied in full.

          (j) Execution and Counterparts. This Agreement may be executed in two
     or more counterparts, all of which when taken together shall be considered
     one and the same agreement and shall become effective when counterparts
     have been signed by each party and delivered to the other party, it being
     understood that both parties need not sign the same counterpart. In the
     event that any signature is delivered by facsimile transmission or by
     e-mail delivery of a ".pdf" format data file, such signature shall create a
     valid and binding obligation of the party executing (or on whose behalf
     such signature is executed) with the same force and effect as if such
     facsimile or ".pdf" signature page were an original thereof.

                                       14

<PAGE>

          (k) Governing Law. All questions concerning the construction,
     validity, enforcement and interpretation of this Agreement shall be
     determined in accordance with the provisions of the Purchase Agreement.

          (l) Cumulative Remedies. The remedies provided herein are cumulative
     and not exclusive of any other remedies provided by law.

          (m) Severability. If any term, provision, covenant or restriction of
     this Agreement is held by a court of competent jurisdiction to be invalid,
     illegal, void or unenforceable, the remainder of the terms, provisions,
     covenants and restrictions set forth herein shall remain in full force and
     effect and shall in no way be affected, impaired or invalidated, and the
     parties hereto shall use their commercially reasonable efforts to find and
     employ an alternative means to achieve the same or substantially the same
     result as that contemplated by such term, provision, covenant or
     restriction. It is hereby stipulated and declared to be the intention of
     the parties that they would have executed the remaining terms, provisions,
     covenants and restrictions without including any of such that may be
     hereafter declared invalid, illegal, void or unenforceable.

          (n) Headings. The headings in this Agreement are for convenience only,
     do not constitute a part of the Agreement and shall not be deemed to limit
     or affect any of the provisions hereof.

          (o) Independent Nature of Holders' Obligations and Rights. The
     obligations of each Holder hereunder are several and not joint with the
     obligations of any other Holder hereunder, and no Holder shall be
     responsible in any way for the performance of the obligations of any other
     Holder hereunder. Nothing contained herein or in any other agreement or
     document delivered at any closing, and no action taken by any Holder
     pursuant hereto or thereto, shall be deemed to constitute the Holders as a
     partnership, an association, a joint venture or any other kind of entity,
     or create a presumption that the Holders are in any way acting in concert
     with respect to such obligations or the transactions contemplated by this
     Agreement. Each Holder shall be entitled to protect and enforce its rights,
     including without limitation the rights arising out of this Agreement, and
     it shall not be necessary for any other Holder to be joined as an
     additional party in any proceeding for such purpose.

                              ********************

                                       15

<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration Rights
     Agreement as of the date first written above.

                                        ATS MEDICAL, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       16

<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO ATSI RRA]

Name of Holder: __________________________

Signature of Authorized Signatory of Holder: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       17
<PAGE>

                                                                         ANNEX A

                              Plan of Distribution

     Each Selling Stockholder (the "Selling Stockholders") of the common stock
and any of their pledgees, assignees and successors-in-interest may, from time
to time, sell any or all of their shares of common stock on the Nasdaq Global
Market or any other stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. A Selling Stockholder may use any one or more of the
following methods when selling 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;

          -    settlement of short sales entered into after the effective date
               of the registration statement of which this prospectus is a part;

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

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

          -    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 of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

     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, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage

                                       18

<PAGE>

commission in compliance with NASDR Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASDR IM-2440.

     In connection with the sale of the common stock or interests therein, 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 the 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 Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

     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.

     Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder. In addition,
any securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than under
this prospectus. There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholders.

     We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

                                       19

<PAGE>

     Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).

                                       20

<PAGE>

                                                                         ANNEX B

                                   [__________

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

     The undersigned beneficial owner of common stock (the "Registrable
Securities") of [_______, a [_______ corporation (the "Company"), understands
that the Company has filed or intends to file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement (the
"Registration Rights Agreement") to which this document is annexed. A copy of
the Registration Rights Agreement is available from the Company upon request at
the address set forth below. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                     NOTICE

     The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it in the Registration Statement.

                                       21

<PAGE>
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.   NAME.

     (a)  Full Legal Name of Selling Securityholder

          ______________________________________________________________________

     (b)  Full Legal Name of Registered Holder (if not the same as (a) above)
          through which Registrable Securities are held:

          ______________________________________________________________________

     (c)  Full Legal Name of Natural Control Person (which means a natural
          person who directly or indirectly alone or with others has power to
          vote or dispose of the securities covered by the questionnaire):

          ______________________________________________________________________

2.   ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Telephone: _____________________________________________________________________

Fax: ___________________________________________________________________________

Contact Person: ________________________________________________________________

3.   BROKER-DEALER STATUS:

     (a)  Are you a broker-dealer?

                               Yes _____ No _____

     (b)  If "yes" to Section 3(a), did you receive your Registrable Securities
          as compensation for investment banking services to the Company.

                               Yes _____ No _____

     Note: If no, the Commission's staff has indicated that you should be
           identified as an underwriter in the Registration Statement.

                                       22

<PAGE>

     (c)  Are you an affiliate of a broker-dealer?

                               Yes _____ No _____

     (d)  If you are an affiliate of a broker-dealer, do you certify that you
          bought the Registrable Securities in the ordinary course of business,
          and at the time of the purchase of the Registrable Securities to be
          resold, you had no agreements or understandings, directly or
          indirectly, with any person to distribute the Registrable Securities?

                               Yes _____ No _____

     Note: If no, the Commission's staff has indicated that you should be
           identified as an underwriter in the Registration Statement.

4.   BENEFICIAL OWNERSHIP OF SECURITIES OF THE COMPANY OWNED BY THE SELLING
     SECURITYHOLDER.

     Except as set forth below in this Item 4, the undersigned is not the
     beneficial or registered owner of any securities of the Company other than
     the securities issuable pursuant to the Purchase Agreement.

     (a)  Type and Amount of other securities beneficially owned by the Selling
          Securityholder:

          ______________________________________________________________________

          ______________________________________________________________________

                                       23

<PAGE>

5.   RELATIONSHIPS WITH THE COMPANY:

     Except as set forth below, neither the undersigned nor any of its
     affiliates, officers, directors or principal equity holders (owners of 5%
     of more of the equity securities of the undersigned) has held any position
     or office or has had any other material relationship with the Company (or
     its predecessors or affiliates) during the past three years.

     State any exceptions here:

     ___________________________________________________________________________

     ___________________________________________________________________________

     The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof at any time while the Registration Statement remains effective.

     By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 5 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.

     IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:                                  Beneficial Owner:
       ------------------------------                     ----------------------

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]