Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into on February 20, 2003 by
and between Elliot Lebowitz, Ph.D. an individual (“Lebowitz”), and North
American Scientific, Inc., a Delaware corporation (the “Company”).

 

I.                                         Employment by the Company and Term.

 

(a)                                  Full Time and Best Efforts.  Subject to the
terms herein, the Company agrees to employ Lebowitz as President of its
subsidiary, Theseus Imaging, Corp. (“Theseus”), and in such other capacities as
may reasonably be requested from time to time by the Board of Directors of the
Company (the “Board”) or a duly authorized committee thereof consistent with his
position as President, and Lebowitz hereby accepts such employment.  During the
term of his employment with the Company, Lebowitz will devote his full time and
use his best efforts to advance the business and welfare of the Company, and
will not engage in any other employment or business activities for any direct or
indirect remuneration that would be directly harmful or detrimental to, or that
may compete with, the business and affairs of the Company, or that would
interfere with his duties hereunder.  Notwithstanding the foregoing, nothing
herein shall preclude Lebowitz from continuing to serve on the board of
directors of BioTransplant Inc., Immerge Biotherapeutics Inc., and Stem Cell
Sciences, Ltd., provided such service does not impact Lebowitz’s performance of
his duties as President.

 

(b)                                 Duties.  As President of Theseus, Lebowitz
shall be primarily responsible for overseeing Theseus’ overall business and
organization structure and for maintaining Theseus’ relationship with its
corporate partners, regulatory agencies, academic partners, investors, employees
and patients.  Lebowitz shall serve in a senior management capacity and shall
perform such duties as are customarily associated with his title.

 

(c)                                  Company Policies.  The employment
relationship between the parties shall be governed by the general employment
policies and practices of the Company, including but not limited to those
relating to protection of confidential information and assignment of inventions,
except that when the terms of this Agreement differ from or are in conflict with
the Company’s general employment policies or practices, this Agreement shall
control.

 

(d)                                 Term.  This Agreement will commence on the
date first noted above (the “Effective Date”) and will continue until terminated
as provided in Section 6 below (“Term”).  Lebowitz acknowledges that certain
provisions of this Agreement, including without limitation Sections 7 and 8,
survive termination of employment and termination of this Agreement.

 

--------------------------------------------------------------------------------

 

2.                                       Base Salary and Benefits.

 

(a)                                  Base Salary.  Lebowitz shall receive for
services to be rendered hereunder a base salary at the rate of Two Hundred Fifty
Thousand dollars ($250,000) per annum payable at least as frequently as monthly
and subject to payroll deductions as may be necessary or customary in respect of
the Company’s salaried employees (the “Base Salary”).  The Base Salary will be
reviewed by and shall be subject to upward, but not downward, adjustment at the
sole discretion of the Chief Executive Officer subject to review and approval by
the Company’s Compensation Committee each year during the term of Lebowitz’s
employment.

 

(b)                                 Participation in Benefits Plans.  During the
term hereof, Lebowitz shall be entitled to participate in any group insurance,
hospitalization, medical, dental, health, accident, disability or similar plan
or program of the Company now existing or established hereafter to the extent
that he is eligible under the general provisions thereof.  These benefits
currently include medical, dental, life, and disability insurance and
participation in a Company-sponsored 401(k) plan, Employee Stock Purchase Plan
and a Profit-Sharing Plan.  The Company shall not terminate such benefits
without providing Lebowitz 30 days’ notice of the termination of such benefits
as described herein.

 

(c)                                  Vacation.  Lebowitz shall be entitled to a
period of annual vacation time equal to four (4) weeks per twelve month period,
to accrue pro rata during the course of each such twelve month period.  The days
selected for Lebowitz’s vacation must be mutually and reasonably agreed to by
the Company and Lebowitz.

 

3.                                       Bonuses.

 

(a)                                  Annual Bonuses.  Beginning on the Effective
Date of this agreement through the Agreement’s Termination Date, Lebowitz will
be eligible to receive a bonus (the “Annual Bonus”).  Lebowitz will be deemed to
have earned his bonus in full on October 31, of the Company’s fiscal year with
respect to which the bonus is determined and paid (the “Measuring Year”),
regardless of the date of determination or payment of the bonus.  The amount of
the bonus will be determined pursuant to the terms of this Agreement by the
Board on or about the January 15 following the last day of the Measuring Year. 
The Annual Bonus will be based on Performance Goals approved by the Board and
established by the Board in consultation with the Chief Executive Officer
(“CEO”).  Lebowitz shall be entitled to an Annual Bonus of not less than 25% of
his Base Salary if the Company meets or exceeds the Performance Goals
established for the previous Measuring Year.

 

(b)                                 Other Bonus Plans.  From time to time, the
CEO or the Board may, in their discretion, institute supplementary bonus plans
or stock option plans, for which Lebowitz may be eligible.  The terms of such
bonus shall be determined by the applicable bonus plan.  No such bonus plan may
alter or rescind Lebowitz’s rights under this Agreement without Lebowitz’s
written consent.

 

2

--------------------------------------------------------------------------------

 

4.                                       Stock Options. The Company will grant
Lebowitz an option to purchase 40,000 shares of Company common stock with an
exercise price equal to the fair market value of the stock on the Effective Date
(the “Option”).  The Option shall be granted effective as of the Effective Date
and shall be subject to the terms and conditions of the Company’s Stock Option
Plan and a stock option agreement, which shall be tendered to Lebowitz within
five (5) days of the Effective Date.  The stock option agreement shall contain,
among other things, a four-year vesting schedule.  The Option shall be granted
as “incentive stock options” to the extent permitted under Section 422 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

5.                                       Reasonable Business Expenses and
Support.  Lebowitz shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder in
accordance with Company policy.  Lebowitz shall be furnished reasonable office
space, assistance and facilities.  In addition, the Company agrees to provide
Lebowitz with a parking space at Theseus’ offices at no charge to Lebowitz.

 

6.                                       Termination of Employment.  As noted in
Section 1 hereof, Lebowitz’s employment and this Agreement shall continue until
terminated under the following circumstances.  The date on which Lebowitz’s
employment by the Company ceases, under any of the following circumstances,
shall be defined herein as the “Termination Date.”

 

(a)                                  Termination by the Company for Cause.

 

(i)                                     Termination; Payment of Accrued Salary
and Vacation.  The Board may terminate Lebowitz’s employment with the Company at
any time for Cause (as defined below), immediately upon written notice to
Lebowitz of the circumstances leading to such termination for Cause.  In the
event that Lebowitz’s employment is terminated for Cause, Lebowitz shall receive
payment for all earned Base Salary, all accrued but unused vacation and any
other accrued benefits up to and through the Termination Date (hereafter, the
“Accrued Obligations”).  The Company shall have no further obligation to pay
severance of any kind whether under this Agreement or otherwise nor to make any
payment in lieu of notice (other than payment in lieu of the 30 day cure period
under the Cause definition, if applicable).

 

(ii)                                  Definition of Cause.  “Cause” means the
occurrence or existence of any of the following with respect to Lebowitz, as
determined by a majority of the independent directors of the Board:  (a)
continued failure or refusal by Lebowitz to follow the direction of the
Company’s Board regarding a material obligation (unless such direction is
considered by Lebowitz in good faith to be unlawful or unethical), provided that
the Company has given Lebowitz written notice specifying the nature of such
failure or refusal, which remains uncorrected by Lebowitz after the lapse of 30
days following receipt of the written notice; (b) a material breach by Lebowitz
of any of his material obligations hereunder, which remains uncured after the
lapse of 30

 

3

--------------------------------------------------------------------------------

 

days following the date that the Company has given Lebowitz written notice
thereof;  (c) a material breach by Lebowitz of his duty not to engage in any
transaction that represents, directly or indirectly, self-dealing with the
Company or any of its Affiliates which has not been approved by a majority of
the disinterested directors of the Board or of the terms of his employment, if
in any such case such material breach remains uncured after the lapse of 30 days
following the date that the Company has given Lebowitz written notice thereof;
(d) any act of misappropriation, embezzlement, intentional fraud or similar
conduct involving the Company or any of its Affiliates; (e) the conviction or
the plea of nolo contendere in respect of a felony involving moral turpitude;
(f) intentional infliction of any damage of a material nature to any property of
the Company or any of its Affiliates; (g) an act of moral turpitude or similar
misconduct by Lebowitz that causes significant and irreparable damage to the
Company as a result of negative publicity; or (h) the repeated abuse of any
non-prescription controlled substance or the repeated abuse of alcohol or any
other non-controlled substance which, in any case described in this clause, the
Board reasonably determines renders the Lebowitz unfit to serve in his capacity
as an officer or employee of the Company or it Affiliates.

 

(b)                                 Control Termination.  The term “Control
Termination” shall mean a termination of Lebowitz’s employment or this Agreement
by the Company for any reason within 90 days prior to or following the
consummation of a “change of control” of the Company.

 

In the event of a Control Termination, Lebowitz will be entitled to payment of
Accrued Obligations, a pro-rata portion of the Annual Bonus, and a severance
payment in the gross amount equal to one (1) year’s Base Salary to be paid in a
lump sum within 30 days of the date of the Control Termination.  In addition,
any unvested Options granted under Section 4 of this Agreement or that may
hereafter be granted to Lebowitz shall immediately vest as of the Termination
Date.

 

The term “change of control” shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of the
Regulation 14A promulgated under the Securities and Exchange Act of 1934 (the
“Act”) or, if Item 6(e) is no longer in effect, any regulations issued by the
Securities and Exchange Commission pursuant to the Act which serve similar
purposes; provided that, without limitation,

 

(i)                                     such a change in control shall be deemed
to have occurred if and when either (a) except as provided in (iv) below, any
“person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or
becomes a “beneficial owner” (as such term is defined in Rule 13d03 promulgated
under the Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities entitled to vote with respect to the election of its
Board of Directors or (b) as the result of the foregoing transaction or events,
individuals who were members of the Board of Directors of the Company
immediately prior to any such transaction or event shall not constitute a
majority of the Board of Directors following such transaction or event, and

 

4

--------------------------------------------------------------------------------

 

(ii)                                  no change in control shall be deemed to
have occurred if and when any such change is the result of a transaction which
constitutes a “Rule 13e-3 transaction” as such term is defined in Rule 13e-3
promulgated under the Act.

 

(c)                                  Termination by the Company Due to
Lebowitz’s Disability.  The Company may terminate Lebowitz’s employment in the
event Lebowitz suffers a Disability (as defined below).  Upon termination for a
Disability, Lebowitz shall be entitled to payment of all Accrued Obligations and
a severance payment in the gross amount equal to six (6) months Base Salary to
be paid in a lump sum within 30 days of the date of the Termination.  In
addition, any unvested Options granted under Section 4 of the Agreement, any
previously granted options or that may hereafter be granted to Lebowitz shall
immediately vest as of the date of the Termination.  For the purposes of this
Agreement, “Disability” shall mean any (i) physical incapacity or mental
incompetence as a result of which Lebowitz is unable to perform substantially
all his duties and responsibilities hereunder for an aggregate of 90 days within
any six (6) month period, whether or not consecutive, during any calendar year,
and (ii) which cannot be reasonably accommodated by the Company without undue
hardship.

 

(d)                                 Termination By the Company Without Cause. 
The Company may terminate Lebowitz’s employment upon 14 days’ prior written
notice for other than cause or disability, pursuant to the following termination
payment requirements.

 

(i)                                     In the event that Lebowitz’s employment
is terminated by the Company without Cause, the Company shall pay Lebowitz all
Accrued Obligations, a pro-rata portion of the Annual Bonus, and severance of an
amount equal to one (1) year of his then Base Salary payable in a lump sum
within 30 days of the date of the Termination, less standard withholdings for
tax and social security purposes.  The bonus may be paid upon such date or over
such period of time which is in accordance with the applicable bonus plan. In
addition, any unvested Options granted under Section 4 of this Agreement or that
may hereafter be granted to Lebowitz shall immediately vest as of the date of
the Termination.

 

(ii)                                  The Company shall not be obligated to pay
any termination payments under 5(d)(i) or (ii) above if Lebowitz breaches the
provisions of Sections 7 or 8 below.

 

(e)                                  Termination Upon Death.  If Lebowitz dies
prior to the expiration of the term of this Agreement, the Company shall (i)
continue coverage of Lebowitz’s dependents (if any) under all benefit plans or
programs of the type listed above in paragraph 2(b) herein for a period of six
(6) months, and (ii) pay to Lebowitz’s estate the Accrued Obligations and the
pro-rata portion of the Annual Bonus through the Termination Date, less standard
withholdings for tax and social security purposes, payable, in the case of a
bonus, upon such date or over such period of time which is in accordance with
the applicable bonus plan.

 

5

--------------------------------------------------------------------------------

 

(f)                                    Termination by Lebowitz For Good Reason. 
Lebowitz may terminate his employment at any time for Good Reason (as defined
below) immediately upon written notice to the Company.  In the event that
Lebowitz’s employment is terminated by Lebowitz for Good Reason, Lebowitz shall
be entitled to payment of Accrued Obligations, a pro-rata portion of the Annual
Bonus, severance of an amount equal to one (1) year of his then Base Salary
payable in a lump sum within 30 days of the date of the Termination, and
continued vesting on any Options granted under Section 4 of this Agreement or
that may hereafter be granted to Lebowitz for the period of one year following
the date of Termination.

 

For purposes of this Agreement, termination by Lebowitz for “Good Reason” shall
mean the termination of employment due to: (i) a material breach of the terms
and conditions of this Agreement by the Company; (ii) a material reduction in
the responsibility or authority of Lebowitz for the operations of Theseus or as
otherwise described in this Agreement; (iii) failure of the Company to pay the
Executive’s salary or bonus, if any, in the time and manner contemplated by this
Agreement; or (iv) the relocation of the Theseus’s headquarters outside a radius
of fifty (50) miles travel distance from its current location in Boston,
Massachusetts; provided, however, that an event described in this sentence shall
not constitute Good Reason unless it is communicated by Lebowitz to the Company
in writing within thirty (30) days of the date Lebowitz knew of such event and
its impact upon him and/or his position and, is not corrected by the Company to
Lebowitz’s reasonable satisfaction within thirty (30) days of the date of
Lebowitz’s delivery of such written notice to the Company.

 

(g)                                 Termination by Lebowitz Without Good
Reason.  Lebowitz may terminate his employment for other than Good Reason at any
time upon 14 days’ prior notice to the Company.  A voluntary termination by
Lebowitz without Good Reason shall have the same consequences as provided in
Section 6(a) for termination for Cause.

 

(h)                                 Benefits Upon Termination.  All benefits
provided under Paragraph 2(b) hereof shall be extended, at Lebowitz’s election,
to the extent permitted by the Company’s insurance policies and benefit plans,
for one year after Lebowitz’s Termination Date, except (a) as required by law
(e.g., COBRA health insurance continuation election) or (b) in the event of a
termination described in Paragraph 5(a).  If Lebowitz elects to continue the
group health and dental coverage following the date of termination in accordance
with COBRA, the Company shall pay the premium for such coverage for the period
of one year following the date of termination (unless such termination is for
Cause under Paragraph 5(a)).  If the Company’s group coverage terminates during
the one year period or if Lebowitz is no longer eligible for continuation of
group coverage under COBRA, the Company shall pay Lebowitz cash in lieu of the
premium payment for the remainder of the one year period.

 

7.                                       Proprietary Information Obligations.

 

During the term of employment under the Agreement, Lebowitz will have access to
and become acquainted with the Company’s and the Company’s Affiliates’
confidential and proprietary information, including, but not limited to,
information or

 

6

--------------------------------------------------------------------------------

 

plans regarding the Company’s and Company’s Affiliates’ customer relationships,
personnel, or sales, marketing, and financial operations and methods; trade
secrets; formulas; devices; secret inventions; processes; and other compilations
of information, records, and specifications (collectively “Proprietary
Information”).  Lebowitz shall not disclose any of the Company’s or the
Company’s Affiliates’ Proprietary Information directly or indirectly, or use it
in any way, either during the term of this Agreement or at any time thereafter,
except as require in the course of his employment for the Company or as
authorized in writing by the Company.  All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the business of the Company or the Company’s Affiliates,
whether prepared by Lebowitz or otherwise coming into his possession, shall
remain the exclusive property of the Company or the Company’s Affiliates, as the
case may be, and shall not be removed from the premises of the Company under an
circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out Lebowitz’s duties
hereunder, and if removed shall be immediately returned to the Company upon any
termination of his employment; provided, however, that Lebowitz may retain
copies of documents that would ordinarily be in the possession of members of the
investment community and any documents that were personally owned, which copies
and the information contained therein Lebowitz agrees not to use for any
business purpose.  Notwithstanding the foregoing, Proprietary Information shall
not include (i) information which is or becomes generally public knowledge or
public except through disclosure by Lebowitz in violation of this Agreement and
(ii) information that may be required to be disclosed by applicable law.

 

8.                                       Non-Solicitation.  From the Execution
Date of this agreement through the date one year after the Termination Date,
Lebowitz will not on his own behalf or on behalf of an other person or entity,
without the express written consent of the Board, solicit or attempt to solicit,
induce or encourage any then current employee, customer, business relation,
service provider or representative of the Company to terminate or modify his,
her or its employment or business relationship with the Company.

 

9.                                       Indemnification and D&O Insurance.  The
Company agrees that Lebowitz will be entitled to indemnification to the fullest
extent authorized by the Company’s by-laws and shall be a covered person under
the Company’s directors and officers’ liability insurance policy.

 

10.                                 Miscellaneous.

 

(a)                                  Notices.  Any notices provided hereunder
must be in writing and shall be deemed effective upon the earlier of two days
following personal delivery (including personal delivery by telecopy or telex),
or the fourth day after mailing by first class mail to the recipient at the
address indicated below:

 

To the Company:

 

North American Scientific, Inc

 

7

--------------------------------------------------------------------------------

 

20200 Sunburst Street

Chatsworth, CA 91311

Attn:  L. Michael Cutrer

Telecopier No:  818-734-5202

 

To Employee:

 

Elliot Lebowitz

143 Gardner Road

Brookline, MA  02445

Telecopier No:

 

Or to such address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party.

 

(b)                                 Severability.  Any provision of this
Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction
shall, as to that jurisdiction and subject to this Paragraph be ineffective to
the extent of such invalidity, illegality or unenforceability, without affecting
in any way the remaining provisions hereof in such jurisdiction or rendering
that or any other provisions of this Agreement invalid, illegal, or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable.

 

(c)                                  Entire Agreement.  This document
constitutes the final, complete, and exclusive embodiment of the entire
agreement and understanding between the parties related to the subject matter
hereof and supersedes and preempts any prior or contemporaneous understandings,
agreements, or representations by or between the parties, written or oral.

 

(d)                                 Counterparts.  This Agreement may be
executed on separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and
the same agreement.

 

(e)                                  Successors and Assigns.  This Agreement is
intended to bind and inure to the benefit of and be enforceable by Lebowitz and
the Company, and their respective successors and assigns, except that Lebowitz
may not assign any of his duties hereunder and he may not assign any of his
rights hereunder without the prior written consent of the Board.

 

(f)                                    Amendments.  No amendments or other
modifications to this Agreement may be made except by writing and signed by both
parties.  No amendment or waiver of this Agreement requires the consent of any
individual, partnership, corporation or other entity not a party to this
Agreement.  Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement.

 

8

--------------------------------------------------------------------------------

 

(g)                                 Choice of Law.  All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the laws of the State of California without giving effect to principles of
conflicts of law.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date it is last executed below by either party.

 

 

 

 

/s/ Elliot Lebowitz

 

ELLIOT LEBOWITZ

 

 

 

Febuary 20, 2003

 

DATE

 

 

 

 

 

NORTH AMERICAN SCIENTIFIC, INC.

 

 

 

By:

/s/L. Michael Cutter

 

Title:  Chief Executive Officer

 

 

 

Febuary 19,2003

 

DATE

 

9

--------------------------------------------------------------------------------