**Exhibit 10.1**

 

**EMPLOYMENT AGREEMENT**

 

ThisEmployment Agreement (“Agreement”) is entered into on February 20, 2003 by andbetween Elliot Lebowitz, Ph.D. an individual (“Lebowitz”), and North AmericanScientific, Inc., a Delaware corporation (the “Company”).

 

I.                                         Employmentby the Company and Term.

 

(a)                                  FullTime and Best Efforts.  Subject tothe terms herein, the Company agrees to employ Lebowitz as President of itssubsidiary, Theseus Imaging, Corp. (“Theseus”), and in such other capacities asmay reasonably be requested from time to time by the Board of Directors of theCompany (the “Board”) or a duly authorized committee thereof consistent withhis position as President, and Lebowitz hereby accepts such employment.  During the term of his employment with theCompany, Lebowitz will devote his full time and use his best efforts to advancethe business and welfare of the Company, and will not engage in any otheremployment or business activities for any direct or indirect remuneration thatwould be directly harmful or detrimental to, or that may compete with, thebusiness and affairs of the Company, or that would interfere with his dutieshereunder.  Notwithstanding theforegoing, nothing herein shall preclude Lebowitz from continuing to serve onthe board of directors of BioTransplant Inc., Immerge Biotherapeutics Inc., andStem Cell Sciences, Ltd., provided such service does not impact Lebowitz’sperformance of his duties as President.

 

(b)                                 Duties.  As President of Theseus, Lebowitz shall beprimarily responsible for overseeing Theseus’ overall business and organizationstructure and for maintaining Theseus’ relationship with its corporatepartners, regulatory agencies, academic partners, investors, employees andpatients.  Lebowitz shall serve in asenior management capacity and shall perform such duties as are customarilyassociated with his title.

 

(c)                                  CompanyPolicies.  The employmentrelationship between the parties shall be governed by the general employmentpolicies and practices of the Company, including but not limited to thoserelating to protection of confidential information and assignment ofinventions, except that when the terms of this Agreement differ from or are inconflict with the Company’s general employment policies or practices, thisAgreement shall control.

 

(d)                                 Term.  This Agreement will commence on the datefirst noted above (the “Effective Date”) and will continue until terminated asprovided in Section 6 below (“Term”). Lebowitz acknowledges that certain provisions of this Agreement, includingwithout limitation Sections 7 and 8, survive termination of employment andtermination of this Agreement.

 

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2.                                       BaseSalary and Benefits.

 

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

 

(b)                                 Participationin Benefits Plans.  During the termhereof, Lebowitz shall be entitled to participate in any group insurance,hospitalization, medical, dental, health, accident, disability or similar planor program of the Company now existing or established hereafter to the extentthat he is eligible under the general provisions thereof.  These benefits currently include medical,dental, life, and disability insurance and participation in a Company-sponsored401(k) plan, Employee Stock Purchase Plan and a Profit-Sharing Plan.  The Company shall not terminate suchbenefits without providing Lebowitz 30 days’ notice of the termination of suchbenefits as described herein.

 

(c)                                  Vacation.  Lebowitz shall be entitled to a period ofannual 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 andreasonably agreed to by the Company and Lebowitz.

 

3.                                       Bonuses.

 

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

 

(b)                                 OtherBonus Plans.  From time to time, theCEO or the Board may, in their discretion, institute supplementary bonus plansor stock option plans, for which Lebowitz may be eligible.  The terms of such bonus shall be determinedby the applicable bonus plan.  No suchbonus plan may alter or rescind Lebowitz’s rights under this Agreement withoutLebowitz’s written consent.

 

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4.                                       StockOptions. The Company will grant Lebowitz an option to purchase 40,000shares of Company common stock with an exercise price equal to the fair marketvalue of the stock on the Effective Date (the “Option”).  The Option shall be granted effective as ofthe Effective Date and shall be subject to the terms and conditions of theCompany’s Stock Option Plan and a stock option agreement, which shall betendered 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 theextent permitted under Section 422 of the Internal Revenue Code of 1986,as amended, and the regulations thereunder.

 

5.                                       ReasonableBusiness Expenses and Support. Lebowitz shall be reimbursed for documented and reasonable businessexpenses in connection with the performance of his duties hereunder inaccordance with Company policy. Lebowitz shall be furnished reasonable office space, assistance andfacilities.  In addition, the Companyagrees to provide Lebowitz with a parking space at Theseus’ offices at nocharge to Lebowitz.

 

6.                                       Terminationof Employment.  As noted inSection 1 hereof, Lebowitz’s employment and this Agreement shall continueuntil 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)                                  Terminationby the Company for Cause.

 

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

 

(ii)                                  Definitionof Cause.  “Cause” means theoccurrence or existence of any of the following with respect to Lebowitz, asdetermined by a majority of the independent directors of the Board:  (a) continued failure or refusal by Lebowitzto follow the direction of the Company’s Board regarding a material obligation(unless such direction is considered by Lebowitz in good faith to be unlawfulor unethical), provided that the Company has given Lebowitz written noticespecifying the nature of such failure or refusal, which remains uncorrected byLebowitz 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

 

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days following the date thatthe Company has given Lebowitz written notice thereof;  (c) a material breach by Lebowitz of hisduty not to engage in any transaction that represents, directly or indirectly,self-dealing with the Company or any of its Affiliates which has not beenapproved by a majority of the disinterested directors of the Board or of theterms of his employment, if in any such case such material breach remainsuncured after the lapse of 30 days following the date that the Company hasgiven Lebowitz written notice thereof; (d) any act of misappropriation,embezzlement, intentional fraud or similar conduct involving the Company or anyof its Affiliates; (e) the conviction or the plea of *nolo contendere* in respectof a felony involving moral turpitude; (f) intentional infliction of any damageof 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 causessignificant and irreparable damage to the Company as a result of negativepublicity; or (h) the repeated abuse of any non-prescription controlledsubstance or the repeated abuse of alcohol or any other non-controlledsubstance which, in any case described in this clause, the Board reasonablydetermines renders the Lebowitz unfit to serve in his capacity as an officer oremployee of the Company or it Affiliates.

 

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

 

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

 

The term“change of control” shall mean a change in control of a nature that would berequired to be reported in response to Item 6(e) of Schedule 14A of theRegulation 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 theSecurities and Exchange Commission pursuant to the Act which serve similarpurposes; provided that, without limitation,

 

(i)                                     sucha 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 inSections 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 orindirectly, of securities of the Company representing 50% or more of the combinedvoting power of the Company’s then outstanding securities entitled to vote withrespect to the election of its Board of Directors or (b) as the result of theforegoing transaction or events, individuals who were members of the Board ofDirectors of the Company immediately prior to any such transaction or eventshall not constitute a majority of the Board of Directors following suchtransaction or event, and

 

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(ii)                                  nochange in control shall be deemed to have occurred if and when any such changeis the result of a transaction which constitutes a “Rule 13e-3 transaction” assuch term is defined in Rule 13e-3 promulgated under the Act.

 

(c)                                  Terminationby the Company Due to Lebowitz’s Disability.  The Company may terminate Lebowitz’s employment in the eventLebowitz suffers a Disability (as defined below).  Upon termination for a Disability, Lebowitz shall be entitled topayment of all Accrued Obligations and a severance payment in the gross amountequal to six (6) months Base Salary to be paid in a lump sum within 30 days ofthe date of the Termination.  Inaddition, any unvested Options granted under Section 4 of the Agreement,any previously granted options or that may hereafter be granted to Lebowitzshall 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 ofwhich Lebowitz is unable to perform substantially all his duties and responsibilitieshereunder for an aggregate of 90 days within any six (6) month period,whether or not consecutive, during any calendar year, and (ii) whichcannot be reasonably accommodated by the Company without undue hardship.

 

(d)                                 TerminationBy the Company Without Cause.  TheCompany may terminate Lebowitz’s employment upon 14 days’ prior written noticefor other than cause or disability, pursuant to the following terminationpayment requirements.

 

(i)                                     Inthe event that Lebowitz’s employment is terminated by the Company withoutCause, the Company shall pay Lebowitz all Accrued Obligations, a pro-rataportion of the Annual Bonus, and severance of an amount equal to one (1) yearof his then Base Salary payable in a lump sum within 30 days of the date of theTermination, less standard withholdings for tax and social securitypurposes.  The bonus may be paid uponsuch date or over such period of time which is in accordance with theapplicable bonus plan. In addition, any unvested Options granted underSection 4 of this Agreement or that may hereafter be granted to Lebowitzshall immediately vest as of the date of the Termination.

 

(ii)                                  TheCompany 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)                                  TerminationUpon Death.  If Lebowitz dies priorto the expiration of the term of this Agreement, the Company shall (i) continuecoverage of Lebowitz’s dependents (if any) under all benefit plans or programsof 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 thepro-rata portion of the Annual Bonus through the Termination Date, lessstandard withholdings for tax and social security purposes, payable, in thecase of a bonus, upon such date or over such period of time which is inaccordance with the applicable bonus plan.

 

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(f)                                    Terminationby Lebowitz For Good Reason.  Lebowitzmay 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 Lebowitzfor 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 dateof the Termination, and continued vesting on any Options granted underSection 4 of this Agreement or that may hereafter be granted to Lebowitzfor the period of one year following the date of Termination.

 

For purposesof this Agreement, termination by Lebowitz for “Good Reason” shall mean thetermination of employment due to: (i) a material breach of the terms andconditions of this Agreement by the Company; (ii) a material reduction inthe responsibility or authority of Lebowitz for the operations of Theseus or asotherwise described in this Agreement; (iii) failure of the Company to pay the Executive’ssalary 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 constituteGood Reason unless it is communicated by Lebowitz to the Company in writingwithin thirty (30) days of the date Lebowitz knew of such event and its impactupon him and/or his position and, is not corrected by the Company to Lebowitz’sreasonable satisfaction within thirty (30) days of the date of Lebowitz’sdelivery of such written notice to the Company.

 

(g)                                 Terminationby Lebowitz Without Good Reason. Lebowitz may terminate his employment for other than Good Reason at anytime upon 14 days’ prior notice to the Company.  A voluntary termination by Lebowitz without Good Reason shallhave the same consequences as provided in Section 6(a) for termination forCause.

 

(h)                                 BenefitsUpon Termination.  All benefitsprovided under Paragraph 2(b) hereof shall be extended, at Lebowitz’selection, to the extent permitted by the Company’s insurance policies andbenefit plans, for one year after Lebowitz’s Termination Date, except (a) asrequired by law (e.g., COBRA health insurance continuation election) or (b) inthe event of a termination described in Paragraph 5(a).  If Lebowitz elects to continue the grouphealth and dental coverage following the date of termination in accordance withCOBRA, the Company shall pay the premium for such coverage for the period ofone year following the date of termination (unless such termination is forCause under Paragraph 5(a)).  Ifthe Company’s group coverage terminates during the one year period or ifLebowitz is no longer eligible for continuation of group coverage under COBRA,the Company shall pay Lebowitz cash in lieu of the premium payment for theremainder of the one year period.

 

7.                                       ProprietaryInformation Obligations.

 

During theterm of employment under the Agreement, Lebowitz will have access to and becomeacquainted with the Company’s and the Company’s Affiliates’ confidential andproprietary information, including, but not limited to, information or

 

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plans regarding the Company’sand 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 theCompany’s or the Company’s Affiliates’ Proprietary Information directly orindirectly, or use it in any way, either during the term of this Agreement orat any time thereafter, except as require in the course of his employment forthe Company or as authorized in writing by the Company.  All files, records, documents,computer-recorded information, drawings, specifications, equipment and similaritems relating to the business of the Company or the Company’s Affiliates,whether prepared by Lebowitz or otherwise coming into his possession, shallremain the exclusive property of the Company or the Company’s Affiliates, asthe case may be, and shall not be removed from the premises of the Companyunder an circumstances whatsoever without the prior written consent of theCompany, except when (and only for the period) necessary to carry outLebowitz’s duties hereunder, and if removed shall be immediately returned tothe Company upon any termination of his employment; provided, however, thatLebowitz may retain copies of documents that would ordinarily be in thepossession of members of the investment community and any documents that werepersonally owned, which copies and the information contained therein Lebowitzagrees 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 exceptthrough 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 agreementthrough the date one year after the Termination Date, Lebowitz will not on hisown behalf or on behalf of an other person or entity, without the expresswritten consent of the Board, solicit or attempt to solicit, induce orencourage any then current employee, customer, business relation, serviceprovider or representative of the Company to terminate or modify his, her orits employment or business relationship with the Company.

 

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

 

10.                                 Miscellaneous.

 

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

 

To theCompany:

 

North AmericanScientific, Inc

 

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20200 SunburstStreet

Chatsworth, CA91311

Attn:  L. Michael Cutrer

TelecopierNo:  818-734-5202

 

To Employee:

 

ElliotLebowitz

143 GardnerRoad

Brookline,MA  02445

Telecopier No:

 

Or to such address or to theattention of such other person as the recipient party will have specified byprior written notice to the sending party.

 

(b)                                 Severability.  Any provision of this Agreement which isdeemed invalid, illegal or unenforceable in any jurisdiction shall, as to thatjurisdiction and subject to this Paragraph be ineffective to the extent of suchinvalidity, illegality or unenforceability, without affecting in any way theremaining provisions hereof in such jurisdiction or rendering that or any otherprovisions of this Agreement invalid, illegal, or unenforceable because itsscope is considered excessive, such covenant shall be modified so that thescope of the covenant is reduced only to the minimum extent necessary to renderthe modified covenant valid, legal and enforceable.

 

(c)                                  EntireAgreement.  This documentconstitutes the final, complete, and exclusive embodiment of the entireagreement and understanding between the parties related to the subject matterhereof 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 separatecounterparts, any one of which need not contain signatures of more than oneparty, but all of which taken together will constitute one and the sameagreement.

 

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

 

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

 

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(g)                                 Choiceof Law.  All questions concerningthe construction, validity and interpretation of this Agreement will be governedby the laws of the State of California without giving effect to principles ofconflicts of law.

 

IN WITNESS WHEREOF, the partieshave executed this Agreement effective as of the date it is last executed belowby 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                                 |

 

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