EXHIBIT
      10.1

     

    FIRST
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     

    This
      First Amended and Restated Employment Agreement (“Agreement”) is entered into
      December 21, 2006, but not to take effect until the Effective Date (as defined
      in Section 1(d) below) by and between L. Michael Cutrer, an individual
      (“Executive), and North American Scientific, Inc., a Delaware corporation (the
      “Company”).

     

    WHEREAS,
      Executive and the Company currently are parties to an Employment Agreement
      dated
      April 1, 2002 (“2002 Employment Agreement”);

     

    WHEREAS,
      the parties have agreed that the Company will seek to hire a new President
      and
      Chief Executive Officer (“new CEO”);

     

    WHEREAS,
      until such time as the Company hires a new CEO, Executive will continue as
      the
      Company’s President and Chief Executive Officer under the terms of the 2002
      Employment Agreement; 

     

    WHEREAS,
      upon the hire of the new CEO, Executive’s role and employment relationship will
      change and will be governed by the terms and conditions contained in this
      Agreement;

     

    NOW,
      THEREFORE, in consideration of the mutual promises contained below, the parties
      agree as follows:

     

    1.  Employment
      by the Company and Term.

     

    (a)  Position.
      At
      the
      time the Company hires a new CEO, and subject to the terms herein, Executive
      shall assume the position of and the Company agrees to employ Executive as
      Executive Vice President and Chief Technology Officer, and in such other
      executive capacities as may be requested from time to time by the new CEO or
      his
      or her successor (“CEO”), the Company’s Board of Directors (“Board”), or a duly
      authorized committee thereof, and Executive hereby accepts such employment.
      Executive shall render such other services for the Company and entities
      controlled by, under common control with or controlling, directly or indirectly,
      the Company, and to successor entities and assignees of the Company (“Company
      Affiliates”) as the Company may from time to time reasonably request and as
      shall be consistent with the duties Executive is to perform for the Company
      and
      with Executive’s experience. During the term of his employment with the Company,
      Executive 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.

     

    (b)  Duties.
      Executive
      shall serve in an executive capacity and shall assist the new CEO in his or
      her
      transition to the Company as requested and perform such duties as may be
      assigned from time to time by the CEO or the Board.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (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 shall become effective on the day the new CEO commences employment
      with the Company (“Effective Date”). Thereafter, Executive’s employment shall be
      at-will, and either party may terminate such employment at any time, for any
      reason, with or without notice, subject to the terms of Section 6 below
      (“Term”). Executive acknowledges that certain provisions of this Agreement,
      including without limitation Sections 7, 8 and 9, survive termination of
      employment and termination of this Agreement.

     

    2.  Compensation
      and Benefits.

     

    (a)  Salary.
      Effective
      on the Effective Date, Executive shall receive for services rendered hereunder
      a
      salary at a rate of Two Hundred and Eighty Thousand Dollars ($280,000.00) per
      annum, payable in accordance with Company’s policies and practices for payment
      of salary to salaried employees (the “Base Salary”). The Base Salary will be
      reviewed by and shall be subject to adjustment at the sole discretion of the
      Company’s Compensation Committee each fiscal year during the term of Executive’s
      employment based on recommendation of the CEO; provided, however, that at a
      minimum Base Salary shall be adjusted each fiscal year in an amount equal to
      the
      change during the preceding twelve (12) months in the Consumer Price Index
      for
      All Urban Consumers (CPI—U), U.S. city average. The initial salary review will
      be conducted no later than twelve (12) months after the Effective Date and
      on an
      annual basis thereafter.

     

    (b)  Participation
      in Benefits Plans. During
      the term hereof, Executive 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. The Company
      may terminate or modify any such benefit plan or program, provided that to
      the
      extent reasonably possible, the Company shall not terminate such benefits
      without providing Executive a minimum of 30 days notice of the termination
      of
      such benefits as described herein. Executive shall also participate in all
      fringe benefits offered generally by the Company to its executives.

     

    (c)  Vacation.
      Executive
      shall be entitled to a period of annual vacation time equal to five (5) weeks
      per twelve month period, to accrue pro
      rata during
      the course of each such twelve month period. The days selected for Executive’s
      vacation must be mutually and reasonably agreeable to Company and Executive.
      In
      no event shall Executive’s total accrued vacation exceed seven (7) weeks.
      Whenever Executive’s total accrued vacation has reached the maximum of seven (7)
      weeks, Executive will stop accruing any further vacation and will only resume
      accruing vacation when and to the extent the Executive’s total accrued vacation
      is reduced below the maximum of seven (7) weeks.

     

    
      
         

      

      
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    (d)  Deductions.
      All
      compensation to be paid to Executive under any provision of this Agreement
      or
      otherwise shall be subject to such deductions as authorized or required by
      law.

     

    3.  Bonuses.

     

    (a)  Annual
      Bonuses. Through
      the Agreement’s Termination Date (as defined in Section 6 below), Executive will
      be eligible to receive a bonus (the “Annual Bonus”). Executive 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 (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 or the
      Compensation Committee thereof on or about the January 15 following the last
      day
      of the Measuring Year. The Annual Bonus will be based on performance goals
      and
      approved by the Board or the Compensation Committee thereof and established
      by
      the Board or the Compensation Committee thereof in consultation with the CEO
      and
      the Executive (“Performance Goals”). The Executive shall be entitled to an
      Annual Bonus of not less than 25% of his Base Salary if the Company and
      Executive meet or exceed the Performance Goals established for the pertinent
      Measuring Year.

     

    (b)  Other
      Bonus Plans. From
      time
      to time, the Board may, in its discretion, institute supplementary bonus plans
      or stock option plans, for which Executive may be eligible. The terms of such
      benefits shall be determined by the applicable plan.

     

    4.  Stock
      Options. The
      Company may grant Executive certain incentive and non—qualified stock options
      (“Options”) in accordance with the Company’s annual stock option grants. All
      options granted to Executive prior to the Effective Date will continue to vest
      during the Term of employment under this Agreement, in accordance with the
      terms
      of such grants.

     

    5.  Reasonable
      Business Expenses and Support. Executive
      shall be reimbursed for documented and reasonable business expenses in
      connection with the performance of his duties hereunder. Executive shall be
      furnished reasonable office space, assistance and facilities suitable to and
      appropriate for his position and responsibilities.

     

    6.  Termination
      of Employment. The
      date
      on which Executive’s employment by the Company ceases for any reason, whether
      voluntary or involuntary, shall be defined herein as the “Termination
      Date.”

     

    (a)  Termination
      Date On or Before October 31, 2007.

     

    (i)  If,
      on or
      before October 31, 2007, (a) the Company terminates Executive’s employment for
      any reason other than Executive’s death, Disability or Cause, or (b) Executive
      resigns for Good Reason, the Company will continue to pay Executive his Base
      Salary in effect on the Termination Date through October 31, 2007 in accordance
      with the Company’s standard payroll practices for salaried employees.


     

    
      
         

      

      
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    (ii)  Definition
      of Cause. “Cause”
      means the occurrence or existence of any of the following with respect to
      Executive, as determined by a majority of the disinterested directors of the
      Board: (a) continued failure to substantially perform of Executive’s duties or
      responsibilities as determined by the Company’s Board, provided that the Company
      has given Executive written notice specifying the basis upon which the Company
      determined that Executive’s duties or responsibilities were not substantially
      performed, which remains uncorrected by the Executive after the lapse of 30
      days
      following receipt of the written notice; (b) a material breach by Executive
      of
      any of his material obligations hereunder which remains uncured after the lapse
      of 30 days following the date that the Company has given Executive written
      notice thereof; (c) a material breach by the Executive 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 the Executive written notice
      thereof; (d) the repeated material breach by the Executive of any material
      duty
      referred to in clause (b) or (c) above as to which at least one (1) written
      notice has been given pursuant to such clause (b) or (c); (e) any act of
      misappropriation, embezzlement, intentional fraud or similar conduct involving
      the Company or any of its Affiliates; (f) the violation of any federal, state
      or
      local law or any act of moral turpitude which has a material adverse impact
      on
      the business, reputation or operation of the Company or on Executive’s ability
      to perform his duties under this Agreement; (g) intentional infliction of any
      damage of a material nature to any property of the Company or any of its
      Affiliates; or (h) the repeated non—prescription abuse of any 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
      has
      a material adverse impact on the Executive’s ability to serve in his capacity as
      an officer or employee of the Company or it Affiliates.

     

    (iii)  Definition
      of Resignation for Good Reason.
      A
“Resignation for Good Reason” shall mean a termination of the employment
      relationship by Executive after an unwarranted material diminution by the
      Company in Executive’s position or responsibilities without Executive’s consent,
      provided that within 60 days of any such alleged diminution, Executive provides
      the Company with written notice of the basis for his claim that he has Good
      Reason to terminate his employment and a period of at least 10 days to cure.
      The
      parties agree that no event occurring before the Effective Date, nor the changes
      set forth in the recitals above or contained in this Agreement shall constitute
      Good Reason for Executive to resign under this Agreement.

     

    (iv)  Definition
      of Disability.“Disability”
means
      an accident, illness, injury or other medical condition that
      renders Executive unable to perform the essential functions of his position,
      even with reasonable accommodation, as defined by the Company’s then existing
      disability insurance policy. 

     

    
      
         

      

      
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    (b)  Termination
      At Any Time After Effective Date. In
      addition to any payment that may be due under Section 6(a) above, upon the
      termination of Executive’s employment with the Company at any time after the
      Effective Date, whether voluntary or involuntary, and for any reason, except
      for
      a Control Termination as provided in Section 6(c) immediately below, Executive
      will be entitled to the following

     

    (i)  Severance
      pay equal to Executive’s highest Base Salary during his employment by the
      Company ($340,680 or higher) multiplied by three, to be paid, as salary
      continuation over a three (3) year period in accordance with the Company’s
      standard payroll practices for salaried employees; and 

     

    (ii)  Any
      unvested Options granted to Executive shall immediately vest as of the
      Termination Date (including for purposes of this Section 6(b)(ii) options
      granted prior to the Effective Date), and the date to exercise all Options
      that,
      on the Termination Date, have an exercise price that is not less than the fair
      market value of the stock, shall be extended to the later of the last day of
      the
      year in which the Option would otherwise have expired or two and a half months
      after the date on which the Option would otherwise have expired (or such later
      date as may be permitted by final regulations issued pursuant to Section 409A
      of
      the Internal Revenue Code, but in no event later than the date on which the
      Option would have expired had Executive's employment not been
      terminated).

     

    (c)  Control
      Termination. The
      term
“Control Termination” shall mean: (i) a termination of this Agreement and
      Executive’s employment by the Company or the Executive immediately prior to or
      concurrent with a Change of Control (as defined below) if Executive is not
      employed by the successor entity after such Change in Control; or (ii)
      resignation by the Executive within 90 days after a “Change of Control” of the
      Company upon the occurrence of any of the following events:

     

    (A)  a
      significant change in the nature or scope of Executive’s authority or duties or
      a reduction in Executive’s total compensation package from that provided by the
      Company immediately prior to the Change in Control; or

     

    (B)  the
      requirement that Executive relocate his residence outside the Los Angeles,
      California metropolitan area.

     

    In
      the
      event of a Control Termination, Executive will be entitled to a “Control
      Severance Payment” in the gross amount equal to the total of: (w) three (3)
      years’ Base Salary; (x) the highest Annual Bonus paid to Executive in the three
      years prior to such termination multiplied by three (3); (y) the Black/Scholes
      valuation of the options received by Executive during the one year prior to
      such
      termination multiplied by three (3); and (z) the payment referred to in Section
      (e) below. The Control Severance Payment shall be paid as salary continuation
      ratably over a one year period. In addition, any unvested Options granted to
      Executive shall immediately vest as of the Termination Date (including for
      purposes of this Section 6(c) options granted prior to the Effective
      Date).

     

    
      
         

      

      
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    The
      term
“Change of Control” shall mean a change in control of the Company of a nature
      that would be required to be reported in response to Item 6(e) of Schedule
      14A
      of 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,

     

    (ii)  such
      a
      change in control shall be deemed to have occurred if and when either (A) except
      as provided in (ii) 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 13d-3 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 immediately
      prior to any such transaction or event shall not constitute a majority of the
      Board of Directors following such transaction or event, and

     

    (iii)  no
      Change
      in Control shall be deemed to have occurred if and when: (A) 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; or (B) the transaction
      resulting in such change in control is approved by a majority of the members
      of
      the Board immediately prior to such change in control.

     

    (d)  Compliance
      With IRC Section 409A.
      Executive agrees that if and to the extent necessary
      to comply with Section 409A of the Internal Revenue Code, as determined by
      the
      Company in its reasonable discretion, any and or all payments under this Section
      6 necessary to so comply will be deferred until six months after the Termination
      Date, and any such amounts that would otherwise would have been paid during
      such
      six-month period will be paid instead as a lump sum at the end of the such
      six-month period. 

     

    (e)  Excess
      Parachute Payment. In
      the
      event that Executive’s termination of employment occurs in connection with a
      change in ownership or control of the Company within the meaning of Section
      280G
      of the Internal Revenue Code, and it is determined that any portion of
      Executive’s severance payment (or any other payment that Executive receives in
      connection with the change in ownership or control) constitutes an excess
      parachute payment subject to the excise tax imposed by Section 4999 of the
      Internal Revenue Code, Executive will receive an additional gross-up payment
      calculated by the Company’s, outside accountant so that the net amount of such
      gross-up payment, after deduction of all income and excise taxes imposed on
      such
      payment, is equal to the amount of such excise tax.

     

    
      
         

      

      
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    (f)  Release
      of Claims. The
      payment of any severance payments or benefits under Section 6 of this Agreement
      shall be subject to Executive signing an agreement reconfirming his
      post—employment obligations contained in this Agreement and releasing the
      Company and all related parties from any claims, such agreement to be prepared
      by the Company or its designee.

     

    7.  Proprietary
      Information Obligations.

     

    During
      the term of employment under the Agreement, Executive will have access to and
      become acquainted with the Company’s and the Company Affiliates’ confidential
      and proprietary information, including, but not limited to, information or
      plans
      regarding the Company’s and Company Affiliates’ customer relationships;
      personnel, sales, marketing, and financial operations and methods; trade
      secrets; business plans; research and development; formulas; devices; secret
      inventions; processes; and other compilations of information, records, and
      specifications (collectively “Proprietary Information”). Executive 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 Executive 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 any circumstances whatsoever without the
      prior
      written consent of the Company, except when (and only for the period) necessary
      to carry out Executive’s duties hereunder, and if removed shall be immediately
      returned to the Company upon any termination of his employment or at any other
      time that the Company may request; provided, however, that Executive may retain
      copies of documents reasonably available to the Company’s shareholders generally
      and any documents that were personally owned, which copies and the information
      contained therein Executive agrees not to use for any business purpose.
      Notwithstanding the foregoing, Proprietary Information shall not include
      information which is or becomes generally public knowledge except through
      disclosure by the Executive in violation of this Agreement or the wrongful
      act
      of any third party, 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, Executive 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.  Inventions.
      Executive
      will, during the period of his employment, disclose to the Company promptly
      and
      fully all Inventions made or conceived by the Executive (either solely or
      jointly with others), including but not limited to Inventions which relate
      to
      the business of the Company or Company Affiliates or the Company’s or the
      Company Affiliates’ actual or anticipate research or development, or result from
      work performed by him for the Company or the Company Affiliates. All Inventions
      and all records related to Inventions, whether or not patentable, shall be
      and
      remain the sole and exclusive property of the Company. “Inventions” means all
      inventions, discoveries, processes, improvements, designs, developments, and
      ideas, and all know—how related thereto. Executive hereby assigns and agrees to
      assign to the Company or its designee all of his rights to Inventions and any
      patents, trademarks, or copyrights which may be issued with respect to
      Inventions. Executive further acknowledges that all work shall be work made
      for
      hire. During and after the term of this Agreement, Executive agrees to assist
      the Company, without charge to the Company but at its request and expense,
      to
      obtain and retain rights in Inventions, and will execute all appropriate related
      documents at the request of the Company or its designee.

     

    
      
         

      

      
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    Executive
      understands that this Paragraph 9 shall not apply to any invention for which
      no
      equipment, supplies, facilities, trade secret, or other confidential information
      of the Company or Company Affiliates was used and which was developed entirely
      on his own time, and does not relate to the business of the Company or Company
      Affiliates, its actual or anticipated research, and does not result from any
      work performed by him for the Company or Company Affiliates.

     

    10.  Miscellaneous.

     

    (a)  Notices.
      Any
      notices provided hereunder must be in writing and shall be deemed effective
      upon
      the earlier of immediately upon personal delivery (including personal delivery
      by reputable delivery service, 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

    20200
      Sunburst Street

    Chatsworth,
      CA 91311

    Attn:
      Board of Directors

     

    To
      Executive:

     

    L.
      Michael Cutrer

    10207
      Jumilla Avenue

    Chatsworth,
      CA 91311

     

    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.

     

    
      
         

      

      
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    (c)  Entire
      Agreement. Upon
      the
      Effective Date, this document shall constitute 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, specifically including, but without
      limitation the 2002 Employment Agreement.

     

    (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
      Executive and the Company, and their respective successors and assigns, except
      that Executive 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.

     

    (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.

     

    
      	NORTH
              AMERICAN SCIENTIFIC, INC.	 	 	 
	 	 	 	 	 
	By:	/s/ GARY
              N.
              WILNER	 	 	/s/ L.
              MICHAEL CUTRER
	 	
              

              Chairman

            	 	 	
              

              L.
                MICHAEL CUTRER

            
	 	 	 	 	 
	Date:	
              December
                21, 2006
                

              

            	 	Date:	
              December 20, 2006

              
                

              

            


    

     

    
      
         

      

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