**Exhibit 10.19**

 
| ***Dedication. Innovation.  Transformation. TM*** | *** *** | ***HOW  WILL WE CHANGE RADIATION NEXT? ®*** |
|-------------------------------------------------------|--------------|--------------------------------------------------|

 

 

May 5, 2004

 

Mr.John W. Manzetti

218Chesapeake Drive

Gibsonia,PA 15044

 

DearMr. Manzetti:

 

Reference is made to theAgreement and Plan of Merger, dated as of October 26, 2003 (the “MergerAgreement”), among NOMOS Corporation, a Delaware corporation (“NOMOS”), NorthAmerican Scientific, Inc., a Delaware corporation (the “Company”), and AMCapital 1, Inc., a Delaware corporation (“AM Capital”), pursuant to which NOMOSwill merge with and into AM Capital and AM Capital  shall continue as the surviving corporationand a wholly-owned subsidiary of the Company. The Company and AM Capital consider it essential to the best interestsof  the stockholders of the Company tofoster the continuous employment of key management personnel of NOMOS .

 

Inorder to induce you to remain in the employ of AM Capital, the Company willcause AM Capital to employ you and agrees that you shall receive the benefitsset forth in this letter agreement (the “Agreement”).  These benefits replace and supersede thebenefits set forth in those certain letter agreements dated February 11, 2002and June 18, 2003, respectively, between you and NOMOS, which prior agreementsare hereby deemed null and void.

 

1.                                       Employment; Duties. Effective as of the Closing Date (as defined in the Merger Agreement),AM Capital hereby agrees to employ you in the position of President of AMCapital.  You shall be responsible forthe management of the business and affairs of AM Capital.  You shall report to, and be subject to thedirection of, the Chief Executive Officer of the Company (the “CEO”).  The CEO may assign other duties to you fromtime to time, and shall have the right to modify your responsibilities fromtime to time as the CEO may reasonably deem necessary or appropriate.  During the term of your employment with AMCapital, you shall devote your full time and use your best efforts to advancethe business and welfare of AM Capital and the Company, and will not engage in any other employment or businessactivities for any direct or indirect remuneration that would be directlyharmful or detrimental to, or that may compete with, the business and affairsof  AM Capital or the Company, or thatwould interfere with your duties hereunder.

 

2.                                       Term; Vacation. Unless earlier terminated as hereinafter provided, the term of youremployment hereunder shall commence on the Closing Date and shall continue fora period of two years thereafter (the “Employment Term”).  The Employment Term shall continue foradditional one-year terms unless notice of non-renewal is given either by youto the Company or by the Company to you at least 90  days prior to the date on which theEmployment Term is then scheduled to end. You shall be entitled to a period of annual vacation time equal to fourweeks per twelve-month period, to accrue pro rata during the course of eachsuch twelve month period.

 

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Thedays selected for your vacation must be mutually and reasonably agreeable tothe Company and you.  In no event shallyour total accrued vacation exceed seven weeks .

 

3.                                       Base Salary; Stock Options.  TheCompany shall pay you, as compensation for your services, an initial salary of$300,000 per annum (“Base Salary”), subject to such annual increases as may bedetermined in the sole discretion of the Company.  Your Base Salary shall be payable inaccordance with the Company’s standard policies and practices for payment ofsalary to salaried employees.  In addition,you will be granted options (“Options”) to purchase 40,000 shares of theCompany’s common stock, at an exercise price equal to the fair market value ofsuch common stock as of the Closing Date, pursuant to the Company’s Amended andRestated 1996 Stock Option Plan (the “Plan”), or any subsequent plan adopted bythe Company.  Such Options will vest inequal installments of 10,000 shares each on the first, second, third and fourthanniversary of the date hereof.  Asdetermined from time to time by the Board of Directors of the Company, you willalso be eligible to receive additional Options under the Plan.  To the extent allowable under InternalRevenue Service regulations, such Options shall be “incentive stock options” asdescribed in the Plan.  You shall beentitled to receive Options in the form of non-statutory stock options, at youroption.

 

4.                                       Other Compensation.  Inaddition to the compensation package described above, you shall be entitled toparticipate in any group insurance, hospitalization, medical, dental, health,accident, disability or similar plan or program of the Company now existing orestablished hereafter to the extent that you are eligible under the generalprovisions thereof (collectively, “Health Benefits”).  In addition, you will be eligible forparticipation in the Company’s standard bonus program.  The bonus program for you for fiscal year2004, ended October 31, 2004  isdescribed in Exhibit A to this agreement.

 

5.                                       Severance.  Subject to Section 7 of thisAgreement,  in the event your employmentis terminated at any time during the Employment Term, or this Agreement is notrenewed, you**will receive (a) a severance paymentequal to twenty four months of your Base Salary if terminated in  the first year of  this Agreement, 18 months if terminated inthe second year of this Agreement and 12 months if terminated thereafter, lessstandard withholding for tax and social security purposes, and (b) healthbenefits coverage at your election, to the extent permitted by the Company’sthen existing insurance policies and Health Benefits plan, except as requiredby law (e.g., COBRA health insurance continuation election), at the expense ofthe Company for twenty four months.

 

6.                                       Payment Terms.  Theseverance payment contemplated by this Agreement shall be payable (in the solediscretion of the Company) in a lump sum within 30 days of the date of suchtermination or as salary continuation over a one year period.

 

7.                                       Severance Terms.  Theseverance shall be payable to you if your employment with the Company isterminated, or if this agreement is not renewed, unless such termination ornon-renewal is (a) because of your death or Disability (as defined below); (b)by the Company for Cause (as defined below); or (c) by you for other than GoodReason (as defined below).

 

8.                                       Change in Control.  Inthe event  that you are terminated by theCompany immediately prior to or concurrently with a Change in Control (asdefined below) and you are not employed by the successor entity in the same orsimilar capacity at the same total compensation level, including bonusopportunity, after such Change in Control, all Options held by you shallautomatically be 100% vested as of the date of such termination.  In addition, you will receive, in total, thesum of  one  year Base Salary plus  your highest bonus received in the prior  two years

 

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and health care coverage  for 24 months as  set forth in Section 5.  A “Change in Control”is defined for purposes of this Agreement as a sale of all or substantially allof the assets of the Company or a sale, directly or indirectly, of more than50% of the voting stock of the Company. This assumes that you will continue to perform your duties in theordinary course through the date of such event.

 

9.                                       Disability.  The Company may terminate youremployment in the event you suffer a disability that renders you unable toperform the essential functions of his position, even with reasonableaccommodation, as defined by the Company’s then existing long term disabilityinsurance policy.  After the TerminationDate, which in this event shall be the date upon which notice of termination isgiven, you shall receive the accrued portion of any salary, vacation and bonushereunder through the Termination Date, less standard withholdings for tax andsocial security purposes, payable, in the case of a bonus, upon such date orover such period of time which is in accordance with the applicable bonusplan.  In addition, you will be entitledto a severance payment in the gross amount equal to  six months Base Salary to be paid, in the sole discretion of the Company, in a lumpsum within 30 days of the date of the Termination or as salary continuationover a  six month period.  In addition, any unvested Options grantedunder Section 4 of the Agreement, any previously granted options or that mayhereafter be granted to you  shallimmediately vest as of the Termination Date.

 

10.                                 Cause.  Termination by the Company ofyour employment for “Cause” shall mean termination upon the occurrence orexistence of any of the following, as reasonably determined by the CEO: (a) thecontinued failure to substantially perform your duties or responsibilities,provided that the Company has given you written notice specifying the basisupon which the CEO determined that your duties or responsibilities were notsubstantially performed and such failure remains uncorrected for a period of 30days following receipt of such written notice; (b) a material breach by you ofany of your material obligations hereunder our under the ConfidentialInformation Agreement (as defined below) which remains uncured for a period of10 days following the date that the Company has given you written noticethereof; (c) a material breach by you of your duty not to engage in anytransaction that represents, directly or indirectly, self-dealing with Parentor the Company or any of their affiliates which has not been approved by theCEO if in any such case such material breach remains uncured for a period of 10days following the date that the Company has given you written notice thereof;(d) the repeated material breach by you of any material duty referred to inclause (b) or (c) above as to which at least one written notice has beenpreviously given pursuant to such clause (b) or (c); (e) any act ofmisappropriation, embezzlement, intentional fraud or similar conduct involvingthe Company or any of its affiliates; (f) the violation and conviction of anyfederal, state or local law or any act of moral turpitude which has a materialadverse impact on the business, reputation or operation of the Company or onyour ability to perform your duties as President; (g) intentional infliction ofany damage of a material nature to any property of the Company or any affiliatethereof; or (h) the repeated non-prescription use of any controlled substanceor the repeated abuse of alcohol or any other non-controlled substance whichhas a material adverse impact on your ability to serve in your capacity as anemployee of the Company or any affiliate thereof.

 

11.                                 Good Reason.  You shall be entitled toterminate your employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrenceof:

 

(a)                                  any material diminution by the Company inyour position or responsibilities without your consent, provided thatwithin 30 days of any such alleged diminution, you provide the Company withwritten notice of the basis for your claim that any 

 

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action by the Company is a materialdiminution  and a period of at least 30days for the Company to cure.

 

(b)                                 a reduction by the Company in your annualbase salary as the same may be increased from time to time, except foracross-the-board salary reductions similarly affecting all senior managementpersonnel of the Company; and

 

(c)                                  the Company’s requiring you to be based morethan 50 miles from the location at which you were based, except for requiredtravel on the Company’s business to an extent substantially consistent withyour present business travel obligations.

 

12.                                 Successors: Binding Agreement.

 

(a)                                  The Company will require any successor(whether direct or indirect, by purchase, merger, consolidation or otherwise)to all or substantially all of the business and/or assets of the Company toexpressly assume and agree to perform this Agreement in the same manner and tothe same extent that the Company would be required to perform it if no suchsuccession had taken place.

 

(b)                                 This Agreement shall inure to the benefit ofand be enforceable by you and your personal or legal representatives,executors, administrators, successors, heirs, distributees, devisees andlegatees.

 

13.                                 Confidential Information Agreement. Simultaneously with your execution hereof, you agree to execute anddeliver to the Company its standard form of Employee Invention, Trade Secretand Confidential Information Agreement (the “Confidential Information Agreement”)as detailed in Exhibit B attached to this agreement..

 

14.                                 Miscellaneous.  Noprovision of this Agreement may be modified, waived or discharged unless suchwaiver, modification or discharge is agreed to in writing and signed by you andthe Company.  No waiver by either partyhereto at any time of any breach by the other party hereto of or compliancewith, any condition or provision of this Agreement to be performed by suchother party shall be deemed a waiver of similar or dissimilar provisions orconditions at the same or at any prior or subsequent time. No agreements orrepresentations, oral or otherwise, express or implied, with respect to thesubject matter hereof have been made by either party which are not expresslyset forth in this Agreement. The validity, interpretation, construction andperformance of this Agreement shall be governed by the laws of the State ofCalifornia without regard to its conflicts of law principles.

 

15.                                 Validity.  The invalidity orunenforceability of any provision of this Agreement shall not affect thevalidity or enforceability of any other provision of this Agreement, whichshall remain in full force and effect.

 

16.                                 Counterparts.  ThisAgreement may be executed in several counterparts, each of which shall bedeemed to be an original but all of which together will constitute one and thesame instrument.

 

17.                                 Entire Agreement.  ThisAgreement and the exhibits attached hereto sets forth the entire understandingof the parties hereto in respect of the subject matter contained herein andsupersedes all prior agreements, promises, covenants, arrangements, communications,representations or warranties, whether oral or written, by any officer,employee or representative

 

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of any party hereto; and any prior agreementof the parties hereto in respect of the subject matter contained herein ishereby terminated and cancelled.

 

Ifthis Agreement sets forth our understanding with respect of the subject mattercontained herein, kindly sign and return to the Company the enclosed copy ofthis letter, which will then constitute our entire agreement in respect of suchsubject matter.

 
|                                  | Sincerely,                       |
|---------------------------------------|----------------------------------|
|                                  |                             |
|                                  | North American Scientific,  Inc. |
|                                  |                             |   |
|                                  |                             |   |
|                                  | By:                              | /s/ L. Michael Cutrer |   |
|                                  |                             | Name: L. Michael Cutrer |
|                                  |                             | Title: President and CEO |
|                                  |                             |   |
|                                  |                             |   |
| Agreed to this 5th  day of May, 2004: |                             |   |
|                                  |                             |   |
|                                  |                             |   |
| /s/ John W. Manzetti                  |                             |
| Name: John W. Manzetti                |                             |   |
|                                       |                                  |  |  |  |

 

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**EXHIBIT A**

 

# ***Fiscal 2004 IncentiveBonus Program***

# *** ***

Your bonus will be aminimum of 25% of your annual base salary if the Company meets or exceeds thePerformance Goals established for the previous Measuring Year.   Full detail of the program for 2004 will beprovided prior to the Closing Date or shortly thereafter and shall beincorporated by reference herein.

 

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**EXHIBIT B**

 

EmployeeInvention, Trade Secret and Confidential Information Agreement

(the “ConfidentialInformation Agreement”)

 

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