Document:

AMENDMENT
TO EMPLOYMENT AGREEMENT

     

    THIS
AMENDMENT (this “Amendment”) to that
certain Employment Agreement dated March 22, 2007 (the “Original Agreement”),
is entered into by and between North American Scientific, Inc., a Delaware
corporation (the “Company”) and John
Rush (the “Executive”),
effective as of December 31, 2008, on the following terms and
conditions.

     

    BACKGROUND

     

    A.           The
Company and Executive are parties to the Original Agreement.

     

    B.           The
Company and Executive desire to amend the Original Agreement as set forth
below.

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants set forth
herein, the Company and Executive, intending to be legally bound, hereby agree
as follows:

     

    1.           Section
3 of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    3.           Annual
Bonuses.  Executive shall be eligible to receive an annual
bonus (based on the Company’s fiscal year ending October 31) in an amount, if
any, of up to 60% of his Base Salary of each year or portion thereof during
which the Executive is employed hereunder, based upon the achievement by the
Company and/or Executive of performance goals and objectives established
annually by the Board or the Compensation Committee thereof in consultation with
the Executive (“Performance Goals”), as determined by the Company’s Compensation
Committee. With respect to the period which begins on the Effective Date and
ends on the last day of the fiscal year that includes the Effective Date,
Executive shall be eligible to receive a bonus in an amount no less than 30% of
his annualized Base Salary, multiplied by a fraction, the numerator of which is
the number of days in the such period and the denominator of which is
365.  Such annual
bonus shall be determined by the Compensation Committee and paid (if applicable)
no later than December 31 of the calendar year following the calendar year to
which such annual bonus relates.

     

    2.           Section
8(a) of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    (a)           Termination By Company for Reasons
other than Cause, Death or Disability; Termination by Executive for Good
Reason.  In
the event that Executive incurs a Separation from Service (within the meaning of
Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from
Service”) by reason of a termination of Executive’s employment by the
Company for any reason other than Executive’s death, Disability or Cause,
or (b) in the event that
Executive incurs a Separation from Service because Executive resigns for
Good Reason, the Company will continue to pay Executive his Base Salary in
effect on the Termination Date for a period ending 12 months following the
Termination Date, which shall
be payable in equal installments over such 12 month period on the regular
payroll dates of the Company in accordance with the Company’s payroll practices
as in effect on the date of Executive’s on such date.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    3.           Section
8(a)(ii) of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    (ii)           Definition of Resignation for Good
Reason.  A “Resignation for Good Reason” shall mean a
termination of the employment relationship by Executive after (i) an unwarranted
material diminution by the Company in Executive’s position or responsibilities
without Executive’s consent, or (ii) a material reduction in
Executive’s Base Salary, provided that within 30 days of any such alleged
diminution or reduction, 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 30 days to cure.  If the Company fails to cure such
event within the succeeding the 30 day cure period, such termination shall be
effective at the end of such thirty 30 day period and Executive shall thereupon
become entitled to receive the benefits set forth in Section 8
hereof.

     

    4.           Section
8(b) of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    (b)           Control
Termination.  In the event that Executive incurs a Separation
from Service by reason of a Control Termination (as defined below), the
Company will (i) continue to pay Executive his Base Salary in effect on the
Termination Date for a period ending 12 months following the Termination Date
(the “Change of Control Benefit Period”), which shall be payable in equal
installments over such 12 month period on the regular payroll dates of the
Company in accordance with the Company’s payroll practices as in effect on such
date, and (ii) continue Executive’s group health benefits which the Company maintains, from time
to time, for its senior executives and their families, under the same terms and
conditions, including payment of any required employee contributions therefor,
as may generally apply (including any limitation or termination of coverage of
non-spouse dependents after a stated age), to the extent such can be continued
under the terms of the governing plans) for the Change in Control Benefit
Period;. In addition, Executive shall, as of the date of the Control
Termination, become fully vested in any unvested Options previously granted to
him.

    

    5.           Section
8(c) of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    (c)           Release of
Claims.  The payment of any severance payments or benefits
under Section 8 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.  Subject to Section 8(d) below, the
Company will pay Executive the severance payments described in this Section 8 in
equal installments on the regular payroll dates of the Company in accordance
with Company's standard payroll practices as in effect on the Termination Date,
with the first payment being payable on the date when the 7 day revocation
period referred to below with respect to the release of claims
expires.  The Company will prepare the final release and deliver it to
Executive within 5 business days of Executive’s Termination
Date.  Executive will have 21 days in which to consider the release of
claims although Executive may execute it sooner.  Thereafter, the
executed release will be subject to a revocation period of 7
days.

    

    
      
         

      

      
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    6.           Section
9(d) of the Original Agreement is hereby amended and restated to read in its
entirety as follows (the changes to the Original Agreement are set forth in bold):

     

    (d) Time of
Payment.  The Gross-Up Payments provided for in Section 9(a)
and (b) above shall be made upon the earlier of (i) (A) the payment to the
Executive of compensation in the nature of a parachute payment, in the case of a
Parachute Gross-Up Payment, or (B) the day on which an amount becomes
non-qualified deferred compensation subject to section 409A of the Code and
includible in Executive’s gross income, in the case of a 409A Gross-Up Payment,
or (ii) the imposition upon the Executive or payment by the Executive of any
Excise Tax or Additional Amounts, as the case may be.  Without limiting the Company’s
obligation hereunder, as provided in Treasury Regulation Section
1.409A-3(i)(1)(v), the Gross-Up Payments shall be made be no later than the end
of Executive’s taxable year following the taxable year in which the Executive
remits payment of the tax contemplated hereunder.

    

    7.           Subsection
(i) shall be added to Section 14 of the Original Agreement and shall read as
follows:

     

    (i)           Any
amounts payable to Executive under this Agreement as a reimbursement of expenses
shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv)
and shall be paid on or before the last day of Executive’s taxable year
following the taxable year in which Executive incurred the
expenses.

     

    8.           Counterparts.  This
Amendment may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which shall constitute one
Amendment.

     

    9.           Terms and Conditions of the
Original Agreement.  Except as specifically amended by this
Amendment, all terms and conditions of the Original Agreement shall remain in
full force and effect.

     

    
      
         

      

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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	 
      	
                                                  EXECUTIVE

                                                
	 	 
	 	 
	 
      	
                                                  /s/
      John Rush

                                                
	 
      	
                                                  John
      Rush

                                                
	 	 
	 	 
	 
      	
                                                  COMPANY

                                                
	 	 
	 
      	
                                                  NORTH
      AMERICAN SCIENTIFIC, INC.,

                                                
	 
      	
                                                  a
      Delaware corporation

                                                
	 	 
	 	 
	 
      	
                                                  By:

                                                	
                                                  /s/
      Brett L. Scott

                                                
	 
      	
                                                  Title:

                                                	
                                                  Executive
      Vice President & Chief Financial
Officer

                                                

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    

     

     

     

     

     

     

     

     

     

    
 

    
      [Signature
Page to Amendment to Employment Agreement]December
31, 2008

    

    Mr. Brett
L. Scott, CPA

    420 S.
Fernhill Lane

    Anaheim,
CA 92807

    

    

    Dear
Brett:

    

    North
American Scientific, Inc. (the “Company”) is proposing to amend the paragraph in
your offer letter (“Offer Letter”) dated June 26, 2008, discussing your
eligibility to receive six (6) months of salary continuation in the event that
you are terminated by the Company for reasons other than for cause, solely to
comply with Section 409A of the Internal Revenue Code (the
“Code”).  Section 409A of the Code governs nonqualified deferred
compensation plans, including severance arrangements, and imposes fairly
stringent penalties (e.g., a 20% excise tax) on employees under such
arrangements if the arrangements do not comply with various rules regarding the
form and timing of payments.  Consistent with the requirements under
Section 409A of the Code, in the first amending paragraph below, we have
clarified that your salary continuation payments will be paid in equal
installments on the Company’s regular payroll dates.

    

    Section
409A of the Code also imposes specific requirements on severance pay
arrangements for “specified employees” of publicly traded companies (e.g. key
employees such as yourself).  In general, unless certain exceptions
apply, Section 409A of the Code requires that severance pay be delayed for six
(6) months following a separation from service (the “Six Month Delay
Rule”).  Section 409A of the Code allows a certain amount of severance
pay (currently $460,000) to be paid prior to six (6) months after a separation
from service as long as the severance is payable only upon an involuntary
termination (“Involuntary Termination Exception”).  Since your
severance is payable only in the event that the Company terminates your
employment for reasons other than for cause, and given your current annual
salary of $220,000, your severance arrangement should be covered by the
Involuntary Termination Exception.  Nonetheless, since your annual
salary may increase over the years, Section 409A of the Code still requires that
the Six Month Delay Rule be expressly stated in the written
agreement.  Therefore, the second amending paragraph below
incorporates the Six Month Delay Rule into your Offer Letter.

    

    This
letter agreement (“Agreement”) amends, restates, and supersedes your Offer
Letter solely as provided herein. The sixth paragraph of your Offer Letter,
discussing your eligibility to receive six (6) months of salary continuation in
the event that you are terminated by the Company for reasons other than for
cause, is hereby amended and restated in its entirety to read as
follows:

    

    “All employment with the Company is
at-will as provided by California law. This means that either party may
terminate the employment relationship at any time with or without notice or
cause. In the event that you incur a Separation from Service (within the meaning
of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended
(the “Code”), and Treasury Regulation Section 1.409A-1(h)) (“Separation from
Service”) by reason of a termination of your employment by the Company for
reasons other than for cause, with cause being defined as a material breach of
this offer letter or company policy, you will be eligible to receive severance
compensation in an amount equal to six (6) months salary (“Severance Payments”).
The Severance Payments shall be payable in equal installments over such six (6)
month period on the regular payroll dates of the Company in accordance with the
Company’s payroll practices as in effect on the date of your Separation from
Service, and subject to applicable tax withholding.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Notwithstanding
anything to the contrary in this offer letter, if at the time of your Separation
from Service with the Company, you are a “specified employee” as defined in
Section 409A of the Code, as determined by the Company in accordance with
Section 409A of the Code, and the deferral of the commencement of any payments
or benefits otherwise payable hereunder as a result of such Separation from
Service is necessary in order to prevent any accelerated or additional tax under
Section 409A of the Code, then the Company will defer the commencement of the
payment of any such payments or benefits hereunder (without any reduction in the
payments or benefits ultimately paid or provided to you) until the date that is
at least six (6) months following your Separation from Service with the Company
(or the earliest date permitted under Section 409A of the Code), whereupon the
Company will pay you a lump-sum amount equal to the cumulative amounts that
would have otherwise been previously paid to you under this offer letter during
the period in which such payments or benefits were
deferred.  Thereafter, payments will resume in accordance with the
offer letter.”

    

    This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which shall constitute one Agreement. Except as
specifically amended by this Agreement, all terms and conditions of your Offer
Letter shall remain in full force and effect.

    

    In
Witness Whereof, the parties have executed this Agreement on the day and year
first above written.

    

    

    NORTH
AMERICAN SCIENTIFIC, INC.

    

    

    

    
      
        
          
            	
                    /s/ John Rush

                  	 
	
                    John
      Rush

                  	 
	
                    President
      and Chief Executive
Officer

                  

          

        

      

    

    

    

    

    

    AGREED
AND ACCEPTED:

    

    

    

    

    
      
        
          	
                  /s/ Brett L. Scott

                	 
	
                  Brett
      L. Scott

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