FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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. Xxxxxxx Xxxxxx, 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
00000
Xxxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Attn:
Board of Directors
To
Executive:
L.
Xxxxxxx Xxxxxx
00000
Xxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
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/ XXXX X. XXXXXX | /s/ L. XXXXXXX XXXXXX | ||
|
Chairman
|
L.
XXXXXXX XXXXXX
|
|||
| Date: |
December
21, 2006
|
Date: |
December 20, 2006
|
|
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