<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT
OF 1934 (AMENDMENT NO. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NORTH AMERICAN SCIENTIFIC, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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<PAGE>
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
7435 GREENBUSH AVENUE
NORTH HOLLYWOOD, CA 91605
February 25, 1997
Notice of Annual Stockholders Meeting:
You are hereby notified that the Annual Meeting of Stockholders of North
American Scientific, Inc. (the "Company") will be held at the Holiday Inn
located at 150 East Angeleno, Burbank, California at 10:00 a.m. local
time, on Friday, March 28, 1997, for the following purposes:
1. To elect 5 directors to hold office until the 1998 Annual Meeting.
2. To consider a proposal to amend the Company's Amended and Restated 1996
Stock Option Plan.
3. To consider a proposal to ratify the selection of Price Waterhouse LLP as
independent auditors of the Company for the fiscal year ending October 31, 1997.
4. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 21, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Meeting.
You are urged to attend the Meeting in person. Whether or not you expect to be
present in person at the Meeting, please date, sign and return the enclosed
proxy in the envelope provided.
By Order of the Board of Directors
L. Michael Cutrer
PRESIDENT
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
----------------------
7435 GREENBUSH AVENUE
NORTH HOLLYWOOD, CA 91605
1997 ANNUAL MEETING OF STOCKHOLDERS
MARCH 28, 1997
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy are furnished to stockholders of
North American Scientific, Inc. (the "Company") in connection with the
solicitation of proxies by the Company's Board of Directors for use at the 1997
Annual Meeting of Stockholders (the "Meeting") to be held at the Holiday Inn
located at 150 East Angeleno, Burbank, California at 10:00 a.m. local time, on
Friday, March 28, 1997, for the purposes set forth in the accompanying Notice of
Meeting. This Proxy Statement, the form of proxy included herewith and the
Company's Annual Report for the fiscal year ended October 31, 1996 are being
mailed to stockholders on or about February 25, 1997.
Stockholders of record at the close of business on February 21, 1997 are
entitled to notice of and to vote at the Meeting. On such date, there were
outstanding 3,028,201 shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock"). The presence, in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding and entitled to
vote at the Meeting is necessary to constitute a quorum. In deciding all
questions, each holder of Common Stock shall be entitled to one vote, in person
or by proxy, for each share held on the record date.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspector appointed for the Meeting and will determine whether or not a
quorum is present. The election inspector will treat abstentions as shares that
are present and entitled to vote but not as voted for purposes of determining
the approval of any matter submitted to the stockholders for a vote.
Abstentions will have the same effect as negative votes. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
Properly executed proxies will be voted in the manner directed by the
stockholders. If no direction is made, such proxies will be voted FOR the
election of all nominees named under the caption "Election of Directors" as set
forth herein as directors of the Company, FOR approval of the amendment to the
Company's Amended and Restated 1996 Stock Option Plan and FOR the ratification
of the selection of Price Waterhouse LLP as independent auditors for the fiscal
year ending October 31, 1997. Any proxy may be revoked by the stockholder at
any time prior to the voting thereof by notice in writing to the Secretary of
the Company, either prior to the Meeting (at the above address) or at the
Meeting if the stockholder attends in person. A later dated proxy will revoke a
prior dated proxy. As of the date of this Proxy Statement, the Board of
Directors knows of no other business which will be presented for consideration
at the Meeting. If other proper matters are presented to the Meeting, however,
it is the intention of the proxy holders named in the enclosed form of proxy to
take such actions as shall be in accordance with their best judgment.
<PAGE>
The information contained in this Proxy Statement relating to the occupations
and security holdings of directors and officers of the Company and their
transactions with the Company is based upon information received from each
individual as of January 15, 1997.
<PAGE>
ELECTION OF DIRECTORS
The nominees for election as a director of the Company are as follows:
Name Age Director Since
---- --- --------------
Irwin J. Gruverman 63 1989
L. Michael Cutrer 41 1989
Larry Berkin 60 1996
Dr. Allan M. Green 52 1996
Michael C. Lee 46 1996
Irwin J. Gruverman has been the Chairman and a director of the Company since
December 31, 1989. Mr. Gruverman has been a partner in G&G Diagnostics Limited
Partnership, a venture capital limited partnership, since 1990. Mr. Gruverman
founded and has been the Chief Executive Officer and a director of Microfluidics
International Corporation, a company that manufactures process devices for
pharmaceutical and other manufacturing uses and conducts drug delivery testing,
since 1982. Mr. Gruverman founded and served as the Executive Vice President of
New England Nuclear, a radioactive materials business, from 1961 to 1981. Mr.
Gruverman also serves as a director of InVitro International, Inc., Fiberchem
International, Inc. and Endogen, Inc.
L. Michael Cutrer has been the President and Chief Executive Officer and a
director of the Company since November 27, 1989. Prior thereto, Mr. Cutrer was
employed by Isotope Products Laboratory, Inc., a radioisotope manufacturing
company from 1982 to 1990. During such employment, Mr. Cutrer acted as a
manager of industrial product manufacturing, research and development.
Larry Berkin has been a certified public accountant with Berkin Accountancy
Corp., a company he founded, since 1968. His practice focuses primarily on
management and taxation, including providing advice on operations, finances,
investments, negotiations, real estate and taxes.
Dr. Allan M. Green has been Vice President, Pharmaceutical/Biomedical Products
for ML Strategies, Inc. since 1990. ML Strategies, Inc. is the consulting
affiliate of the law firm of Mintz Levin Cohn Ferris Glovsky and Popeo PC, of
which Dr. Green is of counsel. Dr. Green has formerly served as President of
the Biotechnology Data Group in Cambridge, Massachusetts and as a consultant to
many major pharmaceutical companies and investors in the pharmaceutical
industry. Dr. Green is the author of many scientific papers in biochemistry and
drug development and is well known for his Issues and Commentary series, which
analyzes the competitive commercial aspects and potential markets for emerging
pharmaceutical technologies. Dr. Green is a director of Sheffield Medical
Technologies, Inc.
Michael C. Lee has been the President and Chief Executive Officer of East Coast
Food Products, Inc., a wholesale food distributor, since 1976. Mr. Lee is a
director of Prime Spot Media, Inc.
The Board of Directors knows of no reason why any of the foregoing nominees will
be unavailable to serve, but, in the event of any such unavailability, the
proxies received will be voted for such substitute nominees as the Board of
Directors may recommend.
-2-
<PAGE>
HOLDINGS OF STOCKHOLDERS, DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of January 15, 1997 by (i) each person who is
known by the Company to own more than 5% of the Company's outstanding Common
Stock, (ii) each of the Company's directors and nominees; and (iii) all existing
directors and executive officers of the Company as a group:
Approximate
Amount and Nature of Percent of
Name and Address (1) Beneficial Ownership Ownership
- -------------------- -------------------- ---------
Irwin J. Gruverman 324,000(2) 10.6%
L. Michael Cutrer 322,500(3) 10.4%
Irwin A. Olian 215,000 7.1%
Larry Berkin 192,800 6.4%
Dr. Allan M. Green 0 *
Michael C. Lee 84,300 2.8%
All existing directors and 923,600 (2)(3) 29.5%
executive officers as a group
(5 persons)
- -------------------------
*Denotes less than 1%
(1) The address of each five percent stockholder is c/o the Company, 7435
Greenbush Avenue, North Hollywood, California, with the exception of Irwin
A. Olian, whose address is 415 Caroll Avenue, Venice, CA 90291
(2) Includes 19,000 shares held in a fund of which the reporting person is
general partner and 40,000 shares subject to outstanding options which are
immediately exercisable.
(3) Includes 60,000 shares subject to outstanding options which are immediately
exercisable; also includes 12,500 shares owned by the reporting person's
spouse over which the reporting person disclaims beneficial ownership.
COMPENSATION OF DIRECTORS
All directors and officers of the Company are elected annually to serve for a
term of one year and until their successors are elected and qualified. All
directors may be reimbursed for certain expenses incurred in connection with
attending Board meetings. Mr. Gruverman does not receive a salary as Chairman.
Upon their election in 1996, Messrs. Berkin, Green and Lee were granted stock
options exercisable for 40,000 shares of Common Stock at an exercise price equal
to the fair market value of the Common Stock on the date of their election.
Fifty percent (50%) of such stock options vest on the first anniversary date of
the grant, with the remaining options vesting on the second anniversary date of
the grant.
-3-
<PAGE>
If elected as directors of the Company at each Annual Meeting of Stockholders of
the Company, and subject to the stockholders' approval of the proposal to amend
the Company's Amended and Restated 1996 Stock Option Plan, Messrs. Gruverman,
Berkin, Green and Lee shall each receive stock options exercisable for 10,000
shares of Common Stock with an exercise price equal to the fair market value of
the Common Stock on the business day prior to the date such directors are
elected. Fifty percent (50%) of such stock options will vest on the first
anniversary date of the grant of the stock options with the remaining stock
options vesting on the second anniversary date of the grant of such options.
COMMITTEES; BOARD MEETINGS
The Board of Directors of the Company held six telephonic meetings during the
fiscal year ended October 31, 1996, and the Board acted twice by unanimous
written consent. The Company does not have standing audit, nominating or
compensation committees of its Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's Chief
Executive Officer for the fiscal year ended October 31, 1996. No other officer
of the Company received total annual salary and bonus in excess of $100,000 for
such period.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------- ------
Other Annual
Compensation Securities
Name and ------------ Underlying All Other
Principal Position Year Salary ($) Bonus ($) ($)(1) Options (#) Compensation ($)
------------------ ---- ---------- --------- ------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
L. Michael Cutrer, 1996 $91,404 $2,500 $0 $0 $0
Chief Executive Officer 1995 $75,673 $4,000 $0 $0 $0
1994 $69,225 $4,300 $0 $0 $0
</TABLE>
- -----------------
(1) Mr. Cutrer did not receive other compensation in aggregate exceeding
$50,000 or 10% of the compensation reported in the table in any of the
fiscal years ended October 31, 1996, 1995 or 1994.
Stock Options
There were no options granted to the Chief Executive Officer during the fiscal
year ended October 31, 1996. The following table sets forth information
concerning options held by the Company's Chief Executive Officer:
-4-
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
10/31/96(#) 10/31/96($)(1)
Shares ----------- --------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
L. Michael Cutrer 0 0 40,000/0 $0/0
- -------------------------
(1) Calculated upon the difference between the exercise price and the fair
market value at fiscal year-end.
Effective November 1, 1996, L. Michael Cutrer was granted options exercisable
for 100,000 shares of the Company's Common Stock at an exercise price of $1.05
per share, the fair market value of the Common Stock at the time of the grant.
The terms of the option grant provide for sixty percent (60%) of the options to
vest immediately, with the balance vesting fifty percent (50%) per year over two
years.
PROPOSAL TO AMEND THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The Board of Directors recommends that the stockholders amend the Amended and
Restated 1996 Stock Option Plan of the Company (the "Plan") to increase the
number of shares that may be issued pursuant to the Plan from 500,000 shares to
1,000,000 shares. A copy of the Plan, as proposed to be amended, is attached to
this Proxy Statement as Exhibit A. The Board of Directors believes that an
increase in the number of shares authorized for issuance is necessary and
desirable in order to maintain the efficacy of the Plan by allowing further
grants to be made thereunder at the discretion of the Board of Directors. More
specifically, the Board believes that an increase in the number of potentially
issuable shares will allow management of the Company to continue to provide
incentives to employees, directors and consultants of the Company, thus
enhancing the value of the Company for the benefit of stockholders. The Plan
was originally approved by the Board of Directors on April 1, 1996, and received
stockholder approval at the Company's 1996 Annual Meeting held on May 14,
1996. The following summary of certain provisions of the Plan is subject to the
complete text of the Plan attached to this Proxy Statement as Exhibit A.
TYPES OF AWARDS
The Plan permits the granting of stock options, including incentive stock
options.
AUTHORITY OF THE BOARD OF DIRECTORS
The Plan is administered by the Board of Directors of the Company. The
Board has the authority to make grants and determine their terms, subject to
the provisions of the Plan, and has the authority to interpret the provisions of
the Plan, to adopt any rules, procedures and forms necessary for the operation
and administration of the Plan, and to determine all questions relating to the
eligibility and other rights of all persons under the Plan. All directors, key
employees of the Company, and certain consultants to the Company and any
subsidiaries and affiliates are eligible to be participants.
-5-
<PAGE>
SHARES SUBJECT TO PLAN
An aggregate of 500,000 shares of Common Stock were originally authorized for
issuance pursuant to the Plan, such number of shares being subject to adjustment
in the event of a merger, consolidation, stock dividend, split-up, combination,
or exchange of shares, recapitalization or change in capitalization with respect
to the shares of Common Stock. The shares of stock deliverable under the Plan
may consist in whole or in part of unissued shares or reacquired shares. If a
grant expires or is canceled, any shares which were not issued or fully vested
under the grant at the time of expiration or cancellation will again be
available for grants. Of the 500,000 shares originally authorized, options for
437,500 shares have been granted as of the date of this Proxy Statement.
STOCK OPTIONS
Options which are issuable under the Plan may be either "Incentive Stock
Options," as defined in section 422 of the Internal Revenue Code, or options not
intended to be so qualified ("Non-qualified Options"). The Board may grant more
than one option to a participant during the life of the Plan, and such option
may be in addition to an option or options previously granted; provided,
however, that the aggregate fair market value of stock with respect to which
Incentive Stock Options are exercisable for the first time by such individual
during any calendar year (under all stock option plans of the Company and any
subsidiaries) may not exceed $100,000. All options (both Incentive Stock
Options and Non-qualified Stock Options) are exercisable at no less than 100% of
the fair market value of the shares on the date of grant, subject to
anti-dilution provisions; provided, however, that if any Incentive Stock Option
is granted to an individual who owns more than 10% of the total combined voting
power of all classes of stock of the Company, actually or constructively under
Section 425(d) of the Internal Revenue Code, such option is exercisable at 110%
of the fair market value of the stock subject to the option.
No option is exercisable following three months after termination of employment
with the Company (or such shorter or longer period as the option may provide)
unless such termination of employment occurs by reason of disability or death.
In the event of the disability or death of an optionee while an employee of the
Company or any subsidiary of the Company, the options or unexercisable portions
thereof, to the extent exercisable on the date of disability or death, are
exercisable at any time for a period not to exceed the expiration of one year
from the date of disability or death (or such shorter period as the option may
provide). In no event, however, may an option be exercisable after the
expiration of ten years from the date such option was granted (five years in the
case of Incentive Stock Options granted to an optionee owning more than 10% of
the voting power of stock of the Company as contemplated by Section 425(d) of
the Internal Revenue Code), or beyond the term for which it was granted.
Except as provided otherwise by Board of Director resolution, payment for shares
of Common Stock purchased upon exercise of an option granted under the Plan must
be made in full at the time of such exercise, whether in cash, shares of the
Company's Common Stock (valued at fair market value), by a note payable to the
Company, or in a combination of cash, notes, and shares of stock.
ADJUSTMENTS
If there is a merger, consolidation, stock dividend, split-up, combination or
exchange of shares, recapitalization or change in capitalization with respect to
the shares of Common Stock, or any other corporate action with respect to the
shares of Common Stock which, in the opinion of the Board of Directors,
adversely affects the relative value of a grant, the number of shares and the
exercise price (in the case of an option) of any grant which is outstanding at
the time of that event will be adjusted to the extent necessary to remedy the
adverse effect on the grant's value.
-6-
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
With respect to Non-qualified Options, the difference between the option price
and the fair market value of the stock on the date the option is exercised is
taxable as ordinary income to the optionee and is deductible by the Company as
compensation on such date except as described in the next paragraph. Any gain
or loss on the subsequent sale of such stock is eligible for capital gain or
loss treatment by the optionee and will have no federal income tax consequences
to the Company.
With respect to Non-qualified Options, the Internal Revenue Code provides that
so long as the sale of the stock at a profit could subject a person to suit
under Section 16(b) of the Securities Exchange Act of 1934, the stock will be
subject to a substantial risk of forfeiture. Accordingly, unless the election
provided by Section 83(b) of the Internal Revenue Code is made, upon exercise of
a Non-qualified Option by an officer or director or 10% stockholder of the
Company, no income will be recognized (assuming no sale is made by the optionee
during the next six months), nor will the capital gain holding period begin to
run or the Company be allowed a deduction, until the six month period prescribed
by Section 16(b) has lapsed. The income to the optionee and deduction to the
Company will be determined on the basis of the fair market value of the stock on
the date of lapse.
An exchange of Common Stock in payment of the option price in the case of a
Non-qualified Option is considered a tax-free exchange by the optionee to the
extent of a like number of new shares, with the new shares retaining the basis
and holding period of the old shares. The fair market value of any additional
shares transferred to the optionee (representing the excess of the fair market
value of all of the new shares over the fair market value of all of the old
shares) will constitute ordinary income to the optionee and be deductible by the
Company. This amount then becomes the optionee's basis in such shares.
With respect to Incentive Stock Options, if the optionee does not make a
disqualifying disposition of stock acquired on exercise of such option, no
income for federal income tax purposes will result to such optionee upon the
granting or exercise of the option (except that the amount by which the fair
market value of the stock at time of exercise exceeds the option price will be a
tax preference item under the expanded alternative minimum tax), and in the
event of any sale thereafter any amount realized in excess of his cost will be
taxed as long term capital gain and any loss sustained will be long term capital
loss. In such case, the Company will not be entitled to a deduction for federal
income tax purposes in connection with the issuance or exercise of the option.
A disqualifying disposition will occur if the optionee makes a disposition of
such shares within two years from the date of the granting of the option or
within one year after the transfer of such shares to him. If a disqualifying
disposition is made, the difference between the option price and the lesser of
(i) the fair market value of the stock at the time the option is exercised or
(ii) the amount realized upon disposition of the stock, will be treated as
ordinary income to the optionee at the time of disposition and will be allowed
as a deduction to the Company.
An exchange of Common Stock in payment of the option price in the case of an
Incentive Stock Option, if the exchange is not a disqualifying disposition of
the stock exchanged, is considered to be tax-free. Under Internal Revenue
Service proposed regulations, a number of shares received upon exercise equal to
the number of shares exchanged will have a basis equal to the basis of the
shares exchanged and the remaining shares received will have a zero basis.
A portion of the excess of the amount deductible by the Company over the value
of options when issued may be subject to the alternative minimum tax imposed on
corporations.
The described tax consequences are based on current laws, regulations and
interpretations thereof, all of which are subject to change. In addition, the
discussion is limited to federal income taxes and does not attempt to describe
state and local tax effects which may accrue to participants or the Company.
-7-
<PAGE>
The following table sets forth the number of stock options that would have been
issued during the last fiscal year assuming the Plan, and the formula for
calculation of grants of options for non-employee directors, had been in effect.
Awards to the Company's Chief-Executive Officer and to non-executive officer
employees remain at the discretion of the Board of Directors.
Number of Shares
Name of Position Underlying Options Granted
---------------- --------------------------
Chief Executive Officer 0
Executive Group 0
Non-Executive Director Group 40,000
Non-Executive Officer Employee Group 0
VOTE REQUIRED
The affirmative vote of a majority of outstanding shares of Common Stock at the
Meeting at which a quorum is present, is necessary to approve this proposal to
amend the Company's Amended and Restated 1996 Stock Option Plan.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE PROPOSAL TO
AMEND THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN.
PROPOSAL TO RATIFY SELECTION OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of Price Waterhouse LLP has audited the books and records of the
Company since October 1993 and the Board of Directors desires to continue the
services of this firm for the current fiscal year ending October 31, 1997.
Accordingly, the Board of Directors will recommend at the Meeting that the
stockholders ratify the appointment of the firm of Price Waterhouse LLP to audit
the accounts of the Company for the current fiscal year. Representatives of that
firm are expected to be present at the Meeting with the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE
SELECTION OF PRICE WATERHOUSE LLP.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
The Company is required to report to its stockholders those directors, officers
and owners of more than 10% of any class of the Company's equity securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), who fail to timely file reports of beneficial
ownership and changes in beneficial ownership, as required by Section 16(a) of
the Exchange Act.
Upon a review of these reports, the Company believes that all reports were filed
on a timely basis, with the exception of one Form 4 report for Larry Berkin to
disclose one transaction in December 1996, which was untimely filed.
-8-
<PAGE>
MISCELLANEOUS
The Company's Annual Report for the fiscal year ended October 31, 1996 is being
mailed to stockholders contemporaneously with this Proxy Statement.
COST OF SOLICITATION
All expenses incurred in the solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be solicited on
behalf of the Company by directors, officers and employees of the Company or by
telephone or telecopy. The Company will reimburse brokers and others holding
Common Stock as nominees for their expenses in sending proxy material to the
beneficial owners of such Common Stock and obtaining their proxies.
PROPOSALS OF SECURITY HOLDERS
Proposals of security holders intended to be presented at the 1998 Annual
Meeting must be received by the Company for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting no later than October 28,
1997.
By order of the Board of Directors.
L. Michael Cutrer
PRESIDENT
Dated: February 25, 1997
-9-
<PAGE>
EXHIBIT A
NORTH AMERICAN SCIENTIFIC, INC.
AMENDED AND RESTATED
1996 STOCK OPTION PLAN
(AS PROPOSED TO BE AMENDED)
1. PURPOSE OF THE PLAN. Under this 1996 Stock Option Plan (the "Plan") of
North American Scientific, Inc. (the "Company") options may be granted to
eligible employees, directors and consultants to purchase shares of the
Company's capital stock. The Plan is designed to enable the Company to
attract, retain, and motivate its employees, directors and consultants by
providing for or increasing the proprietary interests of such individuals
in the Company. The Plan provides for options which qualify as incentive
stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), as well as options which do
not so qualify ("Nonstatutory Options"). Any option granted under this
Plan shall be clearly identified as either an Incentive Option or a
Nonstatutory Option.
2. STOCK SUBJECT TO PLAN. The aggregate number of shares which may be issued
under options is 1,000,000 shares of the Company's Common Stock, $0.01 par
value ("Common Stock"), subject to the adjustments hereinafter provided.
Such number of shares shall be reserved by the Company for options granted
under this Plan. The shares which may be issued or delivered under the
Plan may be either authorized but unissued shares or treasury shares or
partly each. Shares of stock subject to the unexercised portions of any
options granted under this Plan which expire or terminate or are canceled
may again be subject to options under the Plan.
3. ELIGIBILITY. The employees eligible to be considered for the grant of
Incentive Options hereunder are all employees (including directors)
regularly employed by the Company. All such employees and all nonemployed
directors or consultants to the Company shall also be eligible to receive
Nonstatutory Options hereunder.
4. $100,000 INCENTIVE OPTION EXERCISE LIMITATION. The aggregate fair market
value of the stock for which Incentive Options granted to any one eligible
employee under this Plan and under all incentive stock option plans of the
Company, its parent(s) and any subsidiaries, may by their terms first
become exercisable during any calendar year shall not exceed $100,000,
determining fair market value of the stock subject to any option as of the
time that option is granted. If the date on which one or more Incentive
Options could be first exercised would be accelerated pursuant to any other
provision of the Plan or any stock option agreement referred to in Section
10, or an amendment thereto, and the acceleration of such exercise date
would result in a violation of the restriction set forth in the preceding
sentence, then notwithstanding any such other provision the exercise date
of such Incentive Options shall be accelerated only to the extent, if any,
that is permitted under Section 422 of the Code and the exercise date of
the Incentive Options with the lowest option prices shall be accelerated
first. Any exercise date which cannot be accelerated without violating the
$100,000 restriction of this section shall nevertheless be accelerated, and
the portion of the option becoming exercisable thereby shall be treated as
a nonstatutory option.
5. OPTION PRICE. The purchase price at which each stock option may be
exercised (the "Option Price") shall be such price as the Board of
Directors, in its discretion, shall determine, and, in the case of
Incentive Options, shall not be less than one hundred percent (100%) of the
fair market value per share of the Common Stock covered by the Incentive
Option on the date of grant, except that in the case of an Incentive Option
granted to an employee who, immediately prior to such grant, owns stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of
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the Company or any subsidiary (a "Ten Percent Employee"), the Option Price
shall not be less than one hundred ten percent (110%) of such fair market
value on the date of grant. For purposes of this Section 5, the fair
market value of the Common Stock shall be determined as provided in Section
11. For purposes of this Section 5, an individual (a) shall be considered
as owning not only shares of the Common Stock owned individually but also
all shares that are at the time owned, directly or indirectly, by or for
the spouse, ancestors, lineal descendants and brothers and sisters (whether
by the whole or half blood) of such individual, and (b) shall be considered
as owning proportionately any shares owned, directly or indirectly by or
for any corporation, partnership, estate or trust in which such individual
shall be a shareholder, partner or beneficiary.
6. EXERCISE OF OPTION. The option agreement may provide for partial exercise
in installments. Exercisable options may be exercisable in full or in
part. The period of time in which an option may be exercised shall be the
period designated in the option. In the case of an Incentive Option such
period shall not exceed ten (10) years from the date the option is granted
and with respect to a Ten Percent Employee, such period of time shall not
exceed five (5) years from the date the Incentive Option is granted. No
Nonstatutory Option shall be exercisable after the expiration of ten years
from the date of grant. An option to the extent exercisable at any time
may be exercised in whole or in part.
7. PAYMENT OF OPTION PRICE. Payment for stock purchased under any exercise of
an option granted under this Plan shall be made in full in cash
concurrently with such exercise. Alternatively, such payment may be made
in whole or in part with shares of the same class of stock as that then
subject to the option, delivered in lieu of cash concurrently with such
exercise, the shares so delivered to be valued on the basis of the fair
market value of stock (determined in a manner provided in Section 11
hereof) provided that the Company is not then prohibited from purchasing or
acquiring shares of such stock.
Notwithstanding the foregoing, the Company shall not be obligated to
accept payment of the exercise price pursuant to this Section 7 unless the
stock tendered as payment for the exercise price has been held by the
optionee for at least six months. The Company also has the discretion to
refuse any other method of payment that would cause the Plan or the option
agreements issued thereunder to be treated for accounting purposes as
creating stock appreciation rights or other "variable stock plan"
characteristics which would cause the Company to recognize a charge to
earnings.
8. NONTRANSFERABILITY. Any option granted under this Plan shall by its terms
be nontransferable by the optionee other than by will or the laws of
descent and distribution and is exercisable during the optionee's lifetime
only by him or by his guardian or legal representative.
9. TERMINATION OF OPTION. In the case of Incentive Options:
a. If the employment or other service to the Company or a subsidiary of
an optionee (whether employee, nonemployed director, or consultant)
who is not disabled within the meaning of Section 422(c)(6) of the
Code (a "Disabled Optionee") is terminated without cause, quits or
retires under any retirement plan of the Company or a subsidiary, any
then outstanding and exercisable stock option held by such an optionee
shall be exercisable, in accordance with the provisions of the stock
option agreement referred to in Section 10, by such optionee at any
time prior to the expiration date of such stock option or within three
months after the date of termination of employment or service,
whichever is the shorter period;
b. If the employment of an optionee who is a Disabled Optionee is
terminated without cause or if the service of a nonemployed director
or consultant terminates because such individual becomes a Disabled
Optionee, any then outstanding and exercisable stock option held by
such an optionee shall be exercisable, in accordance with the
provisions of the stock option agreement
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referred to in Section 10, by such an optionee at any time prior to
the expiration date of such stock option or within one year after
the date of such termination of employment or service, whichever is
the shorter period;
c. Following the death of an optionee during employment or of a
nonemployed director or consultant while serving as a director or
consultant of the Company or a subsidiary, any outstanding and
exercisable stock option held by such an optionee at the time of death
shall be exercisable, in accordance with the provisions of the stock
option agreement referred to in Section 10, by the person or persons
entitled to do so under the will of the optionee, or, if the optionee
shall fail to make testamentary disposition of the stock option or
shall die intestate, by the legal representative of the optionee at
any time prior to the expiration date of such stock option or within
one year after the date of death, whichever is the shorter period.
For all options issued hereunder, if the Company terminates the
employment of an optionee for cause, all outstanding stock options held by
the optionee at the time of such termination shall automatically terminate
unless the Board of Directors notifies the optionee that his options will
not terminate. A termination "for cause" shall be defined under each
written option agreement issued pursuant to Section 10.
Whether termination of employment or other service is a termination
"for cause" and whether an optionee is disabled within the meaning of
Section 422(c)(6) of the Code shall be determined in each case, in its
discretion, by the Board of Directors and any such determination by the
Board of Directors shall be final and binding.
10. WRITTEN OPTION AGREEMENT. All options granted pursuant to the Plan shall
be evidenced by written option agreements. Such option agreements shall
comply with and be subject to all of the terms, conditions, and limitations
set forth in this Plan and such further provisions, not inconsistent with
this Plan, as the Board of Directors shall deem appropriate.
11. DETERMINATION OF FAIR MARKET VALUE. Fair market value of the Common Stock
shall be the closing price of the Common Stock on the Vancouver Stock
Exchange (or such successor exchange or automated quotation system upon
which the Common Stock becomes listed) on the day prior to the grant.
12. ADJUSTMENTS. If the outstanding shares of stock of the class then subject
to this Plan are increased or decreased, or are changed into or exchanged
for a different number or kind of shares or securities, as a result of one
or more reorganizations, recapitalization, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made
in the number and/or kind of shares or securities for which options may
thereafter be granted under this Plan and for which options then
outstanding under this Plan may thereafter be exercised. The Board of
Directors shall make such adjustments as it may deem fair, just and
equitable to prevent substantial dilution or enlargement of the rights
granted to or available for optionees. No adjustment provided for in this
Section 12 shall require the Company to issue or sell a fraction of a share
or other security.
If any such adjustment provided for in this Section 12 requires the
approval of stockholders in order to enable the Company to grant Incentive
Options, then no such adjustment shall be made without the required
stockholder approval. Notwithstanding the foregoing, in the case of
Incentive Options, if the effect of any such adjustment would be to cause
the stock option to fail to continue to qualify as an Incentive Option or
to cause a modification, extension or renewal of such stock option within
the meaning of Section 424 of the Code, the Board of Directors may elect
that such adjustment not be made but rather shall use reasonable efforts to
effect such other adjustment of each then outstanding stock option as the
Board of Directors, in its sole discretion, shall deem equitable and which
will not
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<PAGE>
result in any disqualification, modification, extension or renewal (within
the meaning of Section 424 of the Code) of such Incentive Option.
13. ADMINISTRATION. The Plan shall be administered by the Board of Directors.
The Board of Directors may interpret the Plan, prescribe, amend and rescind
any rules or regulations necessary or appropriate for the administration of
the Plan, and make all determinations, in its discretion, as to which
eligible employees will receive options, the number of shares subject to
the options and the exercise price. In addition, the Board of Directors
may make such other determinations and take such other action it deems
necessary or advisable. Without limiting the generality of the foregoing,
the Board of Directors may, in its discretion, treat all or any portion of
any period during which a participant is on military or other approved
leave of absence from the Company or a subsidiary as a period of employment
of such participant by the Company or such subsidiary, as the case may be,
for purposes of accrual of his rights under his awards; provided, however,
that no Incentive Option may be awarded to an employee while he is on leave
of absence.
14. LIMITATIONS RESPECTING INCENTIVE OPTIONS. It is the intent of the Company
to conform strictly to the requirements of Code Section 422 with regard to
Incentive Options granted pursuant to this Plan. Therefore,
notwithstanding any other provision of this Plan, nothing herein with
regard to Incentive Options shall contravene any requirement set forth in
Code Section 422 and if inconsistent provisions are otherwise found herein,
they shall be deemed void and unenforceable or automatically amended to
conform, as the case may be.
15. RIGHTS AS A STOCKHOLDER. An optionee, or his executor, administrator or
legatee if he be deceased, shall have no rights as a stockholder with
respect to any stock covered by his option under the date of issuance of
the stock certificate to him or such stock after receipt of the
consideration in full set forth in the option agreement or as may be
approved by the Board of Directors. Except as provided in Section 12
hereof, no adjustments shall be made for dividends, whether ordinary or
extraordinary, whether in cash, securities, or other property, for
distributions in which the record date is prior to the date for which the
stock certificate is issued.
16. MODIFICATION, EXTENSION AND RENEWAL. Subject to the conditions of, and
within the limitations prescribed in, Section 14, hereof, the Board of
Directors may modify, extend or renew options which are outstanding as
granted under the Plan if otherwise consistent herewith. Notwithstanding
the foregoing, no modification shall, without the prior written consent of
the optionee, alter, impair or waive any rights or obligations of any
option theretofore granted under the Plan.
17. INVESTMENT PURPOSES, ETC. Prior to the issuance or delivery of any shares
of the common stock under the Plan, the person exercising the stock option
may be required to (a) represent and warrant that the shares of the Common
Stock to be acquired upon exercise of the stock option are being acquired
for investment for the account of such person and not with a view to resale
or other distribution thereof, (b) represent and warrant that such person
will not, directly or indirectly, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any such shares unless the transfer,
sale, assignment, pledge, hypothecation or other disposition of the shares
is pursuant to effective registrations under the 1933 Act and applicable
state or foreign securities laws or pursuant to appropriate exemptions from
any such registrations, (c) execute such further documents as may be
reasonably required by the Board of Directors upon exercise of the option
or any part thereof, including but not limited to stock transfer
restrictions. The certificate or certificates representing the shares of
the common stock to be issued or delivered upon exercise of a stock option
may bear a legend evidencing the foregoing and other legends required by
any applicable securities laws. Furthermore, nothing herein or any option
granted hereunder shall require the Company or any subsidiary to issue any
stock upon exercise of any option if the issuance would, in the opinion of
counsel for the Company, constitute a violation of the Securities Act
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of 1933, as amended, the California securities laws, or any other
applicable rule or regulation then in effect.
18. NO RIGHT TO CONTINUED EMPLOYMENT. This Plan, and any option granted under
this Plan, shall not confer upon any optionee any right with respect to
continued employment by or service to the Company or any subsidiary, nor
shall they alter, modify, limit or interfere with any right or privilege of
the Company or any subsidiary under any employment or service contract
heretofore or hereinafter executed with any optionee, including the right
to terminate any optionee's employment, directorship, or consultancy
service, at any time for or without cause.
19. DISPOSITION OF INCENTIVE OPTION SHARES. Except (a) as provided in options
to the Company and other holders of the stock contained in stock transfer
restriction agreements to which the Company is a party, or (b) in
connection with reorganizations or other transactions described in Section
12 hereof, no stock acquired by the exercise of an Incentive Option granted
under the Plan shall be transferable, otherwise than by will or the laws of
descent and distribution, within two (2) years after the date the option
was granted or within one (1) year after the transfer of such share of
stock to the optionee pursuant to the exercise of the option. Each
certificate representing the acquired shares shall bear a legend to this
effect.
20. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the options granted
hereunder and the obligation of the Company to sell and deliver stock under
such options, shall be subject to all applicable federal and state laws,
rules, regulations and to such approvals by any government or regulatory
authority or investigative agency as may be required. The Company shall
not be required to issue or deliver any certificates for shares of stock
prior to (a) the listing of any such stock to be acquired pursuant to the
exercise of any option on any stock exchange on which the stock may then be
listed, and (b) the compliance with any registration requirements or
qualification of such shares under any federal or state securities laws, or
obtaining any ruling or waiver from any government body which the Company
or it subsidiaries shall, in their sole discretion, determine to be
necessary or advisable, or which, in the opinion of counsel to the Company
or its subsidiaries, is otherwise required.
21. CORPORATE REORGANIZATIONS. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Company
as a result of which the outstanding securities of the class then subject
to options hereunder are changed into or exchanged for cash or property or
securities not of the Company's issue, or upon a sale of substantially all
the property of the Company to, or the acquisition of stock representing
more than eighty percent (80%) of the voting power of the stock of the
Company then outstanding by another corporation or person, the Plan shall
terminate, and all options theretofore granted hereunder shall terminate,
unless provision be made in writing in connection with such transaction for
the continuance of the Plan and/or for the assumption of options
theretofore granted, or the substitution for such options of options
covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices, in which event the Plan and options theretofore
granted shall continue in the manner and under the terms so provided. If
the Plan and unexercised options shall terminate pursuant to the foregoing
sentence, all persons entitled to exercise any unexercised portions of
options then outstanding shall have the right, at such time prior to the
consummation of the transaction causing such termination as the Company
shall designate, to exercise the unexercised portions of their options,
including the portions thereof which would, but for this Section 21, not
yet be exercisable.
22. WITHHOLDING. If, upon exercise of any Nonstatutory Option (or any
Incentive Option which is treated as a Nonstatutory Option because it fails
to meet the requirements set forth herein for Incentive Options), the
optionee fails to tender payment to the Company for any federal income tax
withholding, the Board of Directors shall withhold from the optionee
sufficient shares or fractional shares having a fair market
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value (determined under Section 11) equal to any amount which the Company
is required to withhold under the Code.
23. AMENDMENT AND TERMINATION. The Company may alter, amend, suspend or
terminate this Plan, provided that no such action shall deprive an
optionee, without his consent, of any option granted to the optionee
pursuant to this Plan or of any of such optionee's rights under such
option. Except as herein provided no such action of the Company, unless
approved by the shareholders of the Company within twelve months prior or
twelve months after such action, may:
a. increase the maximum number of shares for which options granted under
this plan may be exercised;
b. reduce the minimum permissible exercise price;
c. extend the ten-year duration of this Plan set forth herein; or
d. alter the class of employees eligible to receive options under the
Plan.
24. PLAN DATE AND DURATION. The Plan shall take effect on the date it is
adopted by the Board of Directors of the Company. Options may not be
granted under this Plan more than ten years after the date of the adoption
of this Plan, or of shareholder approval thereof, whichever is earlier.
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
7435 GREENBUSH AVENUE
NORTH HOLLYWOOD, CA 91605
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L. Michael Cutrer and Irwin J. Gruverman,
and each of them, attorney and proxy to represent the undersigned at the 1997
Annual Meeting of Stockholders of North American Scientific, Inc. (the
"Company") to be held at the Holiday Inn at 150 E. Angeleno Avenue in Burbank,
California at 10:00 a.m. local time, on Friday, March 28, 1997, or at any
adjournment thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock of the Company which the
undersigned may be entitled to vote at said Meeting as follows:
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (unless name of nominee is crossed out)
/ / WITHHOLD AUTHORITY
Irwin J. Gruverman L. Michael Cutrer Larry Berkin Dr. Allan M.
Green Michael C. Lee
2. PROPOSAL TO AMEND THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
For / / Against / / Abstain / /
3. PROPOSAL TO RATIFY THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
AUDITORS
For / / Against / / Abstain / /
4. IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING (which the Board of Directors does not know of prior to February 25,
1997)
Management recommends your vote FOR all proposals.
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN AND FOR
THE RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
AUDITORS, AND WILL CONFER THE AUTHORITY SET FORTH IN PARAGRAPH 4.
Receipt is hereby acknowledged of the Notice of the Meeting and Proxy
Statement dated February 25, 1997, as well as a copy of the Company's Annual
Report for the fiscal year ended October 31, 1996.
Dated: , 1997.
________________________________
________________________________
(Signature of stockholder)
When signing as attorney,
executor, administrator, trustee
or guardian, please give title.
Each joint owner is requested to
sign. If a corporation or
partnership, please sign by an
authorized officer or partner.
Please sign in the same manner
as your certificate(s) is (are)
registered.
Please complete, date, sign and return this proxy in the envelope provided.