<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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
- --------------------------------------------------------------------------------
(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):
/ / 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:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
Notice of 2000
Annual Meeting of Stockholders
And Proxy Statement
NORTH AMERICAN SCIENTIFIC, INC.
20200 Sunburst Street
Chatsworth, California 91311
<PAGE>
[LOGO]
20200 SUNBURST STREET
CHATSWORTH, CA 91311
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 24, 2000
To the Stockholders of North American Scientific, Inc.:
The 2000 Annual Meeting of Stockholders of North American Scientific,
Inc. (the "Company") will be held at 10:00 a.m. (local time) on March 24,
2000, at the Warner Center Marriott located at 21850 Oxnard Street, Woodland
Hills, California 91367 for the following purposes:
1. To elect five directors to hold office until the 2001 Annual
Meeting;
2. To approve the adoption of the Company's 2000 Employee Stock Purchase
Plan and the reservation of 300,000 shares of Common Stock for issuance
thereunder;
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending October 31, 2000;
and
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on February 7,
2000 as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and at any continuation, adjournment or
postponement thereof.
By Order of the Board of Directors,
/s/ L. Michael Cutrer
L. Michael Cutrer
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Chatsworth, California
February 21, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
THE MEETING. IF YOU ATTEND THE MEETING AND VOTE BY BALLOT, YOUR PROXY WILL BE
REVOKED AUTOMATICALLY AND ONLY YOUR VOTE AT THE MEETING WILL BE COUNTED.
<PAGE>
[LOGO]
----------------------
20200 SUNBURST STREET
CHATSWORTH, CA 91311
2000 ANNUAL MEETING OF STOCKHOLDERS
MARCH 24, 2000
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card 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 2000 Annual Meeting of Stockholders to be held at the Warner Center
Marriott located at 21850 Oxnard Street, Woodland Hills, California 91367 at
10:00 a.m. local time, on March 24, 2000 or at any adjournments or
postponements thereof (the "Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement,
the form of proxy included herewith and the Company's Annual Report to
Stockholders for the fiscal year ended October 31, 1999 are being mailed to
stockholders on or about February 21, 2000.
Stockholders of record at the close of business on February 7, 2000 are
entitled to notice of and to vote at the Meeting. On such date there were
outstanding 6,836,537 shares of the Company's common stock, par value $0.01
per share (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. Any proxy may be
revoked by written notice received by the Secretary of the Company at any
time prior to the voting thereof by submitting a subsequent proxy or by
attending the Meeting and voting in person.
The information contained in this Proxy Statement relating to the
occupations and securities holdings of directors and officers of the Company
and their transactions with the Company is based upon information received
from each individual as of February 7, 2000.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspectors appointed for the Meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote but as not 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.
1
<PAGE>
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Board of Directors currently consists of five Directors serving one-year
terms. All of the nominees have served as Directors since the last annual
meeting. All Directors are elected annually to serve until the next annual
meeting. The nominees for election as Directors of the Company are as follows:
IRWIN J. GRUVERMAN, 66, has been Chairman of the Board and a Director of the
Company since December 31, 1989. Since 1990, Mr. Gruverman has been General
Partner in G&G Diagnostics Limited Partnership II, a venture capital limited
partnership. Mr. Gruverman founded and has been the Chief Executive Officer and
a director of MFIC Corporation, a company that manufactures process devices for
pharmaceutical and other manufacturing uses, since 1982. Mr. Gruverman served as
the Executive Vice President of New England Nuclear, a radioactive materials
business, during the later years of his tenure from 1961 to 1981. Mr. Gruverman
also serves as a director of InVitro International, Inc. and Fiberchem
International, Inc.
L. MICHAEL CUTRER, 44, has been the President and Chief Executive Officer and a
Director of the Company since November 27, 1989. Prior thereto, Mr. Cutrer was a
Manager of Isotope Products Laboratory, Inc., a radioisotope manufacturing
company, where he was responsible for industrial product manufacturing, research
and development from 1982 to 1989.
LARRY BERKIN, 63, has been a Director of the Company since May 1996, and has
been a certified public accountant with Berkin Accountancy Corp., a company he
founded in 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, 55, has been a Director of the Company since May 1996 and
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 P.C., 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.
Dr. Green is a director of Neurochem, Inc., Spectral Dimensions, Inc., Select
Therapeutics, Inc., Argil Management, Inc. and is Chairman of the Board of
Directors and President of Theseus Imaging Corporation.
MICHAEL C. LEE, 49, has been a Director of the Company since May 1996 and has
been the President and Chief Executive Officer of Progressive Technology
Partners since 1999. Prior thereto, Mr. Lee was the President and Chief
Executive Officer of East Coast Food Products, Inc. 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
EACH NOMINEE LISTED ABOVE.
2
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company held four meetings during the fiscal year
ended October 31, 1999, and the Board acted once by unanimous written consent.
Each member of the Board attended at least 75% of Board and applicable committee
meetings thereof on which they served.
The Board of Directors has two standing committees: the Audit Committee and the
Compensation Committee.
AUDIT COMMITTEE. The Audit Committee has the principal functions of (i)
reviewing the adequacy of the Company's internal system of accounting controls,
(ii) conferring with the independent public accountants concerning the scope and
results of the audit, (iii) recommending to the Board of Directors the
appointment of independent public accountants, (iv) reviewing related party
transactions and (v) considering other appropriate matters regarding the
financial affairs of the Company. The current members of the Audit Committee are
Messrs. Berkin (Chairman), Lee and Green, none of whom is, or has ever been, an
officer or employee of the Company. During the fiscal year ended October 31,
1999, the Audit Committee met on two occasions.
Upon a proposal made by the Audit Committee, the Company's Board of Directors
recently adopted an Audit Committee Charter as proposed by the blue ribbon panel
convened by the Securities and Exchange Commission. The Audit Committee Charter
sets forth the purposes of and general guidance for the proper functioning of
the Company's audit committee.
COMPENSATION COMMITTEE. The Compensation Committee, comprised of Messrs. Green
(Chairman), Berkin, Lee and Gruverman, the four non-employee Directors, oversees
the Company's executive compensation programs and policies and is responsible
for determining grants of options to purchase Common Stock under the North
American Scientific Inc. Amended and Restated 1996 Stock Option Plan. During the
fiscal year ended October 31, 1999, the Compensation Committee met on two
occasions.
COMPENSATION OF DIRECTORS
All Directors and non-employee officers of the Company are elected annually to
serve for a term of one year and until their successors are elected and
qualified. Directors who are also employees of the Company or its subsidiaries
receive no separate compensation for serving as Directors or as members of any
committees of the Board of Directors. Each non-employee director receives $1,250
for each meeting they attend in person, or $625 per meeting if they participate
via telephone. Directors may be reimbursed for certain expenses incurred in
connection with attending Board meetings. In addition, the Chairman of the Board
receives a salary of $5,000 per month. Each non-employee Director receives a
non-qualified option to purchase 15,000 shares of the Company's stock upon
election/re-election to the Board of Directors.
3
<PAGE>
PROPOSAL NO. 2 -- APPROVAL OF THE NORTH AMERICAN SCIENTIFIC, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The Board of Directors believes that is in the best interests of the Company to
encourage stock ownership by employees. Accordingly, on September 3, 1999 the
Board of Directors of the Company adopted, subject to shareholder approval, the
North American Scientific Inc. 2000 Employee Stock Purchase Plan (the "Plan")
and authorized the issuance of up to 300,000 shares of Common Stock thereunder.
The Plan is intended to qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The text of the Plan is attached as Exhibit A to this Proxy Statement.
PURPOSE
The purpose of the Plan is to provide employees of the Company with an
opportunity to be compensated through the benefits of stock ownership and to
acquire an interest in the Company through the purchase of Common Stock. The
Plan enables eligible employees of the Company to purchase Common Stock on
advantageous terms and thereby allows employees to share in the success of the
Company.
ELIGIBILITY
Generally, any employee who is employed by the Company for at least six months
preceding the beginning date of each offering period, unless (i) the employee
owns more than 5% of the Common Stock of the Company or (ii) the employee is
customarily employed for less than 20 hours per week or five or fewer months per
calendar year, is eligible for participation. Eligible employees desiring to
participate in the Plan may elect to do so by completing a payroll deduction
authorization form prior to the commencement of an offering period. Under the
terms of the Plan, no employee may be granted an option that permits that
employee to purchase shares of Common Stock under the Plan and any other Section
423 plans of the Company at a rate which exceeds $25,000 of the fair market
value of the Common Stock (determined at the time the option is granted) for
each calendar year for which the option is outstanding. An employee who elects
to participate will be deemed to have elected to participate for all subsequent
offering periods at the same rate of payroll deduction unless and until the
employee changes his or her rate of payroll deduction or terminates
participation.
MANNER OF STOCK PURCHASES
The Plan is offered in six-month "offering periods" commencing on January 1 and
July 1. An eligible employee who elects to participate in the Plan will have
payroll deductions made on each payday during the six month period. The amount
of the payroll deductions shall be at least 1% and shall not exceed 15% of the
employee's compensation. A participant may terminate his or her participation in
the Plan at any time during an offering period by giving written notice to the
Company. In the event a participant terminates his or her participation in the
Plan for any reason, the employee may elect to have all (but not less than all)
payroll deductions previously credited to the account paid to the employee, or,
alternatively, the employee may elect to stop further payroll deductions, and
leave accumulated funds in such employee's account for the purchase of stock at
the end of the offering period. If an employee ceases his or her participation
in the Plan, the employee will not automatically participate in the next
offering period, but will have to re-enroll if the employee desires to once
again participate. If the participant ceases to be an employee of the Company
for any reason, including retirement or death, the participant will be deemed to
have withdrawn from the Plan on the date of his or her termination of employment
and all contributions will automatically be returned to the employee. A
participant may increase or reduce the rate of his or her payroll deductions
once during an offering period or effective as of the commencement of any
subsequent offering period.
4
<PAGE>
At the end of each offering period, participant contributions will be used to
purchase a number of shares of Common Stock, subject to adjustment, in an amount
equal to 85% of the lower of the fair market value of the Common Stock on the
first day of such offering period or the last day of such offering period. Any
payroll deductions credited to a participant's account during an offering period
not used for the purchase of shares will be credited to the participant's
payroll deductions for the next offering period. The closing price of the Common
Stock on the Nasdaq National Market on February 7, 2000 was $12.625 per share.
ADMINISTRATION
The Plan will be administered by the Board of Directors or by a duly appointed
committee of the Board. The Board of Directors has the authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to it,
and to make all other determinations necessary or advisable in administering the
Plan.
AMENDMENT AND TERMINATION OF THE PLAN
Subject to the provisions of Section 423 of the Code, the Board of Directors has
the power to amend or terminate the Plan in its sole discretion at any time in
any respect, except that any amendment may not retroactively impair or otherwise
adversely affect the rights of any person to benefits that have already accrued
under the Plan. In addition, no amendment may be made without the approval of
the shareholders within 12 months of the adoption of the amendment if the
amendment would (i) increase the number of shares issued under the Plan, or (ii)
change the class of employees eligible to participate in the Plan.
FEDERAL INCOME TAX CONSEQUENCES OF THE EMPLOYEE STOCK PURCHASE PLAN
The federal income tax consequences to the Company and the participants pursuant
to the Plan under applicable provisions of the Code and the regulations
thereunder are substantially as follows.
Under the Code, the Company is considered to grant participants an "option" on
the first day of each offering period to purchase as many shares of Common Stock
as the participant will be able to purchase with the payroll deductions credited
to his or her account during the offering period. On the last day of each
offering period, the market price is determined and the participant is
considered to have exercised the "option" and purchased the number of shares of
Common Stock his or her accumulated payroll deductions will purchase at the
market price.
The required holding period for favorable tax treatment upon disposition of
Common Stock acquired under the Plan (the "Holding Period") is the later of (a)
two years after the "option" is granted (the first day of an offering period),
or (b) one year after the Common Stock is purchased (the last day of an offering
period). Consequently, if the Common Stock is held for the required Holding
Period, a participant who sells the shares will realize ordinary income to the
extent of the lesser of (1) the amount by which the fair market value of the
Common Stock at the time the option was granted exceeded the "option price" or
(2) the amount by which the fair market value of the Common Stock at the time of
the disposition exceeded the "option price." The "option price" is determined on
the date of grant for this purpose and, is therefore equal to 85% of the fair
market value of the Common Stock as of the first day of an offering period. Any
further gain realized upon the sale will be considered a long-term capital gain.
If the sale price is less than the option price, there will be no ordinary
income and the participant will have a long-term capital loss with respect to
the difference. Generally, the Company will not be entitled to a deduction for
federal income tax purposes with respect to the purchase or the subsequent
disposition of shares of Common Stock.
When a participant sells Common Stock purchased under the Plan before the
expiration of the required Holding Period, the participant will recognize
ordinary income to the extent of the difference between the
5
<PAGE>
price actually paid for the Common Stock and the fair market value of the
Common Stock at the date the option was exercised (the last day of an
offering period), regardless of the price at which the Common Stock is sold.
To the extent the participant recognizes ordinary income on the sale of
Common Stock, the Company will generally receive a corresponding deduction in
the year in which the disposition occurs. Any gain realized in excess of that
amount will be taxed as a capital gain. If the sale price is less than the
amount paid by the participant, increased by the ordinary income which must
be recognized, then any such loss will be a capital loss.
If a participant dies while owning Common Stock acquired under the Plan,
ordinary income must be reported on his or her final income tax return. The
amount will be the lesser of (1) the amount by which the fair market value of
the Common Stock at the time the option was granted exceeded the option price
(i.e., 15% of such fair market value), or (2) the amount by which the fair
market value of the Common Stock at the time of the participant's death exceeded
the option price.
The foregoing discussion is only a general summary of the federal income tax
consequences of a purchase of Common Stock under the Plan and the subsequent
disposition of shares received pursuant to such purchases. A participant should
consult his or her own tax advisor to determine the tax consequences of any
particular transaction.
The state income tax treatment of purchasing and selling the shares under the
Plan will vary depending upon the state in which a participant resides. If the
participant is a resident of, or is employed in, a country other than the United
States, the participant may be subject to taxation in that country in addition
to or instead of the United States federal income taxes. A participant should
consult his or her own tax advisor regarding the tax consequences and compliance
requirements of any particular transaction.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO ADOPT
THE EMPLOYEE STOCK PURCHASE PLAN AND THE RESERVATION OF SHARES FOR ISSUANCE
THEREUNDER.
PROPOSAL NO. 3 -- RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has selected
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending October 31, 2000 and has further directed that management
submit the selection of independent accountants for ratification by the
stockholders at the Meeting. PricewaterhouseCoopers LLP has audited the
Company's financial statements since 1993. During fiscal year 1999,
PricewaterhouseCoopers LLP served as the Company's independent accountants and
provided certain tax and consulting services. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Meeting and will be
available to respond to appropriate questions.
VOTE REQUIRED. Stockholders are not required to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants. However,
the Board is submitting the selection of PricewaterhouseCoopers LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board and the Company's Audit
Committee will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Board and the Audit Committee in their discretion may
direct the appointment of a different independent accounting firm at any time
during the year if they determine that such a change would be in the best
interest of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Meeting will be
required to ratify the selection of PricewaterhouseCoopers LLP.
6
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of February 7, 2000 by (i) all those 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; (iii) each executive officer named in
the Summary Compensation Table; and (iv) all Directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
Beneficial Ownership
-------------------------------------------------------
Approximate Percent
Name and Address (1) Number of Shares of Total
- -------------------- ---------------- --------
<S> <C> <C>
Irwin J. Gruverman..................................... 475,600 (2) 6.9%
L. Michael Cutrer...................................... 575,667 (3) 8.4
Alan I. Edrick......................................... 68,334 (4) *
Larry Berkin........................................... 389,200 (5) 5.7
Dr. Allan M. Green..................................... 101,000 (6) 1.5
Michael C. Lee......................................... 205,950 (7) 3.0
Frontier Capital Management Co., Inc................... 410,370 6.0
99 Summer Street
Boston, MA 02110
Mentor Corporation..................................... 375,000 5.5
5425 Hollister Avenue
Santa Barbara, CA 93111
All directors and executive officers as a group (6
persons) 1,815,751 25.5
</TABLE>
- -------------------------
*Denotes less than 1%
(1) This table is based upon information supplied by officers, directors,
and principal stockholders of the Company and by Schedules 13D and 13G
filed with the SEC. Except where indicated, the address of each five
percent stockholder is c/o the Company, 20200 Sunburst Street,
Chatsworth, CA 91311. Applicable percentages are based on 6,836,537
shares of Company Common Stock outstanding, adjusted as required.
(2) Includes 36,000 shares held by G&G Diagnostics Limited Partnership, a
Delaware limited partnership, of which the reporting person is the sole
general partner and 40,000 shares subject to outstanding options which
are immediately exercisable. Excludes 30,000 shares owned by the
reporting person's spouse, as to which the reporting person disclaims
beneficial ownership.
(3) Includes 250,667 shares subject to outstanding options which are deemed
exercisable. Excludes 7,500 shares owned and 30,750 shares subject to
outstanding options which are deemed exercisable and which are held by
the reporting person's spouse, over which he disclaims beneficial
ownership.
(4) Consists of 68,334 shares subject to outstanding options which are
deemed exercisable.
(5) Includes 262,200 shares in investment funds to which the reporting
person is trustee. Includes 24,000 shares held by the reporting person
for his minor sons. Also includes 32,500 shares subject to outstanding
options which are deemed exercisable. Excludes 1,700 shares owned by
reporting person's spouse, as to which reporting person disclaims
beneficial ownership.
(6) Includes 32,500 shares subject to outstanding
options which are deemed exercisable.
(7) Includes 40,000 shares subject to outstanding options which are deemed
exercisable.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Company's executive
officers for the fiscal year ended October 31, 1999 and the two previous years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
----------------------------------------------------- -------------------
Other Annual Securities
Name and Compensation Underlying All Other
Principal Position Year Salary ($) Bonus ($) ($) Options/SARS Compensation (3)
------------------ ---- ---------- ---------- --- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
L. Michael Cutrer........... 1999 195,000 75,000 22,154 (1) 125,000 2,118
Chief Executive Officer 1998 120,962 25,000 8,654 (1) 30,000 1,562
1997 95,000 -- 6,942 (1) 150,000 1,547
Alan I. Edrick.............. 1999 122,500 30,000 -- 71,000 2,324
Chief Financial Officer 1998 47,500 (2) -- -- 60,000 --
</TABLE>
- -----------------
(1) Represents payment for Mr. Cutrer's accrued, but unused, vacation days.
(2) Hired May 18, 1998.
(3) Consists of the Company's contribution to such executive officer's
401(k) plan and Company paid life insurance premiums.
The following table sets forth information on option grants in fiscal 1999 to
each of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of
Securities % of Total Options/SARs Exercise
Underlying Options/ Granted to Employees Price Per Expiration Grant Date
Name SARS Granted(1) in Fiscal Year Share ($) Date Present Value (3)
---- --------------- -------------- --------- ---- -----------------
<S> <C> <C> <C> <C> <C>
L. Michael Cutrer......... 55,000 29.7% 6.25 5/06/09 138,750
70,000(2) 6.13 3/19/09 171,500
Alan I. Edrick............ 36,000 16.8% 6.25 5/06/09 90,360
35,000(2) 6.13 3/19/09 85,750
</TABLE>
- -------------
(1) These options were granted at the fair market value on the date of
grant determined pursuant to the Amended and Restated 1996 Stock Option
Plan.
(2) Represents a bonus for fiscal 1998 performance.
(3) Calculated using the Black-Scholes option-pricing model with the
following assumptions: volatility of 40%, risk-free interest rate of
5.2% and an expected life of 5 years. The Black-Scholes option
valuation model was developed for use in estimating the fair value of
traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the Black-Scholes model
does not necessarily provide a reliable measure of the fair value of
the Company's stock options.
8
<PAGE>
The following table sets forth certain information concerning the exercise of
stock options during the fiscal year ended October 31, 1999 by the Company's
executive officers and the fiscal year-end value of unexercised options as of
October 31, 1999.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at 10/31/99 10/31/99(1)
Acquired Value ---------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Michael Cutrer.... -- -- 203,334 101,666 $1,377,086 $323,540
Alan I. Edrick....... -- -- 41,667 89,333 197,293 347,707
</TABLE>
- -------------------------
(1) Calculated upon the difference between the exercise price and
the fair market value at fiscal year-end.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Green (Chairman),
Gruverman, Lee and Berkin, the Company's non-employee directors. Mr. Gruverman
currently holds more than 5% of the Company's common stock. See "Security
Ownership of Certain Beneficial Owners and Management."
Mr. Gruverman serves as a member of the Board of Directors of Theseus Imaging
Corp., and Dr. Green serves as Chairman of the Board of Directors and President
of Theseus Imaging Corp.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
The Compensation Committee of the Board of Directors is composed entirely of
outside directors. The Committee is responsible for developing and making
recommendations to the Board with respect to the Company's executive
compensation policies. In general, the compensation policies adopted by the
Committee are designed (1) to attract and retain executives capable of leading
the Company to meet its business objectives, and (2) to motivate the Company's
executives to enhance long-term stockholder value.
The executive compensation program provides an overall level of compensation
which is competitive relative to the marketplace. The Committee develops its
executive compensation program with reference to current comprehensive data
available regarding enterprises in the biomedical market. Actual compensation
levels may be greater or less than the median levels depending upon annual
and long-term performance by the Company and the particular individual.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation program is comprised of three
primary components: base salary, annual incentive compensation in the form of
cash bonuses, and long-term incentive compensation in the form of stock options.
9
<PAGE>
BASE SALARIES. An executive officer's base salary is determined by evaluating
the responsibilities of the position held and the competitive marketplace for
executive talent. The base salary is intended to be competitive with base
salaries paid to executive officers with comparable qualifications and
responsibilities at other similarly situated companies.
BONUSES. The Company pays bonuses to its executive officers based primarily upon
the Company's performance during the year, the performance of each executive
officer and compensation survey information for executives employed within the
Company's market segment. At the end of fiscal year 1999, the Committee
certified that the Company's performance targets had been achieved and,
accordingly, incentive bonuses could be paid. In determining the actual
incentive bonus amount paid to each executive officer, the Committee considered
several factors including, Company revenue and earnings growth, return on
equity, and non-financial performance relating to overall Company improvements.
STOCK OPTIONS. The general purpose of long-term awards, currently in the form of
stock options, is to align the interests of the executive officers with the
interests of the Company's stockholders. Additionally, long-term awards provide
executive officers with an incentive to achieve superior performance over time
and foster the retention of key management personnel. In determining stock
option grants, the Committee bases its decision on each individual's performance
and potential to improve stockholder value.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
L. Michael Cutrer's compensation is determined pursuant to the principles noted
above. Specific consideration is given to Mr. Cutrer's responsibilities and
experience in the industry and compensation packages awarded to chief executive
officers of other comparable companies.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code generally limits the tax deductions
a public corporation may take for compensation paid to its executive officers
named in its summary compensation table to $1 million per executive per year.
Performance based compensation tied to the attainment of specific goals is
excluded from the limitation. Based on fiscal year 1999 compensation levels, no
such limits on the deductibility of compensation applied to any officer of the
Company.
COMPENSATION COMMITTEE
Dr. Allan M. Green
Irwin J. Gruverman
Michael C. Lee
Larry Berkin
10
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below shows the five-year cumulative total stockholder's return
assuming the investment of $100 on October 31, 1994 (and the reinvestment of
dividends thereafter) in each of the Company's Common Stock, the Nasdaq
Composite index and the Nasdaq Medical Devices index.
[GRAPH]
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the preceding Compensation
Committee Report on Executive Compensation and the preceding Company Stock
Performance Graph are not to be incorporated by reference into any such filings;
nor are such Report or Graph to be incorporated by reference into any future
filings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company 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 Exchange Act, who fail to
timely file reports of beneficial ownership and changes in beneficial ownership
of Common Stock or other equity securities of the Company. Officers, directors
and greater than ten percent shareholders are required to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, during the fiscal year ended October 31, 1999,
all Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were complied with.
11
<PAGE>
CERTAIN TRANSACTIONS
PRACSYS TRANSACTION
On February 6, 1998, the Company entered into agreements with PracSys Corp., a
Massachusetts corporation ("PracSys"), pursuant to which PracSys would (i)
manufacture and sell to the Company two particle accelerators (the "Systems") to
be used in the production of certain isotopes, which the Company intends to
utilize in connection with its new Palladium-103 product line, and (ii) operate
the Systems to produce required isotopes for an initial two-year period. Irwin
J. Gruverman, the Company's Chairman, who was at that time Chairman of the Board
of Directors and directly or indirectly a significant stockholder of both the
Company and PracSys, was instrumental in introducing the parties but was not
involved in the negotiation or approval of the agreements. The agreements were
negotiated between the parties on an arms-length basis.
In addition, the contract called for PracSys to receive a service fee and a
royalty on the Company's sales of products which incorporate isotopes produced
using the Systems. Furthermore, the Company and PracSys entered into an
Exclusivity and Purchase Agreement pursuant to which the Company received
certain exclusivity rights with regard to the PracSys technology. Pursuant to
the Exclusivity Agreement, PracSys also issued to the Company an aggregate of
140,150 shares of PracSys Common Stock, which was equal to approximately 5% of
PracSys' total outstanding shares on a fully-diluted basis. In addition, PracSys
granted the Company a pre-emptive right in the event of certain pre-initial
public offering private financing and a three-year warrant to purchase PracSys
Common Stock equal to 5% of the number of shares of Common Stock issued in an
initial public offering.
Although the Company made payment in full, PracSys has failed to complete the
machines. After the Company demanded that PracSys turn over the uncompleted
machines in accordance with the purchase contract, PracSys initiated a mediation
proceeding. As a result of the failure of mediation, PracSys initiated an
arbitration proceeding against the Company on the basis of claims of breach of
contract, breach of fiduciary duty, and unfair and deceptive trade practices.
The Company has vigorously denied and defended against PracSys' claims, and has
also asserted counterclaims against PracSys for breach of contract and fraud and
misrepresentation in connection with PracSys' failure to complete the machines.
The arbitration proceeding between the Company and PracSys is currently in
process.
THESEUS TRANSACTION
On October 21, 1999, the Company entered into an Agreement and Plan of Merger by
and among the Company, NASI Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of the Company, Theseus Imaging Corporation ("Theseus")
and certain stockholders and officers of Theseus (the "Merger Agreement"). Dr.
Allan M. Green, a director of the Company, is the Chairman of the Board of
Directors, President and a significant stockholder of Theseus. Irwin J.
Gruverman, Chairman of the Board of the Directors of the Company, is a director
and significant stockholder of Theseus. Dr. Green and Mr. Gruverman took no part
in the deliberations of the Company's Board of Directors with respect to the
proposed Theseus transaction, which actions were approved by a unanimous vote of
the disinterested members of the Company's Board.
Pursuant to the Merger Agreement, (a) the Company will pay the holders of
Theseus common stock and stock options total consideration of up to 200,000
shares of the Company's common stock, consisting of the Company's Common Stock
and options (in each case valued for purposes of this transaction at $15.00 per
share), and (b) commissions on Theseus' products. Pending completion of the
transaction, the Company anticipates advancing Theseus up to $6 million in
operating funds to be used towards the completion of phase II activities for
Apomate-TM-, and for other operating and research purposes. Advances made prior
to closing will be in the form of convertible notes secured by Theseus'
intellectual property.
12
<PAGE>
The consummation of the transactions contemplated in the Merger Agreement is
subject to the satisfaction of certain conditions, including, but not limited
to, satisfactory completion of due diligence, receipt of a financial fairness
opinion by a qualified third party expert, receipt of an opinion by a qualified
third party expert as to the technological and market opportunities of the
pre-merger products and results of certain clinical trials being satisfactory to
the Company.
OTHER INFORMATION
The Company's Annual Report for the fiscal year ended October 31, 1999 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 soliciting proxies by mail, the Company and its
directors, officers and employees may also solicit proxies personally, by
telephone or other appropriate means. No additional compensation will be paid to
directors, officers or other employees for such services. 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 2001 Annual
Meeting of Stockholders under SEC Rule 14a-8 must be made in accordance with the
Company's By-Laws, and must be received by the Company for inclusion in the
proxy relating to that meeting (expected to be mailed in February, 2001) no
later than October 21, 2000.
Notice of stockholder matters intended to be submitted at the 2001 Annual
Meeting outside the processes of Rule 14a-8 will be considered untimely if not
received by the Company by January 2, 2001.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Meeting. If any other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote on such matters in accordance with their best judgment.
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1999, as filed with the Securities and Exchange Commission,
excluding exhibits, may be obtained by stockholders without charge by written
request addressed to North American Scientific, Inc., Attn: Investor Relations,
20200 Sunburst Street, Chatsworth, California 91311.
By order of the Board of Directors
/s/ L. Michael Cutrer
L. Michael Cutrer
PRESIDENT
Dated: February 21, 2000
13
<PAGE>
EXHIBIT A
NORTH AMERICAN SCIENTIFIC INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.01 PURPOSE OF THE PLAN. The North American Scientific Inc. Employee Stock
Purchase Plan (the "Plan") is intended to provide a method whereby
employees of North American Scientific Inc. (the "Company") and its
Eligible Subsidiary Corporations (as defined below) will have an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of the Common Stock of the Company. It is the
intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The provisions of the Plan shall be construed in a
manner consistent with the requirements of that section of the Code.
ARTICLE II
DEFINITIONS
2.01 "COMPENSATION" shall mean the gross cash compensation (including wage,
salary and overtime earnings) paid by the Company or any Eligible
Subsidiary Corporation to a participant in accordance with the terms of
employment, but excluding all bonus payments, expense allowances,
nonqualified deferred compensation and compensation paid in a form other
than cash.
2.02 "COMMITTEE" shall mean the individuals described in Article XI.
2.03 "ELIGIBLE SUBSIDIARY CORPORATION" shall mean any present or future
corporation which (i) is or becomes a "subsidiary corporation" of North
American Scientific Inc., as that term is defined in Section 424 of the
Code, and (ii) is designated as a participating employer in the Plan by
the Committee on Schedule 2.03 hereto.
2.04 "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed by the Company or any Eligible Subsidiary
Corporation for at least twenty (20) hours per week and more than five
(5) months in a calendar year.
2.05 "OPTION" shall mean the right to purchase shares of Common Stock from the
Company at a price per share equal to the option price, as determined
under Section 6.02 below.
2.06 "PLAN REPRESENTATIVE" shall mean any person designated from time to time
by the Committee to receive certain notices and take certain other
administrative actions relating to participation in the Plan.
A-1
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 INITIAL ELIGIBILITY. Each Employee who shall have completed six
consecutive months of employment with the Company or any corporation or
entity acquired by the Company or any Eligible Subsidiary Corporation and
shall be employed by the Company or any Eligible Subsidiary Corporation
on the date his or her participation in the Plan is to become effective
shall be eligible to participate in Offerings (as defined below) under
the Plan which commence after such six-month period has concluded.
Persons who are not Employees shall not be eligible to participate in the
Plan.
3.02 RESTRICTIONS ON PARTICIPATION. Notwithstanding any provision of the Plan
to the contrary, no Employee shall be granted an option to purchase
shares of Common Stock under the Plan:
(a) if, immediately after the grant, such Employee would own stock and/or
hold outstanding options to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock of
the Company (for purposes of this paragraph, the rules of Section
424(d) of the Code shall apply in determining stock ownership of any
Employee); or
(b) which permits such Employee's rights to purchase stock under all
Employee stock purchase plans of the Company to accrue at a rate
which exceeds $25,000 of fair market value of the stock (determined
at the time such option is granted) for each calendar year in which
such Option is outstanding at any time.
3.03 COMMENCEMENT OF PARTICIPATION. An eligible Employee may become a
participant by completing an authorization for payroll deductions on the
form provided by the Company and filing the completed form with the Plan
Representative on or before the filing date set therefor by the
Committee, which date shall be prior to the Offering Commencement Date
(as defined below) for the next following Offering. Payroll deductions
for a participant shall commence on the next following Offering
Commencement Date after the Employee's authorization for payroll
deductions becomes effective and shall continue until termination of the
Plan or the participant's earlier termination of participation in the
Plan. Each participant in the Plan shall be deemed to continue
participation until termination of the Plan or such participant's earlier
termination of participation in the Plan pursuant to Article VIII below.
ARTICLE IV
STOCK SUBJECT TO THE PLAN AND OFFERINGS
4.01 STOCK SUBJECT TO THE PLAN. Subject to the provision of Section 12.04 of
the Plan, the Company's Board of Directors shall reserve initially for
issuance under the Plan an aggregate of three hundred thousand shares
(300,000) shares of the Company's common stock (the "Common Stock"),
which shares shall be authorized but unissued shares of Common Stock. The
Company's Board of Directors may from time to time reserve additional
shares of authorized and unissued Common Stock for issuance pursuant to
the Plan; provided, however, that at no time shall the number of shares
of Common Stock reserved be greater than permitted by applicable law.
Shares of Common
A-2
<PAGE>
Stock subject to the Plan may be newly issued shares or shares
reacquired in private transactions or open market purchases.
4.02 OFFERINGS. Except as described below with respect to the first year the
Plan is in effect, the Plan will be implemented by two annual offerings
of the Company's Common Stock each calendar year (the "Offerings"). In
each year that the Plan is in effect, the first Offering will begin on
January 1 and end on June 30, the second Offering will begin on July 1
and end on December 31. The first day of each Offering shall be deemed
the "Offering Commencement Date" and the last day the "Offering
Termination Date" for such Offering. The Committee reserves the right to
change the duration and frequency of offering periods without prior
shareholder approval.
ARTICLE V
PAYROLL DEDUCTIONS
5.01 AMOUNT OF DEDUCTION. The form described in Section 2.03 will permit a
participant to elect payroll deductions (after tax withholding) of zero
percent (0%) or any whole percentage from one percent (1%) through
fifteen percent (15%) of such participant's Compensation for each pay
period during an Offering.
5.02 PARTICIPANT'S ACCOUNT. All payroll deductions made for a participant
shall be credited to an account established for such participant under
the Plan. A participant may not make any separate cash payment into such
account.
5.03 CHANGES IN PAYROLL DEDUCTIONS. A participant may reduce or increase
future payroll deductions (within the limits described in Section 5.01)
by filing with the Plan Representative a form provided by the Company for
such purpose. Such a reduction or increase in future payroll deductions
may only be performed once per participant during an Offering. The
effective date of any increase or reduction in future payroll deductions
will be the first day of the next pay period succeeding processing of the
change form.
5.04 WITHHOLDING. At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the
Plan is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any,
which arise upon the exercise of the option or the disposition of the
Common Stock. At any time, the Company may, but shall not be obligated
to, withhold from the participant's compensation the amount necessary for
the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deduction
or benefits attributable to sale or early disposition of Common Stock by
the Employee.
ARTICLE VI
GRANTING OF OPTION
6.01 NUMBER OF OPTION SHARES. On the Offering Commencement Date, each
participating Employee shall be deemed to have been granted an option to
purchase a maximum number of shares of Common Stock on the Offering
Termination Date equal to (i) that percentage of the Employee's
Compensation which the Employee has elected to have withheld (but not in
any case in excess of
A-3
<PAGE>
15%) multiplied by (ii) the Employee's Compensation during the Offering
then divided by (iii) the applicable Option Price determined as provided
in Section 6.02 below.
6.02 OPTION PRICE. The option price of stock purchased with payroll deductions
made during any Offering (the "Offering Price") for a participant therein
shall be the lesser of:
(a) 85% of the closing price of the stock on the Offering Commencement
Date for such Offering or the nearest prior business day on which
trading occurred on the NASDAQ National Market System; or
(b) 85% of the closing price on the Offering Termination Date for such
Offering or the nearest prior business day on which trading occurred
on the NASDAQ National Market System. If the Common Stock of the
Company is not admitted to trading on any of the aforesaid dates for
which closing prices of the stock are to be determined, then
reference shall be made to the fair market value of the stock on each
such date, as determined on such basis as shall be established or
specified for the purpose by the Committee.
ARTICLE VII
EXERCISE OF OPTION
7.01 AUTOMATIC EXERCISE. Each Plan participant's option for the purchase of
stock with payroll deductions made during any Offering will be deemed to
have been exercised automatically on the applicable Offering Termination
Date for the purchase of the number of full shares of Common Stock which
the accumulated payroll deductions in the participant's account at the
time will purchase at the applicable Option Price (but not in excess of
the number of shares for which outstanding options have been granted to
the participant pursuant to Section 6.01).
7.02 FRACTIONAL SHARES. Fractional shares of Common Stock will not be issued
under the Plan. Any accumulated payroll deductions which would have been
used to purchase fractional shares, unless refunded pursuant to Section
8.01, will be held for the purchase of Common Stock in the next following
Offering, without interest.
7.03 EXERCISE OF OPTIONS. During a participant's lifetime, options held by
such participant shall be exercisable only by such participant and is not
transferable by such participant.
7.04 DELIVERY OF STOCK. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each
participant in such Offering, as appropriate, the shares of Common Stock
purchased therein upon exercise of such participant's option. The Company
may deliver such shares in certificated or book entry form, at the
Company's sole election.
7.05 STOCK TRANSFER RESTRICTIONS. The Plan is intended to satisfy the
requirements of Section 423 of the Code. A participant will not obtain
the tax benefits of Section 423 of the Code if such participant disposes
of shares of Common Stock acquired pursuant to the Plan within two (2)
years from the Offering Commencement Date or within one (1) year from the
date such Common Stock is purchased by the participant, whichever is
later (the "Notice Period."). Each participant shall notify the Committee
if the participant disposes of any of the shares purchased during an
Offering pursuant to this Plan if such disposition occurs within the
Notice Period. Unless such participant is disposing of any of such shares
during the Notice Period, such participant shall keep the certificates
representing such shares in his or her name (and not in the name of a
nominee) during the Notice
A-4
<PAGE>
Period. The Company may, at any time during the Notice Period, place a
legend or legends or any certificate representing shares acquired
pursuant to this Plan requesting the Company's transfer agent to
notify the Company of any transfer of the shares. The obligation of
the participant to provide such notice shall continue notwithstanding
the placement of any such legend on the certificates.
ARTICLE VIII
WITHDRAWAL/TERMINATION OF PARTICIPATION
8.01 IN GENERAL. A participant may stop participating in the Plan at any time
by giving written notice to the Plan Representative. Upon processing of
any such written notice, no further payroll deductions will be made from
the participant's Compensation during such Offering or thereafter, unless
and until such participant elects to resume participation in the Plan by
providing written notice to the Plan Representative pursuant to Section
3.03, above. A participant may withdraw all but not less than all of the
payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written
notice to the Company in the form of Schedule 8.01 to this Plan. If the
participant elects not to withdraw all (but not less than all) of his or
her payroll deductions credited to his or her account, the Employee's
funds in his or her account will be considered suspended and will be used
to purchase the Company's Common Stock on the next Offering Termination
Date and no further payroll deductions will be made under the Plan. If
the participant elects to withdraw all (but not less than all) of his or
her payroll deductions credited to his or her account, all of the
participant's payroll deductions credited to his or her account shall be
paid to such participant promptly after receipt of notice of withdrawal
and such participant's option for the current Offering shall be
automatically terminated, and no further payroll deductions for the
purchase of shares shall be made for such Offering. If a participant
withdraws from an Offering, payroll deductions shall not resume at the
beginning of the succeeding Offering unless the participant delivers to
the Company a new subscription agreement.
8.02 EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal from any
Offering will not have any effect upon such participant's eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company and for which such participant is
otherwise eligible. An approved leave of absence of less than ninety days
shall not be treated as a termination of employment.
8.03 TERMINATION OF EMPLOYMENT. Upon a participant's ceasing to be an Employee
for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's
account during the Offering but not yet used to exercise the option shall
be returned to such participant, or, in the case of his or her death, to
the person or persons entitled thereto under Section 12.01, and his or
her participation in the Plan shall be deemed to be terminated.
ARTICLE IX
INTEREST
9.01 PAYMENT OF INTEREST. No interest will be paid or allowed on any money
paid into the Plan or credited to the account of or distributed to any
participant Employee.
A-5
<PAGE>
ARTICLE X
STOCK
10.01 PARTICIPANT'S INTEREST IN OPTION STOCK. No participant will have any
interest in shares of Common Stock covered by any option held by such
participant until such option has been exercised as provided in Section
7.01 above.
10.02 REGISTRATION OF STOCK. Shares of Common Stock purchased by a participant
under the Plan will be registered in the name of the participant, or, if
the participant so directs by written notice to the Plan Representative
prior to the Offering Termination Date applicable thereto, in the names
of the participant and one such other person as may be designated by the
participant, as joint tenants with rights of survivorship or as tenants
by the entireties, to the extent permitted by applicable law.
10.03 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its discretion,
require as condition to the exercise of any option that the shares of
Common Stock reserved for issuance upon the exercise of such option
shall have been duly listed, upon official notice of issuance, upon a
stock exchange or market, and that either:
(a) a registration statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase, in
form and substance satisfactory to the Company, that it is his or
her intention to purchase the shares for investment and not for
resale or distribution.
ARTICLE XI
ADMINISTRATION
11.01 APPOINTMENT OF COMMITTEE. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed
committee of the Board having such powers as shall be specified by the
Board. Any subsequent references to the Board shall also mean the
committee if a committee has been appointed.
11.02 AUTHORITY OF BOARD. Subject to the express provisions of the Plan, the
Board shall have plenary authority in its discretion to interpret and
construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other
determinations deemed necessary or advisable for administering the Plan.
The Board's determination of the foregoing matters shall be conclusive.
The Board may request advice or assistance or employ such other persons
as it in its absolute discretion deems necessary or appropriate for the
proper administration of the Plan, including but not limited to
employing a brokerage firm, bank, or other financial institution to
assist in the purchase of shares, delivery of reports, or other
administrative aspects of the Plan. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.
A-6
<PAGE>
ARTICLE XII
MISCELLANEOUS
12.01 DESIGNATION OF BENEFICIARY. A participant may file with the Plan
Representative a written designation of a beneficiary who is to receive
any shares of Common Stock and/or cash under the Plan upon the
participant's death. Such designation of beneficiary may be changed by
the participant at any time by written notice to the Plan
Representative. Upon the death of a participant and receipt by the
Company of proof of identity and existence at the participant's death of
a beneficiary validly designated by the participant under the Plan, and
subject to Article VIII, above, concerning withdrawal from the Plan, the
Company shall deliver such shares of Common Stock and/or cash to such
beneficiary. In the event of the death of a participant lacking a
beneficiary validly designated under the Plan who is living at the time
of such participant's death, the Company shall deliver such shares of
Common Stock and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares of Common Stock and/or cash to the
spouse or to any one or more dependents of the participant, in each case
without any further liability of the Company whatsoever under or
relating to the Plan. No beneficiary shall, prior to the death of the
participant by whom he or she has been designated, acquire any interest
in the shares of Common Stock and/or cash credited to the participant
under the Plan.
12.02 TRANSFERABILITY. Neither payroll deductions credited to any
participant's account nor any option or rights with regard to the
exercise of an option or to receive Common Stock under the Plan may be
assigned, transferred, pledged, or otherwise disposed of in any way by
the participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may, in its
discretion, treat such act as an election to withdraw from participation
in the Plan in accordance with Section 8.01.
12.03 USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose. The
Company shall not be obligated to segregate such payroll deductions.
12.04 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding under the Plan, the
outstanding shares of Common Stock of the Company have increased,
decreased, changed into, or been exchanged for a different number
or kind of shares or securities of the Company through any
reorganization, merger, recapitalization, reclassification, stock
split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the
number and/or kind of shares which are subject to purchase under
outstanding options and in the Option Price or Prices applicable
to such outstanding options. In addition, in any such event, the
number and/or kind of shares which may be offered in the Offerings
described in Article IV hereof shall also be proportionately
adjusted. No such adjustments shall be made for or in respect of
stock dividends. For purposes of this paragraph, any distribution
of shares of Common Stock to shareholders in an amount aggregating
20% or more of the outstanding shares of Common Stock shall be
deemed a stock split, and any distribution of shares aggregating
less than 20% of the outstanding shares of Common Stock shall be
deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or
more corporation as a result of which the Company is
A-7
<PAGE>
not the surviving corporation, or upon a sale of substantially all
of the property or capital stock of the Company to another
corporation, the holder of each option then outstanding under the
Plan will thereafter be entitled to receive at the next Offering
Termination Date, upon the exercise of such option, for each share
as to which such option shall be exercised, as nearly as
reasonably may be determined, the cash, securities and/or property
which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of
Directors shall take such steps in connection with such
transactions as the Board shall deem necessary to assure that the
provisions of this Section 12.04 shall thereafter be applicable,
as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which each such holder of
any such option might hereafter be entitled to receive.
12.05 AMENDMENT AND TERMINATION. The Board of Directors shall have complete
power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the
shareholders of the Company, alter (i) the aggregate number of shares of
Common Stock which may be issued under the Plan (except pursuant to
Section 12.04 above) or (ii) the class of employees eligible to receive
options under the Plan, other than to designate additional Eligible
Subsidiary Corporations; and provided further, however, that no
termination, modification, or amendment of the Plan may, without the
consent of an Employee then having an option under the Plan to purchase
shares of Common Stock, adversely affect the rights of such Employee
under such option.
12.06 TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the
stockholders of the Company, provided that stockholder approval occurs
within one year of the adoption of this Plan. It shall continue in
effect for a term of ten (10) years unless sooner terminated under
Section 12.05 herein.
12.07 NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly, create
in any person any right with respect to continuation of employment by
the Company or any Subsidiary Corporation, and it shall not be deemed to
interfere in any way with the Company's or any Subsidiary Corporation's
right to terminate, or otherwise modify, any employee's employment at
any time.
12.08 REPORTS. Individual accounts shall be maintained for each participant in
the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the
amounts of payroll deductions, the purchase price, the number of shares
purchased and the remaining cash balance, if any.
12.09 COMPANY POLICY PROHIBITING INSIDER TRADING. Nothing in this Plan shall
be construed to replace, supersede, nullify, amend, or eliminate the
Company's "Statement of Policy Requiring Confidentiality and Prohibiting
`Insider Trading.'" Accordingly, all participants in the Plan shall be
prohibited from trading in Company Common Stock during the period
commencing on the twenty-fifth day of the last month of each calendar
quarter and through the second business day following the public release
of such prior quarter's earnings results.
12.10 EFFECT OF PLAN. The provisions of the Plan shall, in accordance with its
terms, be binding upon, and inure to the benefit of, all successors of
each Employee participating in the Plan, including, without limitation,
such Employee's estate and the executors, administrators or trustees
thereof, heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such Employee.
12.11 GOVERNING LAW. The law of the State of California will govern all
matters relating to this Plan except to the extent superseded by the
federal laws of the United States.
A-8
<PAGE>
NORTH AMERICAN SCIENTIFIC, INC.
20200 SUNBURST STREET
CHATSWORTH, CA 91311
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 2000 Annual Meeting of Stockholders of North American Scientific, Inc. (the
"Company") to be held at the Warner Center Marriott located at 21850 Oxnard
Street, Woodland Hills, California 91367 at 10:00 a.m. local time, on Friday,
March 24, 2000, or at any adjournment or postponement 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 WITHHOLD AUTHORITY / /
crossed out) / /
Irwin J. Gruverman L. Michael Cutrer Larry Berkin
Dr. Allan M. Green Michael C. Lee
2. FOR approval of the Company's 2000 Employee Stock Purchase Plan and the
reservation of 300,000 shares of Common Stock for the issuance thereunder.
FOR / / AGAINST / / ABSTAIN / /
3. FOR ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending October 31, 2000.
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 21, 2000)
Management recommends your vote FOR all proposals.
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
COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN AND THE RESERVATION OF 300,000
SHARES OF COMMON STOCK FOR ISSUANCE 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 21, 2000, as well as a copy of the Company's Annual
Report for the fiscal year ended October 31, 1999.
Dated: __________________, 2000.
--------------------------------------------
--------------------------------------------
(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.
