Exhibit 10.1

 

IMPAC MEDICAL SYSTEMS, INC.

 

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement (the “Agreement”) is made and entered
into effective as of January 17, 2005 (the “Effective Date”), by and between
Kendra Borrego (the “Employee”) and IMPAC Medical Systems, Inc., a Delaware
corporation (the “Company”). Certain capitalized terms used in this Agreement
are defined in Section 1 below.

 

R E C I T A L S

 

A. It is expected that the Company from time to time will consider the
possibility of a Change of Control. The Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a distraction to the Employee
and can cause the Employee to consider alternative employment opportunities.

 

B. The Board believes that it is in the best interests of the Company and its
shareholders to provide the Employee with an incentive to continue her
employment and to maximize the value of the Company upon a Change of Control for
the benefit of its shareholders.

 

C. In order to provide the Employee with enhanced financial security and
sufficient encouragement to remain with the Company notwithstanding the
possibility of a Change of Control, the Board believes that it is imperative to
provide the Employee with certain severance benefits upon the Employee’s
termination of employment following a Change of Control.

 

AGREEMENT

 

In consideration of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as follows:

 

1. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:

 

(a) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with her responsibilities as an employee which is
intended to result in substantial personal enrichment of the Employee, (ii)
Employee’s conviction of a felony which the Board reasonably believes has had or
will have a material detrimental effect on the Company’s reputation or business,
(iii) a willful act by the Employee which constitutes misconduct and is
injurious to the Company, and (iv) continued willful violations by the Employee
of the Employee’s obligations to the Company after there has been delivered to
the Employee a written demand for performance from the Company which describes
the basis for the Company’s belief that the Employee has not substantially
performed her duties.

 

(b) Change of Control. “Change of Control” shall mean the occurrence of any of
the following events:

 

(i) the approval by shareholders of the Company of a merger or consolidation of
the Company with any other corporation, other than a merger or

--------------------------------------------------------------------------------

consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;

 

(ii) any approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets;

 

(iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities; or

 

(iv) a change in the composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transaction described in subsections
(i), (ii) or (iii) or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.

 

(c) Compensation Continuation Period. “Compensation Continuation Period” shall
mean the period of time commencing with termination of the Employee’s employment
as a result of Involuntary Termination at any time within twelve (12) months
after a Change of Control and ending with the date six (6) months following the
date of the Employee’s termination.

 

(d) Involuntary Termination. “Involuntary Termination” shall mean (i) without
the Employee’s express written consent, a significant reduction of the
Employee’s duties, position or responsibilities relative to the Employee’s
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee’s express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Employee immediately prior to such reduction; (iii) a reduction by the
Company of the Employee’s base salary or target bonus as in effect immediately
prior to such reduction; (iv) a material reduction by the Company in the kind or
level of employee benefits to which the Employee is entitled immediately prior
to such reduction with the result that the Employee’s overall benefits package
is significantly reduced; (v) without the Employee’s express written consent,
the relocation of the Employee to a facility or a location more than fifty (50)
miles from her current location; (vi) any purported termination of the Employee
by the Company which is not effected for Cause or for which the grounds relied
upon are not valid; or (vii) the failure of the Company to obtain the assumption
of this Agreement by any successors contemplated in Section 6 below.

 

-2-

--------------------------------------------------------------------------------

2. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the parties hereto under this Agreement have been satisfied.

 

3. At-Will Employment. The Company and the Employee acknowledge that the
Employee’s employment is and shall continue to be at-will, as defined under
applicable law. If the Employee’s employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee benefit plans or policies
at the time of termination.

 

4. Change of Control and Severance Benefits.

 

(a) Termination Following A Change of Control.

 

(i) Severance Payments. If the Employee’s employment with the Company terminates
as a result of an Involuntary Termination at any time within twelve (12) months
after a Change of Control, then the Employee shall be entitled to receive
continuing payments of severance pay during the Compensation Continuation Period
at a rate equal to one hundred (100)% of the Employee’s base salary (as in
effect immediately prior to the Change of Control). Such severance payments
shall be paid bi-weekly in accordance with the Company’s normal payroll
practices. In addition, during the Compensation Continuation Period, the Company
shall continue to make available to the Employee and Employee’s spouse and
dependents covered under any group health plans or life insurance plans of the
Company on the date of such termination of employment, all group health, life
and other similar insurance plans in which Employee or such Covered Dependents
participate on the date of the Employee’s termination.

 

(ii) Option Acceleration. If the Employee’s employment with the Company
terminates as a result of an Involuntary Termination at any time within twelve
(12) months after a Change of Control, then each option granted to the Employee
by the Company (the “Options”) shall immediately become vested and exercisable
in full.

 

(iii) Conditions. All payments and benefits provided under this Section 4 are
conditioned on Employee’s continuing compliance with this Agreement and the
Company’s policies and Employee’s execution of a release of claims and covenant
not to sue substantially in the form provided in Exhibit A upon termination of
employment.

 

(iv) Other Termination. If the Employee’s employment with the Company terminates
other than as a result of an Involuntary Termination at any time within twelve
(12) months after a Change of Control, then the Employee shall not be entitled
to receive severance or other benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company’s then existing
severance and benefits plans and policies at the time of such termination.

 

(b) Termination Apart from a Change of Control. If the Employee’s employment
with the Company terminates for any or no reason other than within twelve (12)
months following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company’s then existing
severance and benefits plans and policies at the time of such termination.

 

-3-

--------------------------------------------------------------------------------

(c) Accrued Wages and Vacation; Expenses. Without regard to the reason for, or
the timing of, Employee’s termination of employment: (i) the Company shall pay
the Employee any unpaid base salary due for periods prior to the date of
termination; (ii) the Company shall pay the Employee all of the Employee’s
accrued and unused vacation through the date of termination; and (iii) following
submission of proper expense reports by the Employee, the Company shall
reimburse the Employee for all expenses reasonably and necessarily incurred by
the Employee in connection with the business of the Company prior to the date of
termination. These payments shall be made promptly upon termination and within
the period of time mandated by law.

 

5. Successors.

 

(a) Company’s Successors. Any successor (whether direct or indirect and whether
by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets, shall be obligated to
perform this Agreement in the same manner and to the same extent as the Company
would be required to perform it in the absence of a succession.

 

(b) Employee’s Successors. Without the written consent of the Company, Employee
shall not assign or transfer this Agreement or any right or obligation under
this Agreement to any other person or entity. Notwithstanding the foregoing, the
terms of this Agreement and all rights of Employee hereunder shall inure to the
benefit of, and be enforceable by, Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.

 

6. Notices.

 

(a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return receipt
requested and postage prepaid. In the case of the Employee, mailed notices shall
be addressed to him at the home address that she most recently communicated to
the Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.

 

(b) Notice of Termination. Any termination by the Company for Cause or by the
Employee as a result of a voluntary resignation or an Involuntary Termination
shall be communicated by a notice of termination to the other party hereto given
in accordance with this Section. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated. The failure by the Employee to
include in the notice any fact or circumstance which contributes to a showing of
Involuntary Termination shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstance in enforcing her
rights hereunder.

 

-4-

--------------------------------------------------------------------------------

7. Arbitration.

 

(a) Any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof, shall be settled by binding arbitration to be
held in San Francisco, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the “Rules”). The arbitrator may grant injunctions or other relief
in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be
entered on the arbitrator’s decision in any court having jurisdiction.

 

(b) The arbitrator(s) shall apply California law to the merits of any dispute or
claim, without reference to conflicts of law rules. The arbitration proceedings
shall be governed by federal arbitration law and by the Rules, without reference
to state arbitration law. Employee hereby consents to the personal jurisdiction
of the state and federal courts located in California for any action or
proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.

 

(c) Employee understands that nothing in this Section modifies Employee’s
at-will employment status. Either Employee or the Company can terminate the
employment relationship at any time, with or without cause.

 

(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.
EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR
IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION
TO THE EXTENT PERMITTED BY LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

 

(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT,
BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

 

(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE,
INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE
CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE
AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et seq;

 

-5-

--------------------------------------------------------------------------------

(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING
TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

 

8. Miscellaneous Provisions.

 

(a) No Duty to Mitigate. The Employee shall not be required to mitigate the
amount of any payment contemplated by this Agreement, nor shall any such payment
be reduced by any earnings that the Employee may receive from any other source.

 

(b) Waiver. No provision of this Agreement may be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed
by the Employee and by an authorized officer of the Company (other than the
Employee). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

 

(c) Integration. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersede
all prior or contemporaneous agreements, whether written or oral.

 

(d) Choice of Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.

 

(e) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(f) Employment Taxes. All payments made pursuant to this Agreement shall be
subject to withholding of applicable income and employment taxes.

 

(g) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together will constitute one and
the same instrument.

 

(h) Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the parties
hereto, with the full intent of releasing all claims. Employee acknowledges
that:

 

(i) She has read this Agreement;

 

(ii) She has been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of her own choice or that she has voluntarily
declined to seek such counsel;

 

(iii) She understands the terms and consequences of this Agreement and of the
releases it contains;

 

-6-

--------------------------------------------------------------------------------

(iv) She is fully aware of the legal and binding effect of this Agreement.

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.

 

COMPANY:   IMPAC MEDICAL SYSTEMS, INC.     By:  

/s/ Joseph K. Jachinowski

--------------------------------------------------------------------------------

    Title:   Chief Executive Officer EMPLOYEE:      

/s/ Kendra Borrego

--------------------------------------------------------------------------------

        Kendra Borrego

 

-7-

--------------------------------------------------------------------------------

EXHIBIT A

 

Form of Release of Claims and Covenant Not To Sue

 

In consideration of the payments and other benefits that IMPAC Medical Systems,
Inc. (the “Company”) is providing to Kendra Borrego (“Employee”) under the
Change in Control Severance Agreement entered into by and between Employee and
the Company, dated January 17, 2005, the Employee, on his/her own behalf and on
behalf of Employee’s representatives, agents, heirs and assigns, waives,
releases, discharges and promises never to assert any and all claims, demands,
actions, costs, rights, liabilities, damages or obligations of every kind and
nature, whether known or unknown, suspected or unsuspected that Employee ever
had, now have or might have as of the date of Employee’s termination of
employment with the Company against the Company or its predecessors, parent,
affiliates, subsidiaries, stockholders, owners, directors, officers, employees,
agents, attorneys, insurers, successors, or assigns (including all such persons
or entities that have a current and/or former relationship with the Company) for
any claims arising from or related to Employee’s employment with the Company,
its parent or any of its affiliates and subsidiaries and the termination of that
employment.

 

These released claims also specifically include, but are not limited to, any
claims arising under any federal, state and local statutory or common law, such
as (as amended and as applicable) Title VII of the Civil Rights Act, the Age
Discrimination in Employment Act, the Americans With Disabilities Act, the
Employee Retirement Income Security Act, the Family Medical Leave Act, the Equal
Pay Act, the Fair Labor Standards Act, the Industrial Welfare Commission’s
Orders, the California Fair Employment and Housing Act, the California
Constitution, the California Government Code, the California Labor Code and any
other federal, state or local constitution, law, regulation or ordinance
governing the terms and conditions of employment or the termination of
employment, and the law of contract and tort and any claim for attorneys’ fees.

 

Furthermore, the Employee acknowledges that this waiver and release is knowing
and voluntary and that the consideration given for this waiver and release is in
addition to anything of value to which Employee was already entitled. Employee
acknowledges that there may exist facts or claims in addition to or different
from those which are now known or believed by Employee to exist. Nonetheless,
this Agreement extends to all claims of every nature and kind whatsoever,
whether known or unknown, suspected or unsuspected, past or present. Employee
also expressly waives the provisions of California Civil Code section 1542,
which provides: “A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of executing the
release, which if known by him/her must have materially affected his settlement
with the debtor.” With respect to the claims released in the preceding
sentences, the Employee will not initiate or maintain any legal or
administrative action or proceeding of any kind against the Company or its
predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors,
officers, employees, agents, successors, or assigns (including all such persons
or entities that have a current or former relationship with the Company), for
the purpose of obtaining any personal relief, nor assist or participate in any
such proceedings, including any proceedings brought by any third parties (except
as otherwise required or permitted by law). The Employee further acknowledges
that he/she has been advised by this writing that:

 

  • he/she should consult with an attorney prior to executing this release;

--------------------------------------------------------------------------------

  • he/she has at least twenty-one (21) days within which to consider this
release;

 

  • he/she has up to seven (7) days following the execution of this release by
the parties to revoke the release; and

 

  • this release shall not be effective until such seven (7) day revocation
period has expired.

 

Employee agrees that the release set forth above shall be and remain in effect
in all respects as a complete general release as to the matters released.

 

EMPLOYEE

 

 

--------------------------------------------------------------------------------

Date:

--------------------------------------------------------------------------------

 

-2-