Exhibit 10.4

 

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (“Agreement”) is entered into and effective as
of September 21, 2017 (“Effective Date”), by and between Accuray Incorporated, a
Delaware corporation (the “Company”), and Shigeyuki Hamamatsu (“Employee”).

 

RECITALS

 

A.                                    It is possible that the Company from time
to time may consider an acquisition by another company or other Change in
Control (as defined herein).

 

B.                                    The Company recognizes that such
consideration can be a distraction to Employee and has determined that it is
advisable to secure the continued dedication of Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined herein) of
the Company.

 

C.                                    The Compensation Committee of the
Company’s Board of Directors has adopted resolutions approving the provision of
certain benefits to Employee upon a Change in Control to enhance Employee’s
financial incentive to remain with the Company.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      Term.

 

(a)                                 Term of Agreement.  This Agreement will have
an initial term commencing on the Effective Date and ending on December 31, 2020
(the “Initial Term”).  Thereafter, this Agreement will renew automatically for
additional three (3) year terms (such additional terms together with the Initial
Term, the “Term”), unless either party provides the other party with written
notice of non-renewal at least sixty (60) days prior to the date of automatic
renewal; provided, however, that if the Company enters into a definitive
agreement to be acquired and the transactions contemplated thereby would result
in the occurrence of a Change in Control (as defined below) if consummated, then
the Company will no longer be permitted to provide Employee with written notice
to not renew this Agreement unless such definitive agreement is terminated
without the Change in Control being consummated.  If the Change in Control is
consummated, the Agreement will continue in effect through the longer of the
date that is twelve (12) months following the effective date of the Change in
Control or the remainder of the Term then in effect (for purposes of
clarification, it will be possible for the Term of the Agreement to
automatically extend after the Company enters into the definitive agreement, but
before the Change in Control is consummated).  If the definitive agreement is
terminated without the transactions contemplated thereby having been consummated
and at the time of such termination there is at least twelve (12) months
remaining in the Term, the Agreement will continue in effect for the remainder
of the Term then in effect, but if there is less than twelve (12) months
remaining in the Term then in effect, the Agreement will automatically extend
for an additional three (3) years from the date the definitive agreement is
terminated.  If Employee becomes entitled to benefits under Section 2 during the
term of this Agreement, the Agreement will not terminate until all of the
obligations of the parties hereto with respect to this Agreement have been
satisfied.

 

(b)                                 At-Will Employment.  The Company and
Employee acknowledge that, notwithstanding the foregoing, Employee’s employment
is and will continue to be at-will, as defined under applicable law. As an
at-will employee, either the Company or the Employee may terminate the
employment relationship at any time, with or without cause; provided, however,
that in connection with

 

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such termination, the Company will provide Employee with any applicable benefits
under Section 2 to which Employee is entitled, all in accordance with the terms
and conditions thereof.

 

2.                                      Termination of Employment upon a Change
in Control.

 

(a)                                 If the Company terminates Employee’s
employment with the Company without Cause (as defined below) (excluding due to
Employee’s death or Incapacity (as defined below)) or if Employee resigns from
such employment for Good Reason (as defined below), and, in each case, such
termination occurs during the Change in Control Period (as defined below),
Employee will be entitled to the Accrued Benefits and, if Employee executes a
separation agreement and general release in form and substance acceptable to the
Company (the “Release”) and the same becomes irrevocable pursuant to its terms
within the 60-day period following Employee’s termination of employment,
Employee will also be eligible to receive:

 

(i)                                     payment of the equivalent of Employee’s
base salary without regard to any reduction that would otherwise constitute Good
Reason that Employee would have earned over the next twelve (12) months
following the termination date (less necessary withholdings and authorized
deductions) at Employee’s then-current base salary rate, payable in a lump sum
on the first regularly scheduled payroll date following the date the Release
becomes effective and irrevocable (the “Release Effective Date”), but in any
event within ten (10) business days of the Release Effective Date and subject to
Section 13 below;

 

(ii)                                  subject to Section 2(c), the reimbursement
of insurance premiums payable to retain group health coverage as of the
termination date for himself/herself and his/her eligible dependents pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”) for twelve
(12) months or the maximum period of COBRA coverage, whichever is less; provided
that Employee must submit a reimbursement request in accordance with Company
policy within thirty (30) days of paying such insurance premiums.  The Company
will reimburse Employee within thirty (30) days of receiving a properly
submitted request. In addition, if Employee accepts other employment within such
twelve (12) months, the Company’s obligation under this Section 2(a)(ii) shall
be extinguished as of the date Employee becomes covered under the group health
plan of his new employer;

 

(iii)                               one hundred percent (100%) of Employee’s
target bonus for the fiscal year during which termination occurs, payable at the
same time as the payment under Section 2(a)(i); and

 

(iv)                              the immediate vesting of all of Employee’s
previously granted outstanding unvested equity awards.

 

(b)                                 For the avoidance of doubt, if Employee’s
termination without Cause (excluding due to Employee’s death or Incapacity) or
resignation for Good Reason occurs prior to a Change in Control, then any
unvested portion of Employee’s outstanding equity awards will remain outstanding
until the earlier of (i) the date that is three (3) months following the
termination of Employee’s termination or (ii) the date that a Change in Control
occurs (provided that in no event will any of Employee’s equity awards remain
outstanding beyond the equity award’s maximum term to expiration).  In the event
that a Change in Control does not occur by the date that is three (3) months
following the termination of Employee’s employment, any unvested portion of
Employee’s equity awards automatically will be forfeited permanently without
having vested. Further, for any equity awards that are scheduled to vest based
on the achievement of performance-based conditions (which may include additional
service-based conditions), the performance-based vesting component of such
awards shall not be deemed to be automatically achieved as a result of the
application of Section 2(a)(iv) but will remain outstanding during the three
(3) month period following Employee’s termination or through the date of the
Change in Control, as

 

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applicable, to determine whether a Change in Control would have occurred within
three (3) months of the termination of Employee’s employment and, if so, the
extent to which the performance condition is achieved, such determination to be
made in accordance with the procedures set forth in the applicable award
agreement.  If the performance condition is satisfied and that would cause the
award to become eligible to vest based on continued service, then
Section 2(a)(iv) will cause the service-based vesting component to be deemed
satisfied and the vesting of the equity award will be accelerated as to the
portion of the award that became eligible to vest.  For clarity, if there is no
service-based condition that applies with respect to any portion of such equity
award upon such satisfaction of the performance condition, such portion of the
equity award will immediately vest upon such satisfaction of the performance
condition.

 

(c)                                  If the Company determines in its sole
discretion that it cannot make the COBRA reimbursements under
Section 2(a)(ii) (the “COBRA Reimbursements”) without potentially violating
applicable law (including, without limitation, Section 2716 of the Public Health
Service Act), the Company will in lieu thereof provide to Employee a taxable
monthly payment, payable on the last day of a given month, in an amount equal to
the monthly COBRA premium that the Employee would be required to pay to continue
the Employee’s group health coverage in effect on the termination of employment
date (which amount will be based on the premium for the first month of COBRA
continuation coverage), which payments will be made regardless of whether the
Employee elects COBRA continuation coverage and will commence on the month
following the Employee’s termination of employment and will end on the earlier
of (x) the date upon which the Employee obtains other employment or (y) the date
the Company has paid an amount equal to 12 payments pursuant to
Section 2(a)(ii). For the avoidance of doubt, such taxable payments in lieu of
COBRA Reimbursements (the “COBRA Substitute Payments”) may be used for any
purpose, including, but not limited to continuation coverage under COBRA, and
will be subject to all applicable tax withholding.

 

3.                                      Certain Definitions.  As used in this
Agreement, the following terms shall have the following meanings:

 

(a)                                 “Accrued Benefits” shall mean the following
with respect to Employee:

 

(i)                                     continued coverage under the Company’s
insurance benefit plans through the employment termination date and such other
benefits to which Employee may be entitled pursuant to the Company’s benefit
plans, provided, however, that Employee shall not participate in any severance
plan of the Company;

 

(ii)                                  payment of all earned but unpaid
compensation (including accrued unpaid vacation) through the effective date of
termination, payable on or before the termination date; and

 

(iii)                               reimbursement of expenses incurred on or
before the termination date in accordance with the Company’s policies, if a
request for reimbursement of the expenses was timely submitted to the Company.

 

(b)                                 “Cause” shall mean any of the following
conduct by Employee:  (i) material breach of this Agreement, the employment
offer letter between the Company and Employee, any confidentiality or invention
assignment agreement between the Company and Employee, or of a Company policy or
of a law, rule or regulation applicable to the Company or its operations;
(ii) demonstrated and material neglect of duties, or failure or refusal to
perform the material duties of his/her position, or the failure to follow the
reasonable and lawful instructions of the Company; (iii) gross misconduct or
dishonesty, self-dealing, fraud or similar conduct that the Company reasonably
determines has caused, is causing or reasonably is likely to cause harm to the
Company; or (iv) conviction of or plea of guilty or nolo contendere to any

 

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crime other than a traffic offense that is not punishable by a sentence of
incarceration.  Termination pursuant to Section 3(b)(ii) shall be deemed to be
for Cause only if such failure continues after Employee has been given written
notice thereof and fifteen (15) business days thereafter in which to present
his/her position to the Company or to cure the same, unless the Company
reasonably determines that the reason(s) for termination are not capable of
being cured.  In the event of termination for Cause, Employee will be entitled
only to the Accrued Benefits through the termination date, which will be the
date on which the notice is given.  The Company will have no further obligation
to pay any compensation of any kind (including without limitation any bonus or
portion of a bonus that otherwise may have become due and payable to Employee
with respect to the year in which such termination date occurs), or severance
payment of any kind nor to make any payment in lieu of notice.

 

(c)                                  “Change in Control” shall mean any of the
following events:

 

(i)                                     the acquisition by any Group or Person
(as such terms are defined in Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)), other than (A) a trustee or other
fiduciary holding securities of the Company under an employee benefit plan of
the Company or (B) an entity in which the Company directly or indirectly
beneficially owns fifty percent (50%) or more of the voting securities of such
entity (an “Affiliate”), of any securities of the Company, immediately after
which such Group or Person has beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more of
(X) the outstanding shares of Common Stock or (Y) the combined voting power of
the Company’s then outstanding securities entitled to vote generally in the
election of directors;

 

(ii)                                  the Company (and/or its subsidiaries) is a
party to a merger or consolidation with a Person other than an Affiliate, which
merger or consolidation results in (a) the holders of voting securities of the
Company outstanding immediately before such merger or consolidation failing to
continue to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity) fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the
corporation or entity resulting from or surviving such merger or consolidation
or (b) individuals who are directors of the Company just prior to such merger or
consolidation not constituting more than fifty percent (50%) of the members of
the Board of Directors of the surviving entity or corporation immediately after
the consummation of such merger or consolidation; or

 

(iii)                               all or substantially all of the assets of
the Company and its subsidiaries are, in any transaction or series of
transactions, sold or otherwise disposed of (or consummation of any transaction,
or series of related transactions, having similar effect), other than to an
Affiliate;

 

provided, however, that in no event shall a “Change in Control” be deemed to
have occurred for purposes of this Agreement solely because the Company engages
in an internal reorganization, which may include a transfer of assets to, or a
merger or consolidation with, one or more Affiliates. Additionally, with respect
to the payment of any “nonqualified deferred compensation” within the meaning of
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), that
is not exempt from section 409A of the Code, no event shall constitute a Change
in Control unless it also constitutes a change in the ownership of the Company
(as defined in Treasury Regulation section 1.409A-3(i)(5)(v)), a change in
effective control of the Company (as defined in Treasury Regulation section
1.409A-3(i)(5)(vi)), or a change in the ownership of a substantial portion of
the assets of the Company (as defined in Treasury Regulation section
1.409A-3(i)(5)(vii)).

 

(iv)                              “Change in Control Period” shall mean the
period beginning three (3) months prior to, and ending twelve (12) months
following, a Change in Control.

 

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(v)                                 “Good Reason” shall mean any the occurrence
of any one of the following without Employee’s written consent: (i) a material
reduction in Employee’s base salary; (ii) any action or inaction that
constitutes a material breach by the Company of this Agreement or the employment
offer letter between the Company and Employee; (iii) a material diminution in
Employee’s authority, duties or responsibilities such that they are materially
inconsistent with his/her position as VP, Finance & Chief Accounting Officer;
and (iv) relocation of the Company’s headquarters to a location that materially
increases Employee’s commute, provided that no termination for Good Reason shall
be effective until Employee has given the Company written notice (pursuant to
Section 9 below) within sixty (60) days after Employee becomes aware of the
initial occurrence of any of the foregoing specifying the event or condition
constituting the Good Reason and the specific reasonable cure requested by
Employee, and the Company has failed to cure the occurrence within thirty (30)
days of receiving written notice from Employee, and Employee resigns within
six (6) months after Employee becomes aware of the initial occurrence.

 

(vi)                              “Incapacity” shall mean if Employee becomes
unable, due to physical or mental illness or injury, to perform the essential
duties of Employee’s position for more than twelve (12) consecutive weeks in any
twelve (12) month period during this Agreement with or without reasonable
accommodation.

 

4.                                      Non-Solicitation.

 

(a)                                 Non-Solicitation of Customers and Other
Business Partners.  Employee recognizes that by virtue of Employee’s employment
with the Company, Employee may be introduced to and involved in the solicitation
and servicing of existing customers and other business partners of the Company
and new customers and business partners obtained by the Company during
Employee’s employment.  Employee understands and agrees that all efforts
expended in soliciting and servicing such customers and business partners shall
be for the benefit of the Company.  Employee further agrees that during
Employee’s employment with the Company, Employee will not engage in any conduct
which could in any way jeopardize or disturb any of the customer and business
partner relationships of the Company.  In addition, to the extent permitted
under applicable law, Employee agrees that, for a period beginning on Employee’s
hire date and ending twelve (12) months after termination of Employee’s
employment with the Company, regardless of the reason for such termination,
Employee shall not use any Company confidential or proprietary information to,
directly or indirectly, solicit, direct, interfere with, or entice away from the
Company any existing customer, licensee, licensor, vendor, contractor or
distributor of the Company or for the customer or other business partner to
expand its business with a competitor, without the prior written consent of the
Company; provided, however, that if Employee is or becomes a permanent resident
of the state of California and remains such a permanent resident through the
date of termination of Employee’s employment, this Section 4(a) shall not apply
following the termination of Employee’s employment with the Company.

 

(b)                                 Non-Solicitation of Employees.  Employee
recognizes the substantial expenditure of time and effort which the Company
devotes to the recruitment, hiring, orientation, training and retention of its
employees.  Accordingly, Employee agrees that, for a period beginning on the
Employee’s hire date and ending twelve (12) months after termination of
Employee’s employment with the Company, regardless of the reason for such
termination, Employee shall not use any Company confidential or proprietary
information, directly or indirectly, for himself or on behalf of any other
person or entity, solicit, offer employment to, hire or otherwise retain the
services of any employee of the Company in a position classified as exempt from
overtime pay requirements.  For purposes of the foregoing, “employee of the
Company” shall include any person who was an employee of the Company at any time
within six (6) months prior to the prohibited conduct.

 

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5.                                      Interpretation, Governing Law and
Exclusive Forum.  The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of California
(excluding any that mandate the use of another jurisdiction’s laws).  Any
arbitration (unless otherwise mutually agreed), litigation or similar proceeding
with respect to such matters only may be brought within Santa Clara County,
California, and all parties to this Agreement consent to California’s
jurisdiction.

 

6.                                      Entire Agreement.  All oral or written
agreements or representations, express or implied, with respect to the subject
matter of this Agreement are set forth in this Agreement.

 

7.                                      Severability.  In the event that one or
more of the provisions contained in this Agreement are held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such holding shall not impair the validity, legality or enforceability of the
remaining provisions herein.

 

8.                                      Successors and Assigns.  This Agreement
shall be binding upon, and shall inure to the benefit of, Employee and his/her
estate, but Employee may not assign or pledge this Agreement or any rights
arising under it, except to the extent permitted under the terms of the benefit
plans in which he/she participates.  No rights or obligations of the Company
under this Agreement may be assigned or transferred except that the Company
shall require any successor (whether direct or indirect, by purchase, merger,
reorganization, sale, transfer of stock, consideration or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no succession had
taken place.  As used in this Agreement, “Company” means the Company as
hereinbefore defined and any successor to its business and/or assets (by merger,
purchase or otherwise as provided in this Section 8) which executes and delivers
the agreement provided for in this Section 8 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.  In the
event that any successor refuses to assume the obligations hereunder, the
Company as hereinbefore defined shall remain fully responsible for all
obligations hereunder.

 

9.                                      Notices.  All notices, requests, demands
and other communications hereunder shall be in writing and shall be given by
hand delivery, electronic mail, facsimile, telecopy, overnight courier service,
or by United States certified or registered mail, return receipt requested. 
Each such notice, request, demand or other communication shall be effective
(i) if delivered by hand or by overnight courier service, when delivered at the
address specified in this Section 9; (ii) if given by electronic mail, facsimile
or telecopy, when such electronic mail, facsimile or telecopy is transmitted to
the electronic mail address or facsimile or telecopy number specified in this
Section 9 and confirmation is received if during normal business hours on a
business day, and otherwise, on the next business day; and (iii) if given by
certified or registered mail, three (3) days after the mailing thereof.  Notices
shall be addressed to the parties as follows (or at such other address, email
address or fax number as either party may from time to time specify in writing
by giving notice as provided herein):

 

If to the Company:

Accuray Incorporated

 

1310 Chesapeake Terrace

 

Sunnyvale, California 94089

 

Attn: General Counsel

 

Fax No. (408) 789-4205

 

 

If to Employee:

Shig Hamamatsu

 

Address: most recent on file with the Company

 

Email: most recent on file with the Company

 

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10.                               Dispute Resolution.  The parties agree that
all disputes, claims or controversies between them and between Employee and any
of the Company’s affiliated entities and the successor of all such entities,
including any dispute, claim or controversy arising from or otherwise in
connection with this Agreement and/or Employee’s employment with the Company,
will, notwithstanding the arbitration provision to the contrary in Employee’s
offer letter, be resolved as follows:

 

(a)                                 Prior to initiating any other proceeding,
the complaining party will provide the other party with a written statement of
the claim identifying any supporting witnesses or documents and the requested
relief.  The responding party shall within forty-five (45) days furnish a
statement of the relief, if any, that it is willing to provide, and identify
supporting witnesses or documents.

 

(b)                                 If the matter is not resolved by the
exchange of statements of claim and statements of response as provided herein,
the parties shall submit the dispute to non-binding mediation, the cost of the
mediator to be paid by the Company, before a mediator and/or service to be
jointly selected by the parties.  Each party will bear his/her or its own
attorney’s fees and witness fees.

 

(c)                                  If the parties cannot agree on a mediator
and/or if the matter is not otherwise resolved by mediation, any controversy or
claim between Employee and the Company and any of its current or former
directors, officers and employees, including any arising out of or relating to
this Agreement or breach thereof, shall be settled by final and binding
arbitration in the county in which Employee last worked, or elsewhere as
mutually agreed by the parties, by a single arbitrator pursuant to the
Employment Dispute Rules of Judicial Arbitration and Mediation Services, Inc.
(“JAMS”), unless the parties to the dispute agree to another arbitration service
or independent arbitrator.  The parties may conduct discovery to the extent
permitted in a court of law; the arbitrator will render an award together with a
written opinion indicating the bases for such opinion; and the arbitrator will
have full authority to award all remedies that would be available in court. 
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.  Each party shall bear its own attorney’s fees and
costs, unless the claim is based on a statute that provides otherwise.  The
Company will pay the arbitrator’s fees and any administrative charges of the
arbitration service, except that if Employee initiates the claim, he/she will
pay a portion of the administrative charges equal to the amount he/she would
have paid to initiate the claim in a court of general jurisdiction.

 

(d)                                 EMPLOYEE AND THE COMPANY AGREE THAT THIS
ARBITRATION PROCEDURE WILL BE THE EXCLUSIVE MEANS OF REDRESS FOR ANY DISPUTES
RELATING TO OR ARISING FROM EMPLOYEE’S EMPLOYMENT WITH THE COMPANY OR
TERMINATION THEREFROM, INCLUDING DISPUTES OVER UNPAID WAGES, BREACH OF CONTRACT
OR TORT, VIOLATION OF PUBLIC POLICY, RIGHTS PROVIDED BY FEDERAL, STATE OR LOCAL
STATUTES, REGULATIONS, ORDINANCES, AND COMMON LAW, LAWS THAT PROHIBIT
DISCRIMINATION BASED ON ANY PROTECTED CLASSIFICATION, AND ANY OTHER STATUTES OR
LAWS RELATING TO AN EMPLOYEE’S RELATIONSHIP WITH THE COMPANY.  THE FOREGOING
NOTWITHSTANDING, CLAIMS FOR WORKERS’ COMPENSATION BENEFITS OR UNEMPLOYMENT
INSURANCE, OR ANY OTHER CLAIMS WHERE MANDATORY ARBITRATION IS PROHIBITED BY LAW,
ARE NOT COVERED BY THIS ARBITRATION PROVISION.  THE PARTIES EXPRESSLY WAIVE THE
RIGHT TO A JURY TRIAL, AND AGREE THAT THE ARBITRATOR’S AWARD SHALL BE FINAL AND
BINDING ON BOTH PARTIES.  THIS ARBITRATION PROVISION IS TO BE CONSTRUED AS
BROADLY AS IS PERMISSIBLE UNDER APPLICABLE LAW.

 

11.                               Representations.  Each person executing this
Agreement hereby represents and warrants on behalf of himself/herself and of the
entity/individual on whose behalf he/she is executing the Agreement that he/she
is authorized to represent and bind the entity/individual on whose behalf he/she
is

 

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executing the Agreement.  Employee specifically represents and warrants to the
Company that he/she reasonably believes (a) he/she is not under any contractual
or other obligations that would prevent, limit or impair Employee’s performance
of his/her obligations under this Agreement and (b) that entering into this
Agreement will not result in a breach of any other agreement to which he/she is
a party. Employee acknowledges that Employee has been given the opportunity to
consult with legal counsel and seek such advice and consultation as Employee
deems appropriate or necessary.

 

12.                               Amendments and Waivers.  No provisions of this
Agreement may be modified, waived, or discharged except by a written document
signed by Employee and a duly authorized Company officer.  A waiver of any
conditions or provisions of this Agreement in a given instance shall not be
deemed a waiver of such conditions or provisions at any other time.

 

13.                               Taxes.

 

(a)                                 Withholdings.  The Company may withhold from
any compensation and benefits payable under this Agreement all federal, state,
city and other taxes or amounts as shall be determined by the Company to be
required to be withheld pursuant to applicable laws, or governmental regulations
or rulings.  Employee shall be solely responsible for the satisfaction of any
taxes (including employment taxes imposed on employees and penalty taxes on
nonqualified deferred compensation).

 

(b)                                 Net Proceeds
Maximization.                                       Notwithstanding any
provision of this Agreement to the contrary, if all or any portion of the
payments or benefits received or realized by Employee pursuant to this Agreement
either alone or together with other payments or benefits that Employee receives
or realizes or is then entitled to receive or realize from the Company or any of
its affiliates (“Potential Parachute Payments”) would constitute an “excess
parachute payment” within the meaning of section 280G of the Code and/or any
corresponding and applicable state law provision, the Potential Parachute
Payments will be reduced by reducing the amount of the Potential Parachute
Payments to the extent necessary so that no portion of the Potential Parachute
Payments will be subject to the excise tax imposed by section 4999 of the Code
and any corresponding and/or applicable state law provision.  Notwithstanding
the foregoing, a reduction will be made under the previous sentence only if, by
reason of that reduction, Employee’s net after tax benefit exceeds the net after
tax benefit he/she would realize if the reduction were not made.  For purposes
of this paragraph, “net after tax benefit” means the sum of (i) the total amount
received or realized by Employee pursuant to this Agreement that would
constitute a “parachute payment” within the meaning of section 280G of the Code
and any corresponding and applicable state law provision, plus (ii) all other
payments or benefits that Employee receives or realizes or is then entitled to
receive or realize from the Company and any of its affiliates that would
constitute a “parachute payment” within the meaning of Section 280G of the Code
and any corresponding and applicable state law provision, less (iii) the amount
of federal or state income taxes payable with respect to the payments or
benefits described in (i) and (ii) above calculated at the maximum marginal
individual income tax rate for each year in which payments or benefits are
realized by Employee (based upon the rate in effect for that year as set forth
in the Code at the time of the first receipt or realization of the foregoing),
less (iv) the amount of excise taxes imposed with respect to the payments or
benefits described in (i) and (ii) above by section 4999 of the Code and any
corresponding and applicable state law provision.  All determinations and
calculations made in this paragraph shall be made by an independent accounting
firm (the “Accounting Firm”) selected by the Company prior to the Change in
Control and the Company will bear all costs and expenses incurred by the
Accounting Firm in connection with its determination.  The Accounting Firm shall
be a nationally recognized United States public accounting firm which has not,
during the two (2) years preceding the date of its selection, acted in any way
on behalf of (x) the Company or any affiliate thereof or (y) Employee.   If any
payments or benefits are reduced pursuant to this Section 13(b), they shall be
reduced in the following order:  First all payments and benefits that do not
constitute “nonqualified deferred compensation” within the meaning of section
409A of the Code or that are exempt from section 409A of the Code (with the
payments or benefits being

 

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reduced in reverse order of when they otherwise would be made or provided);
second, all payments or benefits that constitute “nonqualified deferred
compensation” within the meaning of section 409A of the Code that are not exempt
from section 409A of the Code that were granted to Employee in the 12-month
period of time preceding the applicable Change in Control, in the order such
benefits were granted to Employee; and third, all remaining payments and
benefits shall be reduced pro-rata.  Notwithstanding the foregoing, if
(i) reducing payments or benefits in the order described above would result in
the imposition on Employee of an additional tax under section 409A of the Code
(or similar state or local law), (ii) Employee so notifies the Company before
such reductions and payments are made and benefits provided, and (iii) reducing
the payments or benefits in another order would not result in the imposition on
Employee of an additional tax under section 409A of the Code (or similar state
or local law), payments and benefits shall instead be reduced in such other
order.

 

(c)                                  Section 409A Compliance.

 

(i)                                     With respect to any reimbursement of
expenses or any provision of in-kind benefits to Employee specified under this
Agreement, such reimbursement of expenses or provision of in-kind benefits shall
be subject to the following conditions: (1) the expenses eligible for
reimbursement or the amount of in-kind benefits provided in one taxable year
shall not affect the expenses eligible for reimbursement or the amount of
in-kind benefits provided in any other taxable year, except for any medical
reimbursement arrangements providing for the reimbursement of expenses referred
to in section 105(b) of the Code; (2) the reimbursement of an eligible expense
shall be made no later than the end of the year following the year in which such
expense was incurred; and (3) the right to reimbursement or in-kind benefits
shall not be subject to liquidation or exchange for another benefit.

 

(ii)                                  A termination of employment shall not be
deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits considered “deferred
compensation” (as defined under Treasury Regulation section 1.409A-1(b)(1),
after giving effect to the exemptions in Treasury Regulation sections
1.409A-1(b)(3) through (b)(12)) upon or following a termination of employment
unless such termination is also a “separation from service” and, for purposes of
any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from service.” 
For purposes of section 409A of the Code, the date as of which Company and
Employee reasonably anticipate that no further services would be performed by
Employee for Company shall be construed as the date that Employee first incurs a
“separation from service” as defined under section 409A of the Code.

 

(iii)                               Notwithstanding anything in this Agreement
to the contrary, if a payment obligation arises on account of Employee’s
separation from service while Employee is a “specified employee” as described in
section 409A of the Code and the Treasury Regulations thereunder and as
determined by Company in accordance with its procedures, by which determination
Employee is bound, any payment of “deferred compensation” (as defined under
Treasury Regulation section 1.409A-1(b)(1), after giving effect to the
exemptions in Treasury Regulation sections 1.409A-1(b)(3) through (b)(12)) shall
be made on the first business day of the seventh month following the date of
Employee’s separation from service, or, if earlier, within fifteen (15) days
after the appointment of the personal representative or executor of Employee’s
estate following Employee’s death together with interest on them for the period
of delay at a rate equal to the average prime interest rate published in the
Wall Street Journal on any day chosen by the Company during that period. 
Thereafter, Employee shall receive any remaining payments as if there had not
been an earlier delay.

 

(iv)                              Notwithstanding anything to the contrary
contained in this Agreement, (i) the Employee shall have no legally-enforceable
right to, and the Company shall have no obligation to make, any payment or
provide any benefit to Employee if having such a right or obligation would
result in the imposition of additional taxes under section 409A of the Code, and
(ii) any provision that would cause any payment or benefit to fail to satisfy
section 409A will have no force and effect until amended to

 

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Page 10 of 11

 

comply therewith (which amendment may be retroactive to the extent permitted by
section 409A and may be accomplished by the Company without the Employee’s
consent).   If any payment is not made or any benefit is not provided under the
terms of this Section 13(c)(iv), it is the Company’s present intention to make a
similar payment or provide a similar benefit to the Employee in a manner that
will not result in the imposition of additional taxes under section 409A of the
Code, to the extent feasible.  Each payment made under this Agreement is
intended to be a separate payment for the purposes of section 409A of the Code.

 

(v)                                 The Company does not guarantee any
particular tax effect to Employee under this Agreement.  Company shall not be
liable to Employee for any payment made under this Agreement that is determined
to result in an additional tax, penalty or interest under section 409A of the
Code, nor for reporting in good faith any payment made under this Agreement as
an amount includible in gross income under section 409A of the Code.  The
parties intend this Agreement to be exempt from, or comply with, the
requirements of Section 409A of the Code and the final regulations and any
guidance promulgated thereunder so that none of the payments and benefits to be
provided hereunder will be subject to the additional tax imposed by
Section 409A.  Any ambiguities or ambiguous terms shall be interpreted to so be
exempt or comply, and this Agreement shall be administered in accordance with
such intent.

 

14.                               Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute the same instrument.

 

(Signature page follows)

 

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Page 11 of 11

 

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

 

 

ACCURAY INCORPORATED,

 

a Delaware Corporation

 

 

 

 

 

 

 

By:

/s/ Alaleh Nouri

 

Name:

Alaleh Nouri

 

Title:

Senior Vice President, General Counsel

 

Accepted and Agreed,

 

 

 

 

 

Shigeyuki Hamamatsu:

/s/ Shigeyuki Hamamatsu

 

 

 

 

Signed on (Date):

9/25/17

 

 

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