Exhibit 10.1

VARIAN MEDICAL SYSTEMS, INC.

THIRD AMENDED AND RESTATED

2005 OMNIBUS STOCK PLAN

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TABLE OF CONTENTS

 

          Page  

SECTION 1

   BACKGROUND AND PURPOSE      1   

1.1

  

Effective Date

     1   

1.2

  

Purpose of the Plan

     1   

SECTION 2

   DEFINITIONS      1   

2.1

  

“1934 Act”

     1   

2.2

  

“Affiliate”

     1   

2.3

  

“Award”

     1   

2.4

  

“Award Agreement”

     1   

2.5

  

“Board”

     1   

2.6

  

“Code”

     1   

2.7

  

“Committee”

     1   

2.8

  

“Company”

     2   

2.9

  

“Consultant”

     2   

2.10

  

“Deferred Stock Unit”

     2   

2.11

  

“Director”

     2   

2.12

  

“Disability”

     2   

2.13

  

“EBIT”

     2   

2.14

  

“EBITDA”

     2   

2.15

  

“Earnings Per Share”

     2   

2.16

  

“Employee”

     2   

2.17

  

“Exercise Price”

     2   

2.18

  

“Fair Market Value”

     2   

2.19

  

“Fiscal Year”

     2   

2.20

  

“Grant Date”

     2   

2.21

  

“Incentive Stock Option”

     2   

2.22

  

“Net Income”

     2   

2.23

  

“Net Orders”

     2   

2.24

  

“Non-employee Director”

     3   

2.25

  

“Non-qualified Stock Option”

     3   

2.26

  

“Operating Cash Flow”

     3   

2.27

  

“Option”

     3   

2.28

  

“Participant”

     3   

2.29

  

“Performance Goals”

     3   

2.30

  

“Performance Period”

     3   

2.31

  

“Performance Share”

     3   

2.32

  

“Performance Unit”

     3   

2.33

  

“Period of Restriction”

     3   

2.34

  

“Plan”

     3   

2.35

  

“Prior Plans”

     4   

2.36

  

“Restricted Stock”

     4   

2.37

  

“Restricted Stock Units”

     4   

2.38

  

“Retirement”

     4   

2.39

  

“Return on Assets”

     4   

2.40

  

“Return on Equity”

     4   

2.41

  

“Return on Sales”

     4   

2.42

  

“Revenue”

     4   

2.43

  

“Rule 16b-3”

     4   

2.44

  

“Section 16 Person”

     4   

2.45

  

“Shareholder Return”

     4   

2.46

  

“Shares”

     4   

2.47

  

“Stock Appreciation Right” or “SAR”

     4   

 

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TABLE OF CONTENTS

(continued)

 

              Page  

2.48

 

“Subsidiary”

     4   

2.49

 

“Termination of Service”

     4   

SECTION 3

 

ADMINISTRATION

     5   

3.1

 

The Committee

     5   

3.2

 

Authority of the Committee

     5   

3.3

 

Delegation by the Committee

     5   

3.4

 

Non-employee Directors

     5   

3.5

 

Decisions Binding

     5   

SECTION 4

 

SHARES SUBJECT TO THE PLAN

     5   

4.1

 

Number of Shares

     5   

4.2

 

Lapsed Awards

     6   

4.3

 

Adjustments in Awards and Authorized Shares

     6   

SECTION 5

 

STOCK OPTIONS

     6   

5.1

 

Grant of Options

     6   

5.2

 

Award Agreement

     6   

5.3

 

Exercise Price

     6     

5.3.1

  

Non-qualified Stock Options

     6     

5.3.2

  

Incentive Stock Options

     6     

5.3.3

  

Substitute Options

     7   

5.4

 

Expiration of Options

     7     

5.4.1

  

Expiration Dates

     7     

5.4.2

  

Death of Participant

     7     

5.4.3

  

Committee Discretion

     7   

5.5

 

Exercisability of Options

     7   

5.6

 

Payment

     7   

5.7

 

Restrictions on Share Transferability

     8   

5.8

 

Certain Additional Provisions for Incentive Stock Options

     8     

5.8.1

  

Exercisability

     8     

5.8.2

  

Termination of Service

     8     

5.8.3

  

Company and Subsidiaries Only

     8     

5.8.4

  

Expiration

     8   

SECTION 6

 

STOCK APPRECIATION RIGHTS

     8   

6.1

 

Grant of SARs

     8   

6.2

 

Exercise Price and Other Terms

     8   

6.3

 

SAR Agreement

     8   

6.4

 

Expiration of SARs

     8   

6.5

 

Payment of SAR Amount

     9   

6.6

 

Payment Upon Exercise of SAR

     9   

SECTION 7

 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

     9   

7.1

 

Grant of Restricted Stock and Restricted Stock Units

     9   

7.2

 

Restricted Stock and Restricted Stock Units Agreement

     9   

7.3

 

Transferability

     9   

7.4

 

Other Restrictions

     9     

7.4.1

  

General Restrictions

     9     

7.4.2

  

Section 162(m) Performance Restrictions

     9     

7.4.3

  

Legend on Certificates

     9   

 

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TABLE OF CONTENTS

(continued)

 

              Page  

7.5

 

Removal of Restrictions

     10   

7.6

 

Voting Rights

     10   

7.7

 

Dividends and Other Distributions

     10   

7.8

 

Return of Restricted Stock to Company

     10   

SECTION 8

 

PERFORMANCE UNITS AND PERFORMANCE SHARES

     10   

8.1

 

Grant of Performance Units and Shares

     10   

8.2

 

Initial Value

     10   

8.3

 

Performance Objectives and Other Terms

     10     

8.3.1

  

General Performance Objectives

     10     

8.3.2

  

Section 162(m) Performance Objectives

     10   

8.4

 

Earning of Performance Units and Performance Shares

     11   

8.5

 

Form and Timing of Payment

     11   

8.6

 

Cancellation

     11   

SECTION 9

 

NON-EMPLOYEE DIRECTORS

     11   

9.1

 

Non-Employee Director Options

     11   

9.2

 

Terms of Options

     11     

9.2.1

  

Option Agreement

     11     

9.2.2

  

Exercise Price

     11     

9.2.3

  

Exercisability

     11     

9.2.4

  

Expiration of Options

     11     

9.2.5

  

Death of Director

     12     

9.2.6

  

Not Incentive Stock Options

     12     

9.2.7

  

Other Terms

     12   

9.3

 

Substitute Options

     12   

9.4

 

Elections by Non-employee Directors

     12   

9.5

 

Deferred Stock Units

     12   

9.6

 

Terms of Deferred Stock Units

     12     

9.6.1

  

Deferred Stock Unit Agreement

     12     

9.6.2

  

Vesting

     12     

9.6.3

  

Payment

     12     

9.6.4

  

Other Terms

     13   

SECTION 10

 

MISCELLANEOUS

     13   

10.1

 

No Effect on Employment or Service

     13   

10.2

 

Participation

     13   

10.3

 

Indemnification

     13   

10.4

 

Successors

     13   

10.5

 

Beneficiary Designations

     13   

10.6

 

Nontransferability of Awards

     13   

10.7

 

No Rights as Stockholder

     13   

10.8

 

Withholding Requirements

     14   

10.9

 

Withholding Arrangements

     14   

10.10

 

Deferrals

     14   

10.11

 

Dividend Equivalents

     14   

10.12

 

Prohibition on Repricings

     14   

10.13

 

Maximum Term of Options and SARs

     14   

10.14

 

Restatement of Financial Results

     14   

SECTION 11

 

AMENDMENT, TERMINATION AND DURATION

     15   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

11.1

   Amendment, Suspension or Termination      15   

11.2

   Duration of the Plan      15   

SECTION 12

   LEGAL CONSTRUCTION      15   

12.1

   Gender and Number      15   

12.2

   Severability      15   

12.3

   Requirements of Law      15   

12.4

   Governing Law      15   

12.5

   Captions      15    EXECUTION      15   

 

-iv-

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VARIAN MEDICAL SYSTEMS, INC.

THIRD AMENDED AND RESTATED

2005 OMNIBUS STOCK PLAN

SECTION 1

BACKGROUND AND PURPOSE

1.1 Effective Date. The Varian medical Systems, Inc. 2005 Omnibus Stock Plan was
originally adopted by Varian Medical Systems, Inc., a Delaware corporation, on
November 19, 2004 and became effective upon its approval by a majority of the
shares of the common stock of the Company’s stockholders on February 17, 2005.
On December 7, 2005, the Board approved an amended and restated Plan, which was
approved at the Company’s 2006 Annual Meeting of Stockholders. On November 17,
2006, the Board approved the second amended and restated Plan, which was
approved at the Company’s 2007 Annual Meeting of Stockholders. On November 11,
2011 (the “Adoption Date”), the Board approved this third amended and restated
Plan, provided that this Plan amendment and restatement is approved by a vote of
the majority of the shares of the common stock of the Company which are present
in person or by proxy and entitled to vote at the Company’s 2012 Annual Meeting
of Stockholders.

1.2 Purpose of the Plan. The Plan is intended to increase incentives and to
encourage Share ownership on the part of (1) employees of the Company and its
Affiliates, (2) consultants who provide significant services to the Company and
its Affiliates, and (3) directors of the Company who are employees of neither
the Company nor any Affiliate. The Plan also is intended to further the growth
and profitability of the Company. The Plan is intended to permit the grant of
Awards that qualify as performance-based compensation under section 162(m) of
the Code.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:

2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference
to a specific section of the 1934 Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.

2.2 “Affiliate” means any corporation or any other entity (including, but not
limited to, partnerships and joint ventures) controlling, controlled by, or
under common control with the Company.

2.3 “Award” means, individually or collectively, a grant under the Plan of
Non-qualified Stock Options, Incentive Stock Options, SARs, Restricted Stock,
Restricted Stock Units, Performance Units, Performance Shares or Deferred Stock
Units.

2.4 “Award Agreement” means the written agreement setting forth the terms and
provisions applicable to each Award granted under the Plan.

2.5 “Board” means the Board of Directors of the Company.

2.6 “Code” means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid regulation promulgated thereunder, and any comparable
provision of any future legislation or regulation amending, supplementing or
superseding such section or regulation.

2.7 “Committee” means the committee appointed by the Board (pursuant to
Section 3.1) to administer the Plan.

 

1

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2.8 “Company” means Varian Medical Systems, Inc., a Delaware corporation, or any
successor thereto.

2.9 “Consultant” means any consultant, independent contractor, or other person
who provides significant services to the Company or its Affiliates, but who is
neither an Employee nor a Director.

2.10 “Deferred Stock Unit” means a Deferred Stock Unit granted pursuant to
Section 9.5.

2.11 “Director” means any individual who is a member of the Board.

2.12 “Disability” means a permanent and total disability within the meaning of
section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Committee in its discretion may determine whether a
permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Committee from time to time.
Notwithstanding the foregoing, to the extent “Disability” is used to establish a
payment event with respect to any Award subject to section 409A of the Code,
“Disability” shall have the meaning set forth in section 409A of the Code and
the applicable guidance issued by the Secretary of the Treasury thereunder.

2.13 “EBIT” means as to any Performance Period, the Company’s or a business
unit’s income before reductions for interest and taxes, determined in accordance
with generally accepted accounting principles.

2.14 “EBITDA” means as to any Performance Period, the Company’s or a business
unit’s income before reductions for interest, taxes, depreciation and
amortization, determined in accordance with generally accepted accounting
principles.

2.15 “Earnings Per Share” means as to any Performance Period, the Company’s or a
business unit’s Net Income, divided by a weighted average number of common
shares outstanding and dilutive common equivalent shares deemed outstanding,
determined in accordance with generally accepted accounting principles.

2.16 “Employee” means any employee of the Company or of an Affiliate, whether
such employee is so employed at the time the Plan is adopted or becomes so
employed subsequent to the adoption of the Plan.

2.17 “Exercise Price” means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

2.18 “Fair Market Value” means the last quoted per share selling price for
Shares on the relevant date, or if there were no sales on such date, the last
quoted per share price for Shares on the next date on which there were sales of
Shares. Notwithstanding the preceding, for federal, state and local income tax
reporting purposes, fair market value shall be determined by the Committee in
accordance with uniform and nondiscriminatory standards adopted by it from time
to time.

2.19 “Fiscal Year” means the fiscal year of the Company.

2.20 “Grant Date” means, with respect to an Award, the date that the Award was
granted.

2.21 “Incentive Stock Option” means an Option to purchase Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of section 422 of the Code.

2.22 “Net Income” means as to any Performance Period, the Company’s or a
business unit’s income after taxes, determined in accordance with generally
accepted accounting principles.

2.23 “Net Orders” means as to any Performance Period, the Company’s or a
business unit’s net orders calculated (and reviewed by the Company’s external
independent auditors in accordance with agreed standard procedures) for and
reported in the Company’s quarterly financial earnings press release filed by
the Company on a Current Report on Form 8-K.

 

2

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2.24 “Non-employee Director” means a Director who is an employee of neither the
Company nor of any Affiliate.

2.25 “Non-qualified Stock Option” means an option to purchase Shares which is
not intended to be an Incentive Stock Option.

2.26 “Operating Cash Flow” means as to any Performance Period, the Company’s or
a business unit’s sum of Net Income plus depreciation and amortization less
capital expenditures plus changes in working capital comprised of accounts
receivable, inventories, other current assets, trade accounts payable, accrued
expenses, product warranty, advance payments from customers and long-term
accrued expenses, determined in accordance with generally acceptable accounting
principles.

2.27 “Option” means an Incentive Stock Option or a Non-qualified Stock Option.

2.28 “Participant” means an Employee, Consultant, or Non-employee Director who
has an outstanding Award.

2.29 “Performance Goals” means the goal(s) (or combined goal(s)) determined by
the Committee (in its discretion) to be applicable to a Participant with respect
to an Award. As determined by the Committee, the Performance Goals applicable to
an Award may provide for a targeted level or levels of achievement using one or
more of the following measures: (a) EBIT, (b) EBITDA, (c) Earnings Per Share,
(d) Net Income, (e) Operating Cash Flow, (f) Return on Assets, (g) Return on
Equity, (h) Return on Sales, (i) Revenue, (j) Shareholder Return, (k) orders or
Net Orders, (l) expenses, (m) cost of goods sold, (n) profit/loss or profit
margin, (o) working capital, (p) operating income, (q) cash flow, (r) market
share, (s) return on equity, (t) economic value add, (u) stock price of the
Company’s stock, (v) price/earning ratio, (w) debt or debt-to-equity ratio,
(x) accounts receivable, (y) cash, (z) write-off, (aa) assets, (bb) liquidity,
(cc) operations, (dd) intellectual property (e.g., patents), (ee) product
development, (ff) regulatory activities, (gg) manufacturing, production or
inventory, (hh) mergers, acquisitions or divestitures, (ii) financings, (jj)
days sales outstanding, (kk) backlog, (ll) deferred revenue, and (mm) employee
headcount. The Performance Goals may differ from Participant to Participant and
from Award to Award. Prior to the Determination Date, the Committee shall
determine whether any significant element(s) shall be included in or excluded
from the calculation of any Performance Goal with respect to any Participant.
“Determination Date” means the latest possible date that will not jeopardize an
Award’s qualification as performance-based compensation under section 162(m) of
the Code. Notwithstanding the previous sentence, for Awards not intended to
qualify as performance-based compensation, “Determination Date” shall mean such
date as the Committee may determine in its discretion.

2.30 “Performance Period” means any fiscal period not to exceed three
consecutive Fiscal Years, as determined by the Committee in its sole discretion.

2.31 “Performance Share” means a Performance Share granted to a Participant
pursuant to Section 8.

2.32 “Performance Unit” means a Performance Unit granted to a Participant
pursuant to Section 8.

2.33 “Period of Restriction” means the period during which shares of Restricted
Stock are subject to forfeiture and/or restrictions on transferability.

2.34 “Plan” means the Varian Medical Systems, Inc. Third Amended and Restated
2005 Omnibus Stock Plan, as set forth in this instrument and as hereafter
amended from time to time.

 

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2.35 “Prior Plans” means the Varian Medical Systems, Inc. Omnibus Stock Plan
approved by the Company’s stockholders effective April 3, 1999 and the Varian
Medical Systems, Inc. 2000 Stock Plan adopted by the Company’s Board of
Directors effective November 17, 2000.

2.36 “Restricted Stock” means an Award granted to a Participant pursuant to
Section 7.

2.37 “Restricted Stock Units” means a Restricted Stock Unit granted to a
Participant pursuant to Section 7.

2.38 “Retirement” means, in the case of an Employee or a Non-employee Director,
“Retirement” as defined pursuant to the Company’s or the Board’s Retirement
Policies, as they may be established from time to time. With respect to a
Consultant, no Termination of Service shall be deemed to be on account of
“Retirement.”

2.39 “Return on Assets” means as to any Performance Period, the percentage equal
to the Company’s or a business unit’s EBIT before incentive compensation,
divided by average net Company or business unit, as applicable, assets,
determined in accordance with generally accepted accounting principles.

2.40 “Return on Equity” means as to any Performance Period, the percentage equal
to the Company’s Net Income divided by average stockholder’s equity, determined
in accordance with generally accepted accounting principles.

2.41 “Return on Sales” means as to any Performance Period, the percentage equal
to the Company’s or a business unit’s EBIT before incentive compensation,
divided by the Company’s or the business unit’s, as applicable, Revenue,
determined in accordance with generally accepted accounting principles.

2.42 “Revenue” means as to any Performance Period, the Company’s or a business
unit’s net sales, determined in accordance with generally accepted accounting
principles.

2.43 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, as amended,
and any future regulation amending, supplementing or superseding such
regulation.

2.44 “Section 16 Person” means a person who, with respect to the Shares, is
subject to section 16 of the 1934 Act.

2.45 “Shareholder Return” means as to any Performance Period, the total return
(change in share price plus reinvestment of any dividends) of a Share.

2.46 “Shares” means shares of the Company’s common stock, $1.00 par value.

2.47 “Stock Appreciation Right” or “SAR” means an Award, granted alone, in
connection or in tandem with a related Option, that pursuant to Section 6 is
designated as a SAR.

2.48 “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

2.49 “Termination of Service” means (a) in the case of an Employee, a cessation
of the employee-employer relationship between an Employee and the Company or an
Affiliate for any reason, including, but not by way of limitation, a termination
by resignation, discharge, death, Disability, Retirement, or the disaffiliation
of an Affiliate, but excluding any such termination where there is a
simultaneous reemployment by the Company or an Affiliate; (b) in the case of a
Consultant, a cessation of the service relationship between a Consultant and the
Company or an Affiliate for any reason, including, but not by way of limitation,
a termination by resignation, discharge, death, Disability, or the
disaffiliation of an Affiliate, but excluding any such termination where there
is a simultaneous re-engagement of the consultant by the Company or an
Affiliate; and (c) in the case of

 

4

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a Non-employee Director, a cessation of the Non-employee Director’s service on
the Board for any reason. Notwithstanding the foregoing, to the extent that
“Termination of Service” is used to establish a payment event with respect to
any Award subject to section 409A of the Code, “Termination of Service” shall
have the same meaning as “separation from service” as that term is defined in
section 409A of the Code and the applicable guidance issued by the Secretary of
the Treasury thereunder.

SECTION 3

ADMINISTRATION

3.1 The Committee. The Plan shall be administered by the Committee. The
Committee shall consist of not less than two (2) Directors. The members of the
Committee shall be appointed from time to time by, and serve at the pleasure of,
the Board. Each member of the Committee shall qualify as (a) a “non-employee
director” under Rule 16b-3, (b) an “independent director” under section 303A.02
of the New York Stock Exchange listing standards rules, and (c) an “outside
director” under section 162(m) of the Code. If it is later determined that one
or more members of the Committee do not so qualify, actions taken by the
Committee prior to such determination shall be valid despite such failure to
qualify.

3.2 Authority of the Committee. It shall be the duty of the Committee to
administer the Plan in accordance with the Plan’s provisions. The Committee
shall have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to
(a) determine which Employees and Consultants shall be granted Awards,
(b) prescribe the terms and conditions of the Awards (other than the Options
granted to Non-employee Directors pursuant to Section 9), (c) interpret the Plan
and the Awards, (d) adopt such procedures, agreements, arrangements, sub plans
and terms as are necessary or appropriate to permit participation in the Plan by
Employees, Consultants and Directors who are foreign nationals or employed
outside of the United States, (e) adopt rules for the administration,
interpretation and application of the Plan as are consistent therewith, and
(f) interpret, amend or revoke any such rules. Notwithstanding any contrary
provision of the Plan, the Committee may reduce the amount payable under any
Award (other than an Option) after the grant of such Award.

3.3 Delegation by the Committee. The Committee, in its sole discretion and on
such terms and conditions as it may provide, may delegate all or any part of its
authority and powers under the Plan to one or more directors and/or officers of
the Company; provided, however, that the Committee may not delegate its
authority and powers (a) with respect to Section 16 Persons, (b) in any way
which would jeopardize the Plan’s qualification under Rule 16b-3, or (c) with
respect to Awards which are intended to qualify as performance-based
compensation under section 162(m) of the Code.

3.4 Non-employee Directors. Notwithstanding any contrary provision of this
Section 3, the Board shall administer Section 9 of the Plan, and the Committee
shall exercise no discretion with respect to Section 9. In the Board’s
administration of Section 9 and the Awards and any Shares granted to
Non-employee Directors, the Board shall have all of the authority and discretion
otherwise granted to the Committee with respect to the administration of the
Plan.

3.5 Decisions Binding. All determinations and decisions made by the Committee,
the Board, and any delegate of the Committee pursuant to the provisions of the
Plan shall be final, conclusive, and binding on all persons, and shall be given
the maximum deference permitted by law.

SECTION 4

SHARES SUBJECT TO THE PLAN

4.1 Number of Shares. Prior to this request for approval of this third amended
and restated Plan, and subject to adjustment as provided in Section 4.3, the
total number of Shares available for issuance under the Plan shall not exceed
18,950,000, plus such number of Shares as are granted pursuant to substitute
Options under Sections 5.3.3 and 9.3. No further grants may be made under the
Prior Plans, but Shares authorized for issuance under the Prior Plans that have
not been issued under the prior Plans may be issued pursuant to Awards granted
under this Plan in addition to the number of Shares specified immediately above.
In addition, if an award previously granted under the Prior Plans terminates,
expires, or lapses for any reason, any Shares subject to such award shall again
be available to be the subject of an Award under the Plan. Shares issued under
the Plan may be either authorized but unissued Shares or treasury Shares. Upon
approval of this third amended and restated Plan by the

 

5

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stockholders of the Company, an additional 6,000,000 Shares shall be available
for issuance under the Plan. For purposes of this Section 4.1, effective with
respect to Awards granted on or after the date the stockholders of the Company
approve this third amended and restated Plan, any Shares that are subject to
Awards of Options or Stock Appreciation Rights shall be counted against the
limit stated in this Section 4.1 as one (1) Share for every (1) Share issued,
and any shares issued in connection with Awards other than Options and Stock
Appreciation Rights shall be counted against the limit stated in this
Section 4.1 as 2.6 Shares for every one (1) Share issued. Except as provided in
Section 4.2, if fewer Shares are issued in settlement of an Award than were
covered by such Award, then the Shares not issued shall not be available for
issuance under the Plan. All of the Shares available for issuance under the Plan
may be issued as Incentive Stock Options.

4.2 Lapsed Awards. If an Award terminates, expires, or lapses for any reason,
any Shares subject to such Award (plus the number of additional shares, if any,
that counted against the share pool using the share counting rule in effect at
the time the Award was granted) again shall be available to be the subject of an
Award. In addition, Shares issued pursuant to Awards assumed or issued in
substitution of other awards in connection with the acquisition by the Company
of an unrelated entity shall not reduce the maximum number of Shares issuable
under Section 4.1.

4.3 Adjustments in Awards and Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the Committee shall adjust the
number and class of Shares which may be delivered under the Plan, the number,
class, and price of Shares subject to outstanding Awards, and the numerical
limit of Section 5.1 in such manner as the Committee (in its sole discretion)
shall determine to be appropriate to prevent the dilution or diminution of such
Awards. In the case of Options granted to Non-employee Directors, the foregoing
adjustments shall be made by the Board. Notwithstanding the preceding, the
number of Shares subject to any Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options
may be granted to Employees and Consultants at any time and from time to time as
determined by the Committee in its sole discretion. The Committee, in its sole
discretion, shall determine the number of Shares subject to each Option,
provided that during any Fiscal Year, no Participant shall be granted Options
covering more than 4,000,000 Shares. The Committee may grant Incentive Stock
Options, Non-qualified Stock Options, or a combination thereof. Non-Qualified
Stock Options may be granted under the Plan pursuant to Section 9 to
Non-employee Directors by the Board, which shall determine the terms of such
Options.

5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the expiration date of the Option, the number
of Shares to which the Option pertains, any conditions to exercise of the
Option, and such other terms and conditions as the Committee, in its discretion,
shall determine. The Award Agreement shall specify whether the Option is
intended to be an Incentive Stock Option or a Non-qualified Stock Option.

5.3 Exercise Price. Subject to the provisions of this Section 5.3, the Exercise
Price for each Option shall be determined by the Committee in its sole
discretion.

5.3.1 Non-qualified Stock Options. In the case of a Non-qualified Stock Option,
the Exercise Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date.

5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the
Exercise Price shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the Grant Date; provided, however, that if on the
Grant Date, the Employee (together with persons whose stock ownership is
attributed to the Employee pursuant to section 424(d) of the Code) owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the Exercise Price
shall be not less than one hundred and ten percent (110%) of the Fair Market
Value of a Share on the Grant Date.

 

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5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1 and
5.3.2, in the event that the Company or an Affiliate consummates a transaction
described in section 424(a) of the Code (e.g., the acquisition of property or
stock from an unrelated corporation), persons who become Employees or
Consultants on account of such transaction may be granted Options in
substitution for options granted by their former employer. If such substitute
Options are granted, the Committee, in its sole discretion and consistent with
section 424(a) of the Code, shall determine the exercise price of such
substitute Options.

5.4 Expiration of Options.

5.4.1 Expiration Dates. Subject to Section 10.13, except as set forth in each
Award Agreement, each Option shall terminate no later than the first to occur of
the following events:

(a) The expiration of seven (7) years from the Grant Date; or

(b) The expiration of three (3) months from the date of the Participant’s
Termination of Service for a reason other than the Participant’s death,
Disability or Retirement; or

(c) The expiration of one (1) year from the date of the Participant’s
Termination of Service by reason of Disability; or

(d) The expiration of three (3) years from the date of the Participant’s
Retirement (subject to Section 5.8.2 regarding Incentive Stock Options); or

(e) The date of the Participant’s Termination of Service by the Company for
cause (as determined by the Company).

5.4.2 Death of Participant. Subject to Section 10.13, notwithstanding
Section 5.4.1, if a Participant who is an Employee dies prior to the expiration
of his or her Options, his or her Options shall be exercisable until the
expiration of three (3) years after the date of death. If a Participant who is a
Consultant dies prior to the expiration of his or her Options, the Committee, in
its discretion, may provide that his or her Options shall be exercisable for up
to three (3) years after the date of death.

5.4.3 Committee Discretion. Subject to the limits of Sections 5.4.1, 5.4.2 and
10.13, the Committee, in its sole discretion, (a) shall provide in each Award
Agreement when each Option expires and becomes unexercisable, and (b) may, after
an Option is granted and before such Option expires, extend the maximum term of
the Option (subject to Section 5.8.4 regarding Incentive Stock Options).

5.5 Exercisability of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall determine in its sole discretion. After an Option is
granted, the Committee, in its sole discretion, may accelerate the
exercisability of the Option. If a Participant dies while an Employee, the
exercisability of his or her Options shall be fully accelerated to the date of
Termination of Service.

5.6 Payment. Options shall be exercised by the Participant’s delivery of a
written notice of exercise to the Secretary of the Company (or its designee),
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares.

Upon the exercise of any Option, the Exercise Price shall be payable to the
Company in full in cash or its equivalent. The Committee, in its sole
discretion, also may permit exercise (a) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the total
Exercise Price, or (b) by any other means which the Committee, in its sole
discretion, determines both to provide legal consideration for the Shares and to
be consistent with the purposes of the Plan.

 

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As soon as practicable after receipt of a written notification of exercise and
full payment for the Shares purchased, the Company shall deliver to the
Participant (or the Participant’s designated broker) Share certificates (which
may be in book entry form) representing such Shares.

5.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option as it
may deem advisable, including, but not limited to, restrictions related to
applicable Federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded, or any blue sky
or state securities laws.

5.8 Certain Additional Provisions for Incentive Stock Options.

5.8.1 Exercisability. The aggregate Fair Market Value (determined on the Grant
Date(s)) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Employee during any calendar year (under
all plans of the Company and its Subsidiaries) shall not exceed $100,000.

5.8.2 Termination of Service. If any portion of an Incentive Stock Option is
exercised more than three (3) months after the Participant’s Termination of
Service for any reason other than Disability or death (unless (a) the
Participant dies during such three-month period, and (b) the Award Agreement or
the Committee permits later exercise), the portion so exercised shall be deemed
a Non-qualified Stock Option.

5.8.3 Company and Subsidiaries Only. Incentive Stock Options may be granted only
to persons who are employees of the Company or a Subsidiary on the Grant Date.

5.8.4 Expiration. No Incentive Stock Option may be exercised after the
expiration of seven (7) years from the Grant Date; provided, however, that if
the Option is granted to an Employee who, together with persons whose stock
ownership is attributed to the Employee pursuant to section 424(d) of the Code,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of the stock of the Company or any of its Subsidiaries, the
Option may not be exercised after the expiration of five (5) years from the
Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be
granted to Employees and Consultants at any time and from time to time as shall
be determined by the Committee, in its sole discretion. The Committee shall have
complete discretion to determine the number of SARs granted to any Participant,
provided that during any Fiscal Year, no Participant shall be granted SARs
covering more than 2,000,000 Shares.

6.2 Exercise Price and Other Terms. The Committee, subject to the provisions of
the Plan, shall have complete discretion to determine the terms and conditions
of SARs granted under the Plan. However, the exercise price of a SAR shall be
not less than one hundred percent (100%) of the Fair Market Value of a Share on
the Grant Date.

6.3 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that
shall specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Committee, in its sole
discretion, shall determine.

6.4 Expiration of SARs. A SAR granted under the Plan shall expire upon the date
determined by the Committee, in its sole discretion, and set forth in the Award
Agreement. Notwithstanding the foregoing, the rules of Section 5.4 and 10.13
also shall apply to SARs.

 

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6.5 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

(a) The difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times

(b) The number of Shares with respect to which the SAR is exercised.

6.6 Payment Upon Exercise of SAR. At the discretion of the Committee, payment
for a SAR may be in cash, Shares or a combination thereof.

SECTION 7

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

7.1 Grant of Restricted Stock and Restricted Stock Units. Subject to the terms
and provisions of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock or Restricted Stock Units to Employees and
Consultants in such amounts as the Committee, in its sole discretion, shall
determine. The Committee, in its sole discretion, shall determine the number of
Shares to be granted to each Participant, provided that during any Fiscal Year,
no Participant shall be granted more than 400,000 Shares of Restricted Stock or
Restricted Stock Units.

7.2 Restricted Stock and Restricted Stock Units Agreement. Each Award of
Restricted Stock or Restricted Stock Units shall be evidenced by an Award
Agreement that shall specify the Period of Restriction, the number of Shares
granted, any price to be paid for the Shares, and such other terms and
conditions as the Committee, in its sole discretion, shall determine. Unless the
Committee determines otherwise, Shares of Restricted Stock shall be held by the
Company as escrow agent until the restrictions on such Shares have lapsed.

7.3 Transferability. Shares of Restricted Stock or Restricted Stock Units may
not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of Restriction.

7.4 Other Restrictions. The Committee, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock or Restricted Stock Units as it
may deem advisable or appropriate, in accordance with this Section 7.4.

7.4.1 General Restrictions. The Committee may set restrictions based upon the
achievement of specific performance objectives (Company-wide, business unit or
individual), applicable federal or state securities laws, or any other basis
determined by the Committee in its discretion.

7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock and Restricted Stock Units as “performance-based
compensation” under section 162(m) of the Code, the Committee, in its
discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals shall be set by the Committee on or before the
latest date permissible to enable the Restricted Stock or Restricted Stock Units
to qualify as “performance-based compensation” under section 162(m) of the Code.
In granting Restricted Stock or Restricted Stock Units which is intended to
qualify under section 162(m) of the Code, the Committee shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Restricted Stock or Restricted Stock Units under
section 162(m) of the Code (e.g., in determining the Performance Goals).

7.4.3 Legend on Certificates. The Committee, in its discretion, may legend the
certificates representing Restricted Stock to give appropriate notice of such
restrictions. For example, the Committee may determine that some or all
certificates representing Shares of Restricted Stock shall bear the following
legend:

“The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject
to certain restrictions on transfer as set forth in the Varian Medical
Systems, Inc. 2005 Omnibus Stock Plan, and in a Restricted Stock Agreement. A
copy of the Plan and such Restricted Stock Agreement may be obtained from the
Secretary of Varian Medical Systems, Inc.”

 

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7.5 Removal of Restrictions. Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan shall be released from escrow as soon
as practicable after the last day of the Period of Restriction. The Committee,
in its discretion, may accelerate the time at which any restrictions shall
lapse, and remove any restrictions. After the restrictions have lapsed, the
Participant shall be entitled to have any legend or legends under Section 7.4
removed from his or her Share certificate, and the Shares shall be freely
transferable by the Participant.

7.6 Voting Rights. During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless otherwise provided in the Award Agreement.

7.7 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

7.8 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall
revert to the Company and again shall become available for grant under the Plan.

SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES

8.1 Grant of Performance Units and Shares. Performance Units and Performance
Shares may be granted to Employees and Consultants at any time and from time to
time, as shall be determined by the Committee, in its sole discretion. The
Committee shall have complete discretion in determining the number of
Performance Units and Performance Shares granted to any Participant, provided
that during any Fiscal Year, no more than 400,000 Performance Shares or
Performance Units may be granted to any Participant.

8.2 Initial Value. Each Performance Unit shall have an initial value that is
established by the Committee on or before the Grant Date, provided that such
value shall not exceed the Fair Market Value of a Share on the Grant Date. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the Grant Date.

8.3 Performance Objectives and Other Terms. The Committee shall set performance
objectives in its discretion, which, depending on the extent to which they are
met, will determine the number or value of Performance Units or Shares that will
be paid out to the Participants. The Committee may set performance objectives
based upon the achievement of Company-wide, business unit, or individual goals,
or any other basis determined by the Committee in its discretion. The time
period during which the performance objectives must be met shall be called the
“Performance Period.” Each Award of Performance Units or Shares shall be
evidenced by an Award Agreement that shall specify the Performance Period, and
such other terms and conditions as the Committee, in its sole discretion, shall
determine.

8.3.1 General Performance Objectives. The Committee may set performance
objectives based upon the achievement of Company-wide, business unit or
individual goals, or any other basis determined by the Committee in its
discretion.

8.3.2 Section 162(m) Performance Objectives. For purposes of qualifying grants
of Performance Units or Shares as “performance-based compensation” under
section 162(m) of the Code, the

 

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Committee, in its discretion, may determine that the performance objectives
applicable to Performance Units or Shares shall be based on the achievement of
Performance Goals. The Performance Goals shall be set by the Committee on or
before the latest date permissible to enable the Performance Units or Shares to
qualify as “performance-based compensation” under section 162(m) of the Code. In
granting Performance Units or Shares which are intended to qualify under
section 162(m) of the Code, the Committee shall follow any procedures determined
by it from time to time to be necessary or appropriate to ensure qualification
of the Performance Units or Shares under section 162(m) of the Code (e.g., in
determining the Performance Goals).

8.4 Earning of Performance Units and Performance Shares. After the applicable
Performance Period has ended, the Participant shall be entitled to receive a
payout of the number of Performance Units or Shares earned during the
Performance Period, depending upon the extent to which the applicable
performance objectives have been achieved. After the grant of a Performance Unit
or Share, the Committee, in its sole discretion, may reduce or waive any
performance objectives for Award.

8.5 Form and Timing of Payment. Payment of earned Performance Units or
Performance Shares shall be made as soon as practicable after the expiration of
the applicable Performance Period. The Committee, in its sole discretion, may
pay such earned Awards in cash, Shares or a combination thereof.

8.6 Cancellation. On the date set forth in the Award Agreement, all unearned or
unvested Performance Units or Performance Shares shall be forfeited to the
Company, and again shall be available for grant under the Plan.

SECTION 9

NON-EMPLOYEE DIRECTORS

9.1 Non-Employee Director Options. Subject to the terms and provisions of the
Plan, Non-qualified Stock Options may be issued to Non-employee Directors at any
time and from time to time, as determined by the Board in its sole discretion,
including the number of Shares subject to each Option, and the terms and
conditions of such Awards.

9.2 Terms of Options.

9.2.1 Option Agreement. Each Option granted pursuant to this Section 9 shall be
evidenced by a written stock option agreement, which shall be executed by the
Non-employee Director and the Company.

9.2.2 Exercise Price. The Exercise Price for the Shares subject to each Option
granted pursuant to this Section 9 shall be one hundred percent (100%) of the
Fair Market Value of such Shares on the Grant Date.

9.2.3 Exercisability. Unless provided otherwise in an Award Agreement, each
Option granted pursuant to this Section 9 shall be fully exercisable on the
Grant Date.

9.2.4 Expiration of Options. Subject to Section 10.13, unless provided otherwise
in an Award Agreement, each Option shall terminate upon the first to occur of
the following events:

(a) The expiration of seven (7) years from the Grant Date; or

(b) The expiration of three (3) months from the date of the Non-employee
Director’s Termination of Service for a reason (including, but not limited to
the Non-Employee Director’s resignation) other than death, Disability,
completion of the Participant’s term as a Director or Retirement; or

(c) The expiration of three (3) years from the date of the Non-employee
Director’s Termination of Service by reason of completion of the Participant’s
term as a Director, Disability or Retirement.

 

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9.2.5 Death of Director. Subject to Section 10.13, notwithstanding
Section 9.2.4, if a Non-employee Director dies prior to the expiration of his or
her options in accordance with Section 9.2.4, his or her options shall terminate
three (3) years after the date of his or her death.

9.2.6 Not Incentive Stock Options. Options granted pursuant to this Section 9
shall not be designated as Incentive Stock Options.

9.2.7 Other Terms. Unless provided otherwise in an Award Agreement, all
provisions of the Plan not inconsistent with this Section 9 shall apply to
Options granted to Non-employee Directors; provided, however, that Section 5.2
(relating to the Committee’s discretion to set the terms and conditions of
Options) shall be inapplicable with respect to Non-employee Directors.

9.3 Substitute Options. Notwithstanding the provisions of Section 9.2.2, in the
event that the Company or an Affiliate consummates a transaction described in
section 424(a) of the Code (e.g., the acquisition of property or stock from an
unrelated corporation), persons who become Non-employee Directors on account of
such transaction may be granted Options in substitution for options granted by
their former employer. If such substitute Options are granted, the Committee, in
its sole discretion and consistent with section 424(a) of the Code, shall
determine the exercise price of such substitute Options.

9.4 Elections by Non-employee Directors. Pursuant to such procedures as the
Board (in its discretion) may adopt from time to time, each Non-employee
Director may elect to forego receipt of all or a portion of the annual retainer,
committee chair fees, meeting attendance fees and other cash compensation
otherwise due to the Non-employee Director in exchange for Shares. The number of
Shares received by any Non-employee Director shall equal the amount of foregone
compensation divided by the Fair Market Value of a Share on the date that the
compensation otherwise would have been paid to the Non-employee Director,
rounded up to the nearest whole number of Shares. In addition, pursuant to such
procedures as the Board (in its discretion) may adopt from time to time, each
Non-employee Director may elect to forego receipt of all or a portion of the
annual retainer, committee chair and meeting attendance fees and other cash
compensation otherwise due to the Non-employee Director in exchange for an
Option to purchase Shares. The number of Shares subject to such an Option
received by any Non-employee Director shall equal the amount of foregone
compensation multiplied by four (4) and divided by the Fair Market Value of a
Share on the date that the compensation otherwise would have been paid to the
Non-employee Director, rounded up to the nearest whole number of Shares. All
Options granted pursuant to this Section 9.4 shall be subject to the
restrictions of Section 9.2.

9.5 Deferred Stock Units. Subject to the terms and provisions of the Plan,
Awards of Deferred Stock Units may be granted to Non-employee Directors at any
time and from time to time, as determined by the Board in its sole discretion,
including the number of Deferred Stock Units subject to each Award and the terms
and conditions of such Awards.

9.6 Terms of Deferred Stock Units.

9.6.1 Deferred Stock Unit Agreement. Deferred Stock Units granted pursuant to
Section 9.5 shall be evidenced by a written Award Agreement, which shall be
executed by the Non-employee Director and the Company.

9.6.2 Vesting. Unless otherwise provided in an Award Agreement, Awards of
Deferred Stock Units shall vest over a period of not less than one year from the
date of grant, and may vest pro rata over such time. Vesting may be accelerated
in limited situations such as death of the Non-employee Director and change in
control of the Company.

9.6.3 Payment. Except as may be provided in an Award Agreement, Deferred Stock
Unit Awards will be paid in Shares. Awards of Deferred Stock Units may be paid
in a lump sum or in installments or, in accordance with procedures established
by the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code.

 

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9.6.4 Other Terms. Unless provided otherwise in an Award Agreement, all
provisions of the Plan applicable to Restricted Stock Units not inconsistent
with Section 9.5 and this Section 9.6 shall apply to Deferred Stock Units
granted to Non-employee Directors.

SECTION 10

MISCELLANEOUS

10.1 No Effect on Employment or Service. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any Participant’s
employment or service at any time, with or without cause. For purposes of the
Plan, transfer of employment of a Participant between the Company and any one of
its Affiliates (or between Affiliates) shall not be deemed a Termination of
Service. Employment with the Company and its Affiliates is on an at-will basis
only.

10.2 Participation. No Employee or Consultant shall have the right to be
selected to receive an Award under this Plan, or, having been so selected, to be
selected to receive a future Award.

10.3 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any Award Agreement, and (b) from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval,
or paid by him or her in satisfaction of any judgment in any such claim, action,
suit, or proceeding against him or her, provided he or she shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.

10.4 Successors. All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business or assets of the Company.

10.5 Beneficiary Designations. If permitted by the Committee, a Participant
under the Plan may name a beneficiary or beneficiaries to whom any vested but
unpaid Award shall be paid in the event of the Participant’s death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Committee. In the
absence of any such designation, any vested benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant’s estate.

10.6 Nontransferability of Awards. Except as provided below, no Award granted
under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will, by the laws of descent and
distribution, or to the limited extent provided in Section 10.5. All rights with
respect to an Award granted to a Participant shall be available during his or
her lifetime only to the Participant. Notwithstanding the foregoing, the
Committee, or the Board in the case of Awards to Non-Employee Directors, may, in
its sole discretion, permit the transfer of an Award to an individual or entity
other than the Company (each transferee thereof a “Permitted Assignee”), subject
to such restrictions as the Committee, or the Board, in its sole discretion may
impose.

10.7 No Rights as Stockholder. Except to the limited extent provided in Sections
7.6 and 7.7, no Participant (nor any beneficiary) shall have any of the rights
or privileges of a stockholder of the Company with respect to any Shares
issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).

 

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10.8 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof). Notwithstanding any contrary
provision of the Plan, if a Participant fails to remit to the Company such
withholding amount within the time period specified by the Committee (in its
discretion), the Participant’s Award may, in the Committee’s discretion, be
forfeited and in such case the Participant shall not receive any of the Shares
subject to such Award.

10.9 Withholding Arrangements. The Committee, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit or
require a Participant to satisfy all or part of the minimum required tax
withholding obligations in connection with an Award by (a) having the Company
withhold otherwise deliverable Shares, or (b) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to
be withheld. The Fair Market Value of the Shares to be withheld or delivered
shall be determined as of the date that the taxes are required to be withheld.

10.10 Deferrals. The Committee, in its sole discretion, may permit a Participant
to defer receipt of the payment of cash or the delivery of Shares that would
otherwise be delivered to a Participant under the Plan. Any such deferral
elections shall be subject to such rules and procedures as shall be determined
by the Committee in its sole discretion. Notwithstanding the foregoing, any
deferral under this Section 10.10 shall be made in accordance with the
provisions of section 409A of the Code and the applicable guidance issued by the
Secretary of the Treasury thereunder.

10.11 Dividend Equivalents. Subject to the provisions of the Plan and any Award
Agreement, the recipient of an Award (including, without limitation, any
deferred Award) may, if so determined by the Committee, or the Board in the case
of Awards to Non-Employee Directors, be entitled to receive, currently or on a
deferred basis, cash or stock dividends, or cash payments in amounts equivalent
to cash or stock dividends on Shares (“dividend equivalents”) with respect to
the number of Shares covered by the Award, as determined by the Committee, or
the Board in the case of Non-Employee Directors, in its sole discretion, and the
Committee or Board may provide that such amounts (if any) shall be deemed to
have been reinvested in additional Shares or otherwise reinvested.

10.12 Prohibition on Repricings. Options and SARs may not be repriced without
the approval of the Company’s stockholders. For this purpose, “reprice” means
that that the Company has: (a) lowered or reduced the Exercise Price of
outstanding Options and/or outstanding SARs after they have been granted, (b)
canceled an Option and/or a SAR when the applicable Exercise Price exceeds the
Fair Market Value of the underlying Shares in exchange for cash or another
Award and (c) taken any other action with respect to an Option and/or a SAR that
would be treated as a repricing under the rules and regulations of the principal
securities market on which the Shares are traded. An adjustment pursuant to
Section 4.3 shall not be treated as a repricing.

10.13 Maximum Term of Options and SARs. Notwithstanding anything in Sections 5,
6 and 9 to the contrary, no Option or SAR granted after February 15, 2007 shall
have a term that exceeds seven (7) years from the Grant Date.

10.14 Restatement of Financial Results. Notwithstanding anything to the contrary
set forth in the Plan or any Award Agreement, in the event of a restatement of
incorrect financial results, the Board will review the conduct of executive
officers in relation to the restatement. If the Board determines that an
executive officer has engaged in misconduct or other violations of the Company’s
code of ethics in connection with the restatement, the Board would, in its
discretion, take appropriate action to remedy the misconduct, including, without
limitation, seeking reimbursement of any portion of performance-based or
incentive compensation paid or awarded to the executive under the Plan that is
greater than would have been paid or awarded if calculated based on the restated
financial results, to the extent not prohibited by governing law. For this
purpose, the term “executive officer” means executive officers as defined by the
Securities Exchange Act of 1934, as amended. Such action by the Board would be
in addition to any other actions the Board or the Company may take under the
Company’s policies, as modified from time to time, or any actions imposed by law
enforcement, regulators or other authorities.

 

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SECTION 11

AMENDMENT, TERMINATION AND DURATION

11.1 Amendment, Suspension or Termination. The Board, in its sole discretion,
may amend or terminate the Plan, or any part thereof, at any time and for any
reason. The amendment, suspension or termination of the Plan shall not, without
the consent of the Participant, alter or impair any rights or obligations under
any Award theretofore issued to such Participant. Any amendment shall also, to
the extent required by applicable law or regulation, be subject to stockholder
approval. No Award may be granted during any period of suspension or after
termination of the Plan.

11.2 Duration of the Plan. This third amended and restated Plan shall, subject
to Section 11.1 (regarding the Board’s right to amend or terminate the Plan),
remain in effect for ten (10) years from the Adoption Date. Without further
stockholder approval, no Incentive Stock Option may be granted under the Plan
after ten (10) years from the Adoption Date.

SECTION 12

LEGAL CONSTRUCTION

12.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

12.2 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

12.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

12.4 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California, but without
regard to its conflict of law provisions.

12.5 Captions. Captions are provided herein for convenience only, and shall not
serve as a basis for interpretation or construction of the Plan.

EXECUTION

IN WITNESS WHEREOF, Varian Medical Systems, Inc., by its duly authorized
officer, has executed the Plan on the date indicated below.

 

    Varian Medical Systems, Inc. Dated: February 9, 2012    

By: /s/ John W. Kuo

    John W. Kuo     Corporate Vice President, General Counsel & Secretary

 

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