Exhibit 10.1

 

September 17, 2004

 

Dow Wilson

 

Dear Dow,

 

I am pleased to confirm our offer of employment to you for the position of
President, Oncology Systems and Corporate Vice-President, Varian Medical
Systems, Inc. (VMS) reporting to Tim Guertin, in his role as Chief Operating
Officer of VMS.  This offer is contingent on approval by our Board of
Directors.  Your start date has yet to be determined but this offer is
contingent on a start date not later than January 30, 2005.

 

The specific components making up this offer are as follows:

 

SALARY

 

Your starting weekly base salary will be $8,847.00 ($460,044.00 annualized). VMS
is on a bi-weekly payroll cycle.

 

MANAGEMENT INCENTIVE PLAN

 

You will be eligible to participate in the VMS Management Incentive Plan (MIP)
beginning in fiscal year 2006. Your target award percentage will be 75% of base
salary (at 100% achievement of funding target levels).  Under the terms of the
MIP (please refer to the Plan document for the actual terms governing awards),
awards are based on specific VMS financial achievements. In general, to be
eligible for the award, you must be actively employed and in good standing at
the end of the specified performance period.  The award is typically payable in
December for the prior fiscal year’s performance.  A separate MIP participation
letter will be issued to you along with the highlights and terms of the plan.

 

In lieu of MIP participation in fiscal year 2005, we will grant you a lump sum
bonus of $500,000.00 which will be payable within the first month of your
employment.  In the event that a payout of more than $500,000 would have been
made to you under the MIP had you been a participant for fiscal year 2005 at
your FY2006 participation level, we will provide you an additional incremental
bonus to cover the differential no later than December of 2005.

 

Executive Car

 

While employed by VMS, you will participate in the VMS Executive Car Program.
Your current purchase price limit will be $66,000 per the car plan terms.
Vehicles are leased for 36 months or 60,000 miles whichever occurs first.
Insurance, maintenance expenses and fuel costs are included in the program. A
copy of the Executive Car Plan will be provided to you.

 

Stock Options, Restricted Stock & Restricted Cash

 

We shall recommend to the Compensation and Management Development Committee of
the Board of Directors that you be granted a non-qualified stock option for
50,000 shares of VMS stock and a restricted stock grant equal to $1,8000,000.00
for shares of the corporation’s Common Stock (calculated on the closing price of
our stock on the first date of your employment) (the “Employment Date”).

 

For the non-qualified stock options, the exercise price would be the closing
price on the New York Stock Exchange on the effective day of the grant, which
will be your Employment Date.  These non-qualified options vest over a
three-year period and expire after 10 years. The first one-third of the options
vest and are exercisable after the end of the first year following the option
grant and the remainder of the options

 

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vest and are exercisable on a monthly basis thereafter.  The details of the
grant will be set forth in the option agreement.

 

For the restricted stock, the grant will be effective as of the Employment
Date.  The shares will vest over a 15-year period according to the following
vesting schedule: the first one-third after the end of the fifth year following
the restricted stock grant date, the second one-third after the end of the tenth
year following the restricted stock grant date, and the last one-third after the
end of the fifteenth year following the restricted stock grant date. The details
of the grant will be set forth in the restricted stock agreement.

 

Additionally, also effective as of the Employment Date, we will grant you
$1,600,000.00 cash over a 5-year period.  The initial payment of $320,000 will
be paid on the first anniversary of the Employment Date, followed by forty seven
(47) monthly payments in the amount of $26,666 beginning on the first month
following the initial payment; and one (1) final payment in the amount of
$26,700.

 

BENEFIT PROGRAMS

 

While employed by VMS, you will be eligible to participate in health, life,
benefit and retirement plans offered by VMS in accordance with plan enrollment
requirements. While some plans are provided at no costs, others do require an
employee contribution.

 

Additionally, you will be entitled to the following executive benefits while
employed by VMS:

 

•                  Reimbursement for financial and tax planning up to a maximum
of $6,500/year.

•                  Reimbursement of annual executive physical examination up to
a maximum of $1,500/year.

•                  Supplemental Retirement Plan (SRP) match beginning after one
year of employment.  Equal to 6% of the participant’s base salary and applicable
incentive payments earned during the year, reduced by the amount of any company
matching contributions that would be made to the 401(k) Retirement Plan if the
participant had contributed the maximum 401(k) amount for the plan year.

•                  Participation in the VMS Deferred Compensation Plan (DCP). 
This non-qualified DCP is designed to allow its participants to defer current
compensation on a pre-tax basis.

 

RELOCATION PROGRAM

 

As part of a relocation package, VMS offers the following:

 

•                  Three house hunting trips for you and your wife, including
airfare, lodging, rental car and a $75 a day per diem.

•                  Reimbursement of duplicate housing costs for up to six
months, if necessary, not to exceed ½ of the monthly mortgage expense on a home
you purchase in California.

•                  Movement of household items up to a maximum of 30,000 lbs.

•                  Shipment of up to two automobiles or mileage reimbursement
for driving to the SF Bay Area.

•                  Should you relocate to the SF Bay Area in advance of your
family, Varian will pay for home visits to Wisconsin every two weeks for up to
six months.

•                  30 days of temporary housing for you.

•                  30 days of temporary storage of household goods.

•                  30 days usage of a rental car.

•                  A one-time relocation allowance of $30,000.00 (net of taxes).

 

Varian will assist you in the sale of your primary residence in Wisconsin by
paying all normal seller-closing costs (cost of sales), up to 6% of the sale
price. This benefit will be available to you for up to twelve (12) months from
the date you move to the SF Bay Area.

 

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With respect to your new residence in California, VMS’s policy on closing costs
on a new home is the following:  an employee may be reimbursed for actual normal
closing costs for an appraisal, document preparation, home inspection, credit
report, mortgage application and loan origination points, title search and title
insurance, legal fees, recording fees, state transfer taxes etc. up to a maximum
of 4% of the mortgage value assuming 100% equity reinvestment of the home
purchased.  Costs for such items as home warranties, prorated property taxes,
homeowners insurance, interest rate buy-down points or prorated interest expense
are not reimbursable.  Varian will not pay for any assumed buyer closing costs.

 

Please be aware that if you voluntarily terminate your employment with Varian
following your relocation to the SF Bay Area, you will be expected to repay all
relocation expenses in accordance with the following schedule:

 

Resignation Following
Relocation

 

Repayment
Obligation

 

0 - 6 Months

 

100

%

7 - 12 Months

 

75

%

13 - 18 Months

 

50

%

19 -24 Months

 

25

%

25+ Months

 

0

%

 

Except for amounts grossed up for applicable taxes as provided in VMS’s
policies, any amounts referenced in and paid pursuant to this letter and
referenced policies are subject to all applicable state, local and federal
withholding taxes.

 

Please note that these proposed terms of employment supersede any prior
agreement, representations or promises of any kind, whether written, verbal,
expressed or implied between the parties hereto with respect to the subject
matters herein.

 

This offer is contingent upon your ability to perform the essential functions of
the position with or without reasonable accommodation, and pass a drug screen. 
Until you have been notified that you have successfully passed the drug screen,
do not take any actions in reliance upon this offer letter, such as resigning
from your current employment.

 

This offer is also contingent upon your ability to provide proof of employment
eligibility under applicable regulations.

 

VMS’s offer of employment is based on your individual skills and talent.  Please
make sure not to bring with you to VMS any materials that contain the trade
secret or proprietary information of third parties.  VMS respects the trade
secret rights of other companies and expects all employees to do the same.

 

Your employment at VMS is an at-will employment relationship, meaning that
either VMS, or you, has the right to terminate the employment relationship at
any time with or without cause or notice.  Your signature below acknowledges
your agreement to VMS’s at-will employment relationship and supercedes all other
agreements on this subject. The at-will nature of the employment relationship
can only be modified by a written agreement signed by you and VMS’s Chief
Executive Officer.

 

We are including new hire materials for you to review and complete and return to
MVS as of your Employment Date.  Should you have any questions in the meantime,
please feel free to contact me at (650) 424-6180.

 

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Dow, we are very enthusiastic about the prospect of your joining Varian Medical
Systems, Inc. and hope you will have a stimulating and satisfying career here.

 

 

Sincerely,

 

/s/ Wendy Reitherman

 

 

 

Wendy Reitherman

Vice President, Human Resources

 

cc:

 

H.R. File

 

 

Tim Guertin

 

 

Dick Levy

 

Your signature below will indicate your understanding and intention to accept
the offer of employment set forth in this letter and enter into an employment
arrangement with Varian.  In addition to the contingencies set forth above and
not withstanding your signature below, it is understood and agreed that the
terms of this letter shall become effective only upon your Employment Date
following termination of your current employment. Please sign both copies and
return one copy in the envelope provided.

 

 

/s/ Dow Wilson

 

20 December 2004

 

Dow Wilson (signature)

Date

 

 

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