Exhibit 10.3

 

VARIAN MEDICAL SYSTEMS, INC.

EMPLOYEE STOCK PURCHASE PLAN

 

(Amended and restated to reflect the July 30, 2004 two-for-one stock split)

 

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TABLE OF CONTENTS

 

Section 1

PURPOSE

 

 

 

 

Section 2

DEFINITIONS

 

 

 

 

 

2.1

“1934 Act”

 

 

2.2

“Board”

 

 

2.3

“Code”

 

 

2.4

“Committee”

 

 

2.5

“Common Stock”

 

 

2.6

“Company”

 

 

2.7

“Compensation”

 

 

2.8

“Eligible Employee”

 

 

2.9

“Employee”

 

 

2.10

“Employer” or “Employers”

 

 

2.11

“Enrollment Date”

 

 

2.12

“Grant Date”

 

 

2.13

“Participant”

 

 

2.14

“Plan”

 

 

2.15

“Purchase Date”

 

 

2.16

“Subsidiary”

 

 

 

 

 

Section 3

SHARES SUBJECT TO THE PLAN

 

 

 

 

 

3.1

Number Available.

 

 

3.2

Adjustments.

 

 

 

 

 

Section 4

ENROLLMENT

 

 

 

 

 

4.1

Participation.

 

 

4.2

Payroll Withholding.

 

 

 

 

 

Section 5

OPTIONS TO PURCHASE COMMON STOCK

 

 

 

 

 

5.1

Grant of Option.

 

 

5.2

Duration of Option.

 

 

5.3

Number of Shares Subject to Option.

 

 

5.4

Other Terms and Conditions.

 

 

 

 

 

Section 6

PURCHASE OF SHARES

 

 

 

 

 

6.1

Exercise of Option.

 

 

6.2

Delivery of Shares.

 

 

6.3

Exhaustion of Shares.

 

 

 

 

 

Section 7

WITHDRAWAL

 

 

 

 

 

7.1

Withdrawal.

 

 

 

 

 

Section 8

CESSATION OF PARTICIPATION

 

 

 

 

 

8.1

Termination of Status as Eligible Employee.

 

 

 

 

 

Section 9

DESIGNATION OF BENEFICIARY

 

 

 

 

 

9.1

Designation.

 

 

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9.2

Changes.

 

 

9.3

Failed Designations.

 

 

 

 

 

Section 10

ADMINISTRATION

 

 

 

 

 

10.1

Plan Administrator.

 

 

10.2

Actions by Committee.

 

 

10.3

Powers of Committee.

 

 

10.4

Decisions of Committee.

 

 

10.5

Administrative Expenses.

 

 

10.6

Eligibility to Participate.

 

 

10.7

Indemnification.

 

 

 

 

 

Section 11

AMENDMENT, TERMINATION, AND DURATION

 

 

 

 

 

11.1

Amendment, Suspension, or Termination.

 

 

 

 

 

Section 12

GENERAL PROVISIONS

 

 

 

 

 

12.1

Participation by Subsidiaries.

 

 

12.2

Inalienability

 

 

12.3

Severability.

 

 

12.4

Requirements of Law.

 

 

12.5

Compliance with Rule 16b-3.

 

 

12.6

No Enlargement of Employment Rights.

 

 

12.7

Apportionment of Costs and Duties.

 

 

12.8

Construction and Applicable Law.

 

 

12.9

Captions.

 

 

12.10

Duration

 

 

 

 

 

EXECUTION

 

 

 

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VARIAN MEDICAL SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(as amended and restated to reflect the July 30, 2004 two-for-one stock split)

 

SECTION 1
PURPOSE

 

Varian Medical Systems, Inc., a Delaware corporation has established the Varian
Medical Systems, Inc. Employee Stock Purchase Plan in order to provide eligible
employees of the Company and its participating Subsidiaries with the opportunity
to purchase Common Stock through payroll deductions.  The Plan as amended and
restated effective as of April 1, 2001, is intended to qualify as an employee
stock purchase plan under Section 423(b) of the Code.

 

SECTION 2
DEFINITIONS

 

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

 

2.3                                 “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 under such Section, and any comparable provision of any future
legislation or regulation amending, supplementing or superseding such Section or
regulation.

 

2.4                                 “Committee” shall mean the committee
appointed by the Board to administer the Plan.  Any member of the Committee may
resign at any time by notice in writing mailed or delivered to the Secretary of
the Company.  As of the effective date of the Plan, the Plan shall be
administered by the Organization and Compensation Committee of the Board.

 

2.5                                 “Common Stock” means the common stock of the
Company.

 

2.6                                 “Company” means Varian Medical Systems,
Inc., a Delaware corporation.

 

2.7                                 “Compensation” means a Participant’s regular
wages.  The Committee, in its discretion, may (on a uniform and
nondiscriminatory basis) establish a different definition of Compensation prior
to an Enrollment Date for all options to be granted on such Enrollment Date.

 

2.8                                 “Eligible Employee” means every Employee of
an Employer, except (a) any Employee who immediately after the grant of an
option under the Plan, would own stock and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of any Subsidiary

 

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of the Company (including stock attributed to such Employee pursuant to
Section 424(d) of the Code), or (b) as provided in the following sentence.  The
Committee, in its discretion, from time to time may, prior to an Enrollment Date
for all options to be granted on such Enrollment Date, determine (on a uniform
and nondiscriminatory basis) that an Employee or class of Employees shall not be
an Eligible Employee.

 

2.9                                 “Employee” means an individual who is a
common-law employee of any Employer, whether such employee is so employed at the
time the Plan is adopted or becomes so employed subsequent to the adoption of
the Plan.

 

2.10                           “Employer” or “Employers” means any one or all of
the Company, and those Subsidiaries which, with the consent of the Board, have
adopted the Plan.

 

2.11                           “Enrollment Date” means such dates as may be
determined by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time.

 

2.12                           “Grant Date” means any date on which a
Participant is granted an option under the Plan.

 

2.13                           “Participant” means an Eligible Employee who (a)
has become a Participant in the Plan pursuant to Section 4.1 and (b) has not
ceased to be a Participant pursuant to Section 8 or Section 9.

 

2.14                           “Plan” means the Varian Medical Systems, Inc.
Employee Stock Purchase Plan, as set forth in this instrument and as hereafter
amended from time to time.

 

2.15                           “Purchase Date” means such dates as may be
determined by the Committee (in its discretion and on a uniform and
nondiscriminatory basis) from time to time prior to an Enrollment Date for all
options to be granted on such Enrollment Date.

 

2.16                           “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.

 

SECTION 3
SHARES SUBJECT TO THE PLAN

 

3.1                                 Number Available.  In addition to shares of
Common Stock previously reserved by the Company’s Board of Directors for sale to
participants pursuant to the Plan, beginning with the first fiscal year of the
Company beginning after the effective date of the amendment and restatement of
the Plan, 2,700,000 Shares or such lesser amount as determined by the Board will
be added to the Plan.  Shares sold under the Plan may be newly issued shares or
treasury shares.

 

3.2                                 Adjustments.  In the event of any
reorganization, recapitalization, stock split, reverse stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights or
other similar change in the capital structure of the Company, the Board may make

 

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such adjustment, if any, as it deems appropriate in the number, kind and
purchase price of the shares available for purchase under the Plan and in the
maximum number of shares subject to any option under the Plan.

 

SECTION 4
ENROLLMENT

 

4.1                                 Participation.  Each Eligible Employee may
elect to become a Participant by enrolling or re-enrolling in the Plan effective
as of any Enrollment Date.  In order to enroll, an Eligible Employee must
complete, sign and submit to the Company an enrollment form in such form, manner
and by such deadline as may be specified by the Committee from time to time (in
its discretion and on a nondiscriminatory basis).  Any Participant whose option
expires and who has not withdrawn from the Plan automatically will be
re-enrolled in the Plan on the Enrollment Date immediately following the
Purchase Date on which his or her option expires.

 

4.2                                 Payroll Withholding.  On his or her
enrollment form, each Participant must elect to make Plan contributions via
payroll withholding from his or her Compensation.  Pursuant to such procedures
as the Committee may specify from time to time.  A Participant may elect to have
withholding equal to a whole percentage from 1% to 10% (or such lesser, or
greater, percentage that the Committee may establish from time to time for all
options to be granted on any Enrollment Date).  A Participant may elect to
increase or decrease his or her rate of payroll withholding by submitting a new
enrollment form in accordance with such procedures as may be established by the
Committee from time to time.  A Participant may stop his or her payroll
withholding by submitting a new enrollment form in accordance with such
procedures as may be established by the Committee from time to time.  In order
to be effective as of a specific date, an enrollment form must be received by
the Company no later than the deadline specified by the Committee, in its
discretion and on a nondiscriminatory basis, from time to time.  Any Participant
who is automatically re-enrolled in the Plan will be deemed to have elected to
continue his or her contributions at the percentage last elected by the
Participant.

 

SECTION 5
OPTIONS TO PURCHASE COMMON STOCK

 

5.1                                 Grant of Option.  On each Enrollment Date on
which the Participant enrolls or re-enrolls in the Plan, he or she shall be
granted an option to purchase shares of Common Stock.

 

5.2                                 Duration of Option.  Each option granted
under the Plan shall expire upon the conclusion of the option’s offering period
which will end on the earliest to occur of (a) the completion of the purchase of
shares on the last Purchase Date occurring within 27 months of the Grant Date of
such option, (b) such shorter option period as may be established by the
Committee from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date, or (c) the date on which the Participant ceases
to be such for any reason.  Until otherwise determined by the Committee for all
options to be granted on an Enrollment Date, the period referred to in clause
(b) in the preceding sentence shall mean the period from the applicable
Enrollment Date through the last business day prior to the immediately following
Enrollment Date.

 

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5.3                                 Number of Shares Subject to Option.  The
number of shares available for purchase by each Participant under the option
will be established by the Committee from time to time prior to an Enrollment
Date for all options to be granted on such Enrollment Date.

 

5.4                                 Other Terms and Conditions.  Each option
shall be subject to the following additional terms and conditions:

 

(a)                                  payment for shares purchased under the
option shall be made only through payroll withholding under Section 4.2;

 

(b)                                 purchase of shares upon exercise of the
option will be accomplished only in accordance with Section 6.1;

 

(c)                                  the price per share under the option will
be determined as provided in Section 6.1; and

 

(d)                                 the option in all respects shall be subject
to such other terms and conditions (applied on a uniform and nondiscriminatory
basis), as the Committee shall determine from time to time in its discretion.

 

SECTION 6
PURCHASE OF SHARES

 

6.1                                 Exercise of Option.  Subject to Section 6.2,
on each Purchase Date, the funds then credited to each Participant’s account
shall be used to purchase whole shares of Common Stock.  Any cash remaining
after whole shares of Common Stock have been purchased shall be carried forward
in the Participant’s account for the purchase of shares on the next Purchase
Date.  The price per Share of the Shares purchased under any option granted
under the Plan shall be eighty-five percent (85%) of the lower of:

 

(a)                                  the closing price per Share on the New York
Stock Exchange as reported in the Western Edition of The Wall Street Journal on
the Grant Date for such option; or

 

(b)                                 the closing price per Share on the New York
Stock Exchange as reported in the Western Edition of The Wall Street Journal on
the Purchase Date.

 

6.2                                 Delivery of Shares.  As directed by the
Committee in its sole discretion, shares purchased on any Purchase Date shall be
delivered directly to the Participant or to a custodian or broker (if any)
designated by the Committee to hold shares for the benefit of the Participants. 
As determined by the Committee from time to time, such shares shall be delivered
as physical certificates or by means of a book entry system.

 

6.3                                 Exhaustion of Shares.  If at any time the
shares available under the Plan are over-enrolled, enrollments shall be reduced
proportionately to eliminate the over-enrollment. Such reduction method shall be
“bottom up,” with the result that all option exercises for one share shall be
satisfied first, followed by all exercises for two shares, and so on, until all
available shares have been exhausted.  Any funds that, due to over-enrollment,
cannot be applied to the purchase of whole shares shall be refunded to the
Participants (without interest thereon).

 

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SECTION 7
WITHDRAWAL

 

7.1                                 Withdrawal.  A Participant may withdraw from
the Plan by submitting a completed Employee Stock Purchase Plan Authorization
form to the Company.  A withdrawal will be effective only if it is received by
the Company by the deadline specified by the Committee (in its discretion and on
a uniform and nondiscriminatory basis) from time to time.  When a withdrawal
becomes effective, the Participant’s payroll contributions shall cease and all
amounts then credited to the Participant’s account shall be distributed to him
or her (without interest thereon).

 

SECTION 8
CESSATION OF PARTICIPATION

 

8.1                                 Termination of Status as Eligible Employee. 
A Participant shall cease to be a Participant immediately upon the cessation of
his or her status as an Eligible Employee (for example, because of his or her
termination of employment from all Employers for any reason).  As soon as
practicable after such cessation, the Participant’s payroll contributions shall
cease and all amounts then credited to the Participant’s account shall be
distributed to him or her (without interest thereon).  If a Participant is on a
Company-approved leave of absence, his or her participation in the Plan shall
continue for so long as he or she remains an Eligible Employee and has not
withdrawn from the Plan pursuant to Section 7.1.

 

SECTION 9
DESIGNATION OF BENEFICIARY

 

9.1                                 Designation.  Each Participant may, pursuant
to such uniform and nondiscriminatory procedures as the Committee may specify
from time to time, designate one or more Beneficiaries to receive any amounts
credited to the Participant’s account at the time of his or her death. 
Notwithstanding any contrary provision of this Section 9, Sections 9.1 and 9.2
shall be operative only after (and for so long as) the Committee determines (on
a uniform and nondiscriminatory basis) to permit the designation of
Beneficiaries.

 

9.2                                 Changes.  A Participant may designate
different Beneficiaries (or may revoke a prior Beneficiary designation) at any
time by delivering a new designation (or revocation of a prior designation) in
like manner.  Any designation or revocation shall be effective only if it is
received by the Committee.  However, when so received, the designation or
revocation shall be effective as of the date the designation or revocation is
executed (whether or not the Participant still is living), but without prejudice
to the Committee on account of any payment made before the change is recorded. 
The last effective designation received by the Committee shall supersede all
prior designations.

 

9.3                                 Failed Designations.  If a Participant dies
without having effectively designated a Beneficiary, or if no Beneficiary
survives the Participant, the Participant’s Account shall be payable to his or
her estate.

 

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SECTION 10
ADMINISTRATION

 

10.1                           Plan Administrator.  The Plan shall be
administered by the Committee.  The Committee shall have the authority to
control and manage the operation and administration of the Plan.

 

10.2                           Actions by Committee.  Each decision of a
majority of the members of the Committee then in office shall constitute the
final and binding act of the Committee.  The Committee may act with or without a
meeting being called or held and shall keep minutes of all meetings held and a
record of all actions taken by written consent.

 

10.3                           Powers of Committee.  The Committee shall have
all powers and discretion necessary or appropriate to supervise the
administration of the Plan and to control its operation in accordance with its
terms, including, but not by way of limitation, the following discretionary
powers:

 

(a)                                  To interpret and determine the meaning and
validity of the provisions of the Plan and the options and to determine any
question arising under, or in connection with, the administration, operation or
validity of the Plan or the options;

 

(b)                                 To determine any and all considerations
affecting the eligibility of any employee to become a Participant or to remain a
Participant in the Plan;

 

(c)                                  To cause an account or accounts to be
maintained for each Participant;

 

(d)                                 To determine the time or times when, and the
number of shares for which, options shall be granted;

 

(e)                                  To establish and revise an accounting
method or formula for the Plan;

 

(f)                                    To designate a custodian or broker to
receive shares purchased under the Plan and to determine the manner and form in
which shares are to be delivered to the designated custodian or broker;

 

(g)                                 To determine the status and rights of
Participants and their Beneficiaries or estates;

 

(h)                                 To employ such brokers, counsel, agents and
advisers, and to obtain such broker, legal, clerical and other services, as it
may deem necessary or appropriate in carrying out the provisions of the Plan;

 

(i)                                     To establish, from time to time, rules
for the performance of its powers and duties and for the administration of the
Plan;

 

(j)                                     To adopt such procedures and subplans as
are necessary or appropriate to permit participation in the Plan by employees
who are foreign nationals or employed outside of the United States;

 

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(k)                                  To delegate to any one or more of its
members or to any other person, severally or jointly, the authority to perform
for and on behalf of the Committee one or more of the functions of the Committee
under the Plan.

 

10.4                           Decisions of Committee.  All actions,
interpretations, and decisions of the Committee shall be conclusive and binding
on all persons, and shall be given the maximum possible deference allowed by
law.

 

10.5                           Administrative Expenses.  All expenses incurred
in the administration of the Plan by the Committee, or otherwise, including
legal fees and expenses, shall be paid and borne by the Employers, except any
stamp duties or transfer taxes applicable to the purchase of shares may be
charged to the account of each Participant.  Any brokerage fees for the purchase
of shares by a Participant, fees and taxes (including brokerage fees) for the
transfer, sale or resale of shares by a Participant, or the issuance of physical
share certificates, shall be borne solely by the Participant.

 

10.6                           Eligibility to Participate.  No member of the
Committee who is also an employee of an Employer shall be excluded from
participating in the Plan if otherwise eligible, but he or she shall not be
entitled, as a member of the Committee, to act or pass upon any matters
pertaining specifically to his or her own account under the Plan.

 

10.7                           Indemnification.  Each of the Employers shall,
and hereby does, indemnify and hold harmless the members of the Committee and
the Board, from and against any and all losses, claims, damages or liabilities
(including attorneys’ fees and amounts paid, with the approval of the Board, in
settlement of any claim) arising out of or resulting from the implementation of
a duty, act or decision with respect to the Plan, so long as such duty, act or
decision does not involve gross negligence or willful misconduct on the part of
any such individual.

 

SECTION 11
AMENDMENT, TERMINATION, AND DURATION

 

11.1                           Amendment, Suspension, or Termination.  The
Board, in its sole discretion, may amend, suspend or terminate the Plan, or any
part thereof, at any time and for any reason.  If the Plan is terminated, the
Board, in its discretion, may elect to terminate all outstanding options either
immediately or upon completion of the purchase of shares on the next Purchase
Date, or may elect to permit options to expire in accordance with their terms
(and participation to continue through such expiration dates).  If the options
are terminated prior to expiration, all amounts then credited to Participants’
accounts which have not been used to purchase shares shall be returned to the
Participants (without interest thereon) as soon as administratively practicable.

 

SECTION 12
GENERAL PROVISIONS

 

12.1                           Participation by Subsidiaries.  One or more
Subsidiaries of the Company may become participating Employers by adopting the
Plan and obtaining approval for such adoption from the Board.  By adopting the
Plan, a Subsidiary shall be deemed to agree to all of

 

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its terms, including (but not limited to) the provisions granting exclusive
authority (a) to the Board to amend the Plan, and (b) to the Committee to
administer and interpret the Plan.  An Employer may terminate its participation
in the Plan at any time.  The liabilities incurred under the Plan to the
Participants employed by each Employer shall be solely the liabilities of that
Employer, and no other Employer shall be liable for benefits accrued by a
Participant during any period when he or she was not employed by such Employer.

 

12.2                           Inalienability  In no event may either a
Participant, a former Participant or his or her Beneficiary, spouse or estate
sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any
right or interest under the Plan; and such rights and interests shall not at any
time be subject to the claims of creditors nor be liable to attachment,
execution or other legal process.  Accordingly, for example, a Participant’s
interest in the Plan is not transferable pursuant to a domestic relations order.

 

12.3                           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.

 

12.4                           Requirements of Law.  The granting of options and
the issuance of shares shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or securities
exchanges as the Committee may determine are necessary or appropriate.

 

12.5                           Compliance with Rule 16b-3.  Any transactions
under this Plan with respect to officers (as defined in Rule 16a-1 promulgated
under the 1934 Act) are intended to comply with all applicable conditions of
Rule 16b-3.  To the extent any provision of the Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.  Notwithstanding any contrary
provision of the Plan, if the Committee specifically determines that compliance
with Rule 16b-3 no longer is required, all references in the Plan to Rule 16b-3
shall be null and void.

 

12.6                           No Enlargement of Employment Rights.  Neither the
establishment or maintenance of the Plan, the granting of options, the purchase
of shares, nor any action of any Employer or the Committee, shall be held or
construed to confer upon any individual any right to be continued as an employee
of the Employer nor, upon dismissal, any right or interest in any specific
assets of the Employers other than as provided in the Plan.  Each Employer
expressly reserves the right to discharge any employee at any time, with or
without cause.

 

12.7                           Apportionment of Costs and Duties.  All acts
required of the Employers under the Plan may be performed by the Company for
itself and its Subsidiaries, and the costs of the Plan may be equitably
apportioned by the Committee among the Company and the other Employers. 
Whenever an Employer is permitted or required under the terms of the Plan to do
or perform any act, matter or thing, it shall be done and performed by any
officer or employee of the Employers who is thereunto duly authorized by the
Employers.

 

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12.8                           Construction and Applicable Law.  The Plan is
intended to qualify as an “employee stock purchase plan” within the meaning of
Section 423(b) of the Code.  Any provision of the Plan which is inconsistent
with Section 423(b) of the Code shall, without further act or amendment by the
Company or the Committee, be reformed to comply with the requirements of
Section 423(b).  The provisions of the Plan shall be construed, administered and
enforced in accordance with such Section and with the laws of the State of
California (excluding California’s conflict of laws provisions).

 

12.9                           Captions.  The captions contained in and the
table of contents prefixed to the Plan are inserted only as a matter of
convenience, and in no way define, limit, enlarge or describe the scope or
intent of the Plan nor in any way shall affect the construction of any provision
of the Plan.

 

12.10                     Duration.  The Plan commenced on April 1, 2001, and
subject to Section ll.1 (regarding the Board’s right to amend, suspend or
terminate the Plan), shall remain in effect for ten (10) years thereafter.

 

EXECUTION

 

IN WITNESS WHEREOF, Varian Medical Systems, Inc., by its duly authorized
officer, has executed this Plan.

 

 

 

VARIAN MEDICAL SYSTEMS, INC.

 

 

 

 

 

 

Dated:  July 30, 2004

By 

/s/ Joseph B. Phair

 

 

 

Name:

Joseph B. Phair

 

 

 

Title:

Vice President, Administration,
General Counsel & Secretary

 

 

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