Exhibit 10.36

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

SECOND AMENDED AND RESTATED

 

SHAREHOLDER AGREEMENT

 

COMPACT PARTICLE ACCELERATION CORPORATION

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

1.

VOTING PROVISIONS REGARDING BOARD

2

 

 

 

 

1.1

Size of the Board

2

 

 

 

 

 

1.2

Board Composition

2

 

 

 

 

 

1.3

Matters Requiring Certain Directors’ Approval

3

 

 

 

 

 

1.4

Failure to Designate a Board Member

3

 

 

 

 

 

1.5

Removal of Board Members

3

 

 

 

 

 

1.6

No Liability for Election of Designated Directors

4

 

 

 

 

 

1.7

Other Board Matters

4

 

 

 

 

2.

INFORMATION RIGHTS OF MAJOR INVESTORS

4

 

 

 

 

2.1

Delivery of Financial Statements

4

 

 

 

 

 

2.2

Inspection

5

 

 

 

 

 

2.3

Observation Rights

6

 

 

 

 

 

2.4

Termination of Information and Observation Rights

6

 

 

 

 

 

2.5

Confidentiality

6

 

 

 

 

3.

RIGHTS TO FUTURE STOCK ISSUANCES

7

 

 

 

 

3.1

Right of First Offer

7

 

 

 

 

 

3.2

Termination

8

 

 

 

 

4.

AGREEMENT AMONG THE COMPANY AND THE SHAREHOLDERS REGARDING TRANSFERS OF SHARES

8

 

 

 

 

4.1

Rights of Refusal

8

 

 

 

 

 

4.2

Right of Co-Sale

10

 

 

 

 

 

4.3

Effect of Failure to Comply; Inapplicability to Acquisition Option

12

 

 

 

 

5.

ACCURAY ACQUISITION OPTION AND DISTRIBUTION OPTION

12

 

 

 

 

5.1

Accuray Options

12

 

 

 

 

 

5.2

Monterey Milestone Option Process

14

 

 

 

 

 

5.3

Potential Sale Option Process

15

 

 

 

 

 

5.4

Company Fair Market Value

15

 

 

 

 

 

5.5

Stock Acquisition Option

16

 

 

 

 

 

5.6

Merger Acquisition Option

18

 

 

 

 

 

5.7

Purchase Price Provisions and Other Matters

18

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

5.8

Distribution Option

19

 

 

 

 

 

5.9

Restrictions Regarding Distribution Agreements, Etc.

20

 

 

 

 

 

5.10

Voting in Favor of the Acquisition Option or Distribution Option

20

 

 

 

 

 

5.11

Right of Accuray to Appoint Directors

21

 

 

 

 

 

5.12

Irrevocable Proxy to Accuray

21

 

 

 

 

 

5.13

Waiver of Dissenters’ Rights

22

 

 

 

 

 

5.14

No Obligation to Exercise Option

22

 

 

 

 

6.

REMEDIES

22

 

 

 

 

6.1

Covenants of the Company

22

 

 

 

 

 

6.2

Irrevocable Proxy

22

 

 

 

 

 

6.3

Specific Enforcement

23

 

 

 

 

 

6.4

Remedies Cumulative

23

 

 

 

 

7.

“MARKET STAND-OFF” AGREEMENT

23

 

 

 

8.

TERM

24

 

 

 

9.

MISCELLANEOUS

24

 

 

 

 

9.1

Additional Parties

24

 

 

 

 

 

9.2

Transfers

24

 

 

 

 

 

9.3

Successors and Assigns

25

 

 

 

 

 

9.4

Governing Law

25

 

 

 

 

 

9.5

Counterparts; Facsimile

25

 

 

 

 

 

9.6

Titles and Subtitles

25

 

 

 

 

 

9.7

Notices

25

 

 

 

 

 

9.8

Consent Required to Amend, Terminate or Waive

25

 

 

 

 

 

9.9

Delays or Omissions

26

 

 

 

 

 

9.10

Severability

26

 

 

 

 

 

9.11

Entire Agreement

26

 

 

 

 

 

9.12

Legend on Share Certificates

26

 

 

 

 

 

9.13

Stock Splits, Stock Dividends, Etc.

27

 

 

 

 

 

9.14

Manner of Voting

27

 

 

 

 

 

9.15

Further Assurances

27

 

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TABLE OF CONTENTS

(continued)

 

 

 

 

Page

 

 

 

 

 

9.16

Dispute Resolution

27

 

 

 

 

 

9.17

Costs of Enforcement

27

 

 

 

 

 

9.18

Aggregation of Stock

28

 

 

 

 

 

9.19

Spousal Consent

28

 

 

 

 

 

9.20

Public Announcement

28

 

iii

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AMENDED AND RESTATED

SHAREHOLDER AGREEMENT

 

THIS SECOND AMENDED AND RESTATED SHAREHOLDER AGREEMENT (this “Agreement”), is
made and entered into as of the 20th day of April, 2012, by and among Compact
Particle Acceleration Corporation, a Wisconsin corporation (the “Company”),
Accuray Incorporated, a Delaware corporation (“Accuray”), TomoTherapy
Incorporated, a Wisconsin corporation and wholly owned subsidiary of Accuray
(“TomoTherapy”), each holder of the Company’s Series A Common Stock, $0.001 par
value per share (“Series A Common Stock”), listed on Schedule A (each a
“Series A Holder” and collectively, the “Series A Holders”), each holder of
Series B Common Stock, $0.001 par value per share (“Series B Common Stock” and,
together with the Series A Common Stock and all other common stock as described
in the Articles (as defined below), the “Common Stock”), listed on Schedule B
(each a “Series B Holder” and collectively, the “Series B Holders”), each holder
of the Company’s Series A Preferred Stock, $0.001 par value per share (“Series A
Preferred Stock”), listed on Schedule C (each a “Series A Preferred Holder” and
collectively, the “Series A Preferred Holders”), and each holder of the
Company’s Series A-1 Preferred Stock, $0.001 par value per share (“Series A-1
Preferred Stock”), listed on Schedule D (each a “Series A-1 Preferred Holder”
and collectively, the “Series A-1 Preferred Holders”).  The Series A Holders,
the Series B Holders, the Series A Preferred Holders, and the Series A-1
Preferred Holders together with any subsequent investors or transferees who
become parties hereto pursuant to Sections 9.1 or 9.2 below, are referred to
herein each as a “Shareholder” and collectively as the “Shareholders”.  This
Agreement amends and restates that certain Amended and Restated Shareholder
Agreement, dated as of September 10, 2008 (the “Prior Agreement”),  Capitalized
terms not otherwise defined herein have the meanings attributed to them in
Exhibit A, which is incorporated herein by reference.

 

RECITALS

 

WHEREAS, concurrently with the execution of this Agreement, the Company and
certain of the Investors are entering into a Preferred Stock and Warrant
Purchase Agreement (as amended, restated, and otherwise modified from time to
time, the “Purchase Agreement”) providing for the sale and issuance of shares of
the Company’s Series A Preferred Stock and Series A-1 Preferred Stock
(collectively, “Series A Preferred Stock”) and warrants to purchase Series B
Common Stock;

 

WHEREAS, the parties to the Prior Agreement desire to amend and restate that
agreement to provide those Shareholders purchasing shares of the Company’s
Series A Preferred Stock with the right, among other rights, to designate and
elect certain members of the board of directors of the Company (the “Board”) in
accordance with the terms of this Agreement;

 

WHEREAS, the parties also desire to enter into this Agreement for the purpose of
regulating certain aspects of the Shareholders’ relationships with regard to the
Company, the right, among other rights, to designate the election of certain
members of the Board, and certain restrictions on, and rights and obligations
with respect to, the Common Stock and Series A Preferred Stock owned by the
Shareholders; and

 

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WHEREAS, to induce Accuray to acquire the Series A Preferred Stock and to enter
into this Agreement, the Purchase Agreement and the other agreements
contemplated hereby and thereby and in consideration of the mutual covenants set
forth herein and therein, the Company and the Shareholders wish to grant Accuray
a contingent acquisition right, on the terms and subject to the conditions set
forth in this Agreement, to acquire the Company in accordance with the
provisions of Section 5.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      Voting Provisions Regarding Board.

 

1.1                               Size of the Board.  Subject to the provisions
of Section 5.10, each Shareholder agrees to vote, or cause to be voted, all
Shares owned by such Shareholder, or over which such Shareholder has voting
control, from time to time and at all times, in whatever manner as shall be
necessary to ensure that the size of the Board shall be five (5) directors.

 

1.2                               Board Composition.  Subject to the provisions
of Section 5.10, each Shareholder agrees to vote, or cause to be voted, all
Shares owned by such Shareholder, or over which such Shareholder has voting
control, from time to time and at all times, in whatever manner as shall be
necessary to ensure that at each annual or special meeting of shareholders at
which an election of directors is held or pursuant to any written consent of the
shareholders, the following persons shall be elected to the Board:

 

(a)                                 So long as shares of Series A Common Stock
remain outstanding, one individual designated by the holders of a majority of
the Series A Common Stock then outstanding (the “Series A Director”);

 

(b)                                 One individual designated by the holders of
a majority of the Series B Common Stock then outstanding (the “Series B
Director”);

 

(c)                                  So long as shares of Series A Preferred
Stock remain outstanding, one individual designated by the holders of a majority
of the Series A Preferred Stock then outstanding and, so long as shares of
Series A Preferred Stock are owned by Accuray or TomoTherapy, one individual
designated by Accuray (collectively, the “Series A Preferred Directors”); and

 

(d)                                 One individual, or in the absence of the
designation of two Series A Preferred Directors pursuant to Section 1.2(c), two
individuals, designated by a majority of the following persons: the Series A
Director, the Series B Director and the Series A Preferred Director(s).

 

To the extent that any of clauses (a), (c) or (d) above shall not be applicable,
any member of the Board who would otherwise have been designated in accordance
with the terms thereof shall instead be voted upon by the holders of a majority
of the Series A Common Stock, Series B Common Stock, Series A Preferred Stock
and Series A-1 Preferred then outstanding, voting together as a single class on
an as-converted to Common Stock basis.

 

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1.3                               Matters Requiring Certain Directors’ Approval.

 

(a)                                 The Company hereby covenants and agrees that
it shall not, without the approval of the Company’s Board, including at least
one Series A Preferred Director and at least one of either the Series A Director
or the Series B Director:

 

(i)                                     make, or permit any subsidiary to make,
any loan or advance to any Person, including, without limitation, any employee
or director of the Company or any subsidiary, except advances and similar
expenditures in the ordinary course of business or under the terms of an
employee stock or option plan approved by the Board;

 

(ii)                                  guarantee, directly or indirectly, or
permit any subsidiary to guarantee, directly or indirectly, any indebtedness
except for trade accounts of the Company or any subsidiary arising in the
ordinary course of business;

 

(iii)                               incur any aggregate indebtedness in excess
of $500,000 that is not already included in a budget approved by the Board,
other than trade credit incurred in the ordinary course of business;

 

(iv)                              change the principal business of the Company,
enter new lines of business, or exit the current line of business;

 

(v)                                 sell, assign, license, pledge, or encumber
material technology or intellectual property, other than licenses granted in the
ordinary course of business or those agreements substantially in place as of the
date of the Purchase Agreement or as provided for in Section 5; or

 

(vi)                              declare or make any dividend or other
distribution.

 

(b)                                 The Company hereby covenants and agrees that
it shall not, without the approval of the Company’s Board, prior to such time as
the Company has a commercially operational dielectric-wall accelerator (“DWA”)
product on the market, accept any deposit or other form of advance payment from
any customer or potential customer with respect to a sale or lease of a DWA
product.

 

1.4                               Failure to Designate a Board Member.  In the
absence of any designation from the Persons or groups with the right to
designate a director as specified above, the director previously designated by
them and then serving shall be reelected if still eligible to serve as provided
herein.

 

1.5                               Removal of Board Members.  Subject to the
provisions of Section 5.10, each Shareholder also agrees to vote, or cause to be
voted, all Shares owned by such Shareholder, or over which such Shareholder has
voting control, from time to time and at all times, in whatever manner as shall
be necessary to ensure that:

 

(a)                                 no director elected pursuant to Sections 1.2
or 1.4 of this Agreement may be removed from office except as provided in
Sections 1.5(c) and (d) below, unless the Person(s) originally entitled to
designate or approve such director or occupy such Board

 

3

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seat pursuant to Section 1.2 is no longer so entitled to designate or approve
such director or occupy such Board seat;

 

(b)                                 any vacancies created by the resignation,
removal or death of a director elected pursuant to Sections 1.2 or 1.4 shall be
filled pursuant to the provisions of this Section 1;

 

(c)                                  upon the request of the holders of Shares
in an amount which would be entitled to designate a director as provided in
Section 1.2 to remove such director, such director shall be removed; and

 

(d)                                 if a second individual has been designated
as a director pursuant to Section 1.2(d) and, subsequently, the holders of a
majority of the Series A Preferred Stock elect to designate a second Series A
Preferred Director, then such second individual designated as a director
pursuant to Section 1.2(d) shall be removed as a director and the individual
designated as the second Series A Preferred Director shall fill the vacancy on
the Board created by such removal.

 

All Shareholders agree to execute any written consents required to perform the
obligations of this Agreement, and the Company agrees at the request of any
party entitled to designate directors to call a special meeting of Shareholders
for the purpose of electing directors.

 

1.6                               No Liability for Election of Designated
Directors.  No Shareholder, nor any Affiliate of any Shareholder, shall have any
liability as a result of designating a person for election as a director for any
act or omission by such designated person in his or her capacity as a director
of the Company, nor shall any Shareholder have any liability as a result of
voting for any such designee in accordance with the provisions of this
Agreement.

 

1.7                               Other Board Matters.  Each Shareholder shall
take such actions as may be necessary, including without limitation, the voting
of Shares to ensure that (a) the Board shall meet at least quarterly unless
otherwise agreed by a vote of the majority of the Board and (b) the Company will
bind directors and officers insurance with a carrier and in an amount
satisfactory to the Board.

 

2.                                      Information Rights of Major Investors.

 

2.1                               Delivery of Financial Statements.  The Company
shall deliver to each Major Investor:

 

(a)                                 as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, (i) a
balance sheet as of the end of such year, (ii) statements of income and of cash
flows for such year, and (iii) a statement of shareholders’ equity as of the end
of such year;

 

(b)                                 as soon as practicable, but in any event
within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Company, unaudited statements of income and
of cash flows for such fiscal quarter, and an unaudited balance sheet and a
statement of shareholders’ equity as of the end of such

 

4

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fiscal quarter, all prepared in accordance with GAAP (except that such financial
statements may (i) be subject to normal year-end audit adjustments and (ii) not
contain all notes thereto that may be required in accordance with GAAP);

 

(c)                                  as soon as practicable, but in any event
within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of the Company, a statement showing the number of
shares of each class and series of capital stock and securities convertible into
or exercisable for shares of capital stock outstanding at the end of the period,
the Common Stock issuable upon conversion or exercise of any outstanding
securities convertible or exercisable for Common Stock and the exchange ratio or
exercise price applicable thereto, and the number of shares of underlying issued
stock options and stock options not yet issued but reserved for issuance, if
any, all in sufficient detail as to permit the Major Investors to calculate
their respective percentage equity ownership in the Company, and certified by
the chief financial officer or chief executive officer of the Company as being
true, complete and correct; and

 

(d)                                 as soon as practicable, but in any event
within thirty (30) days of the end of each month, an unaudited income statement
and statement of cash flows for such month, and an unaudited balance sheet and
statement of shareholders’ equity as of the end of such month, all prepared in
accordance with GAAP (except that such financial statements may (i)  be subject
to normal year-end audit adjustments and (ii) not contain all notes thereto that
may be required in accordance with GAAP).

 

If, for any period, the Company has any subsidiary whose accounts are
consolidated with those of the Company, then in respect of such period the
financial statements delivered pursuant to the foregoing sections shall be the
consolidated and consolidating financial statements of the Company and all such
consolidated subsidiaries.

 

Notwithstanding anything else in this Section 2.1 to the contrary, the Company
may cease providing the information set forth in this Section 2.1 during the
period starting with the date sixty (60) days before the Company’s good-faith
estimate of the date of filing of a registration statement if it reasonably
concludes it must do so to comply with the SEC rules applicable to such
registration statement and related offering; provided that the Company’s
covenants under this Section 2.1 shall be reinstated at such time as the Company
is no longer actively employing its commercially reasonable efforts to cause
such registration statement to become effective.

 

2.2                               Inspection.  The Company shall permit each
Major Investor, at such Major Investor’s expense, to visit and inspect the
Company’s properties and discuss the Company’s affairs with its officers, during
normal business hours of the Company as may be reasonably requested by the Major
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information that it reasonably and in
good faith considers to be a trade secret or confidential information (unless
covered by an enforceable confidentiality agreement, in form acceptable to the
Company) or the disclosure of which would adversely affect the attorney-client
privilege between the Company and its counsel.

 

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2.3                               Observation Rights.

 

(a)                                 Upon written request of a Major Investor, a
representative (who is not a Person that the Board determines is, or is an
Affiliate of, a competitor of the Company) designated by a Major Investor may
attend all meetings of the Board in a nonvoting observer capacity.  Upon written
request, the Company shall give such representative copies of all notices,
minutes, consents and other materials that it provides to its directors at the
same time and in the same manner as provided to such directors; provided,
however, that such representative shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information so provided;
provided, further, that the Company reserves the right to withhold any
information and to exclude such representative from any meeting or portion
thereof if access to such information or attendance at such meeting could
adversely affect the attorney-client privilege between the Company and its
counsel; result in disclosure of trade secrets; is deemed by the Board to
include competitive or sensitive customer-related matters of the Company; or
result in a conflict of interests.  Notwithstanding the foregoing, the
provisions of Section 2.3(b) below, and not the provisions of this
Section 2.3(a), shall be applicable to Accuray, TomoTherapy or any of their
respective Affiliates.

 

(b)                                 Accuray shall have the right to designate
one (1) person as a representative to attend (without restriction) all formal
and informal meetings of the Board and any and all committees of the Board in a
nonvoting observer capacity.  Any person designated by Accuray as an observer
pursuant to this Section 2.3(b) shall be entitled to copies of all notices,
minutes, consents, and other materials that the Company provides to its
directors at the same time and in the same manner as provided to such
directors.  The provisions of this Section 2.3(b) shall be applicable regardless
of whether a designee of Accuray is a Series A Preferred Director.

 

2.4                               Termination of Information and Observation
Rights.  The covenants set forth in Sections 2.1, 2.2, and 2.3 shall terminate
and be of no further force or effect when the Company first becomes subject to
the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange
Act, whichever event occurs first.

 

2.5                               Confidentiality.  Each Shareholder agrees that
such Shareholder will keep confidential and will not disclose, divulge or use
for any purpose (other than to monitor its investment in the Company) any
confidential information obtained from the Company pursuant to the terms of this
Agreement (including notice of the Company’s intention to file a registration
statement), unless such confidential information (a) is known or becomes known
to the public in general (other than as a result of a breach of this Section 2.5
by such Shareholder), (b) is or has been independently developed or conceived by
the Shareholder without use of the Company’s confidential information, or (c) is
or has been made known or disclosed to the Shareholder by a third party without
a breach of any obligation of confidentiality such third party may have to the
Company, provided, however, that a Shareholder may disclose confidential
information (i) to its attorneys, accountants, consultants and other
professionals to the extent necessary to obtain their services in connection
with monitoring its investment in the Company; (ii) to any existing Affiliate,
partner, member, shareholder or wholly owned subsidiary of such Shareholder in
the ordinary course of business, provided that such Shareholder informs such
Person that such

 

6

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information is confidential and directs such Person to maintain the
confidentiality of such information; or (iii) as may otherwise be required by
law in the reasonable written opinion of the Shareholder’s legal counsel,
provided that the Shareholder promptly notifies the Company of such disclosure
and takes reasonable steps to minimize the extent of any such required
disclosure.  Notwithstanding the foregoing, each Shareholder agrees that it is
restricted from disclosing any such confidential information to any Person that
is a competitor of the Company, Accuray or TomoTherapy.  For the avoidance of
doubt, the Board shall determine whether such a Person is such a competitor.

 

3.                                      Rights to Future Stock Issuances.

 

3.1                               Right of First Offer.  Subject to the terms
and conditions of this Section 3.1 and applicable securities laws, if the
Company proposes to offer or sell any New Securities, the Company shall first
offer such New Securities to each Major Investor in accordance with the
following:

 

(a)                                 The Company shall give notice (the “Offer
Notice”) to each Major Investor, stating (i) its bona fide intention to offer
such New Securities, (ii) the number of such New Securities to be offered, and
(iii) the price and terms, if any, upon which it proposes to offer such New
Securities.

 

(b)                                 By notification to the Company within twenty
(20) days after the Offer Notice is given, each Major Investor may elect to
purchase or otherwise acquire, at the price and on the terms specified in the
Offer Notice, up to that portion of such New Securities which equals the
proportion that the Common Stock issued and held, or issuable (directly or
indirectly) upon conversion and/or exercise, as applicable, of any Derivative
Securities then held, by such Major Investor bears to the total Common Stock of
the Company then outstanding (assuming full conversion and/or exercise, as
applicable, of all Derivative Securities).  At the expiration of such twenty
(20) day period, the Company shall promptly notify each Major Investor that
elects to purchase or acquire all the shares available to it (each, a “Fully
Exercising Investor”) of any other Major Investor’s failure to do likewise. 
During the ten (10) day period commencing after the Company has given such
notice, each Fully Exercising Investor may, by giving notice to the Company,
elect to purchase or acquire, in addition to the number of shares specified
above, up to that portion of the New Securities for which Major Investors were
entitled to subscribe but that were not subscribed for by the Major Investors
which is equal to the proportion that the Common Stock issued and held, or
issuable (directly or indirectly) upon conversion and/or exercise, as
applicable, of any other Derivative Securities then held, by such Fully
Exercising Investor bears to the Common Stock issued and held, or issuable
(directly or indirectly) upon conversion and/or exercise, as applicable, of any
other Derivative Securities then held, by all Fully Exercising Investors who
wish to purchase such unsubscribed shares.  The closing of any sale pursuant to
this Section 3.1(b) shall occur on a date designated by the Company that is
within the later of ninety (90) days of the date that the Offer Notice is given
and the date of initial sale of New Securities pursuant to Section 3.1(c).

 

7

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(c)                                  If all New Securities referred to in the
Offer Notice are not elected to be purchased or acquired as provided in
Section 3.1(b), the Company may, during the ninety (90) day period following the
expiration of the periods provided in Section 3.1(b), offer and sell the
remaining unsubscribed portion of such New Securities to any Person or Persons
at a price not less than, and upon terms no more favorable to the offeree than,
those specified in the Offer Notice.  If the Company does not enter into an
agreement for the sale of the New Securities within such period, or if such
agreement is not consummated within thirty (30) days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such New
Securities shall not be offered unless first re-offered to the Major Investors
in accordance with this Section 3.1.

 

(d)                                 The right of first offer in this Section 3.1
shall not be applicable to offers or sales of (i) Exempted Securities; and
(ii) shares of Common Stock issued in the IPO.

 

(e)                                  Notwithstanding any provision hereof to the
contrary, in complying with the provisions of this Section 3.1, the Company may
elect to give notice to the Major Investors within thirty (30) days after the
issuance of New Securities.  Such notice shall describe the type, price, and
terms of the New Securities.  Each Major Investor shall have twenty (20) days
from the date notice is given to elect to purchase up to the number of New
Securities that would, if purchased by such Major Investor, maintain such Major
Investor’s percentage-ownership position, calculated as set forth in
Section 3.1(b) before giving effect to the issuance of such New Securities.  The
closing of such sale shall occur on a date designated by the Company that is
within sixty (60) days of the date notice is given to the Major Investors.

 

3.2                               Termination.  The covenants set forth in
Section 3.1 shall terminate and be of no further force or effect (i) immediately
before the consummation of the IPO or (ii) when the Company first becomes
subject to the periodic reporting requirements of Section 12(g) or 15(d) of the
Exchange Act, whichever event occurs first.

 

4.                                      Agreement Among the Company and the
Shareholders Regarding Transfers of Shares.

 

4.1                               Rights of Refusal.

 

(a)                                 Grant.  Subject to the terms of this
Section 4 and Section 5, each Shareholder hereby unconditionally and irrevocably
grants to the Company a Right of First Refusal to purchase all or any portion of
the Shares that are subject to a Proposed Transfer, at the same price and on the
same terms and conditions as those offered to the Prospective Transferee, or
pursuant to this Agreement in the absence of any such ascertainable price, terms
and conditions.

 

(b)                                 Notice.  Any Shareholder proposing to make a
Proposed Transfer must deliver a Proposed Transfer Notice to the Company not
later than ninety (90) days prior to the consummation of such Proposed
Transfer.  Such Proposed Transfer Notice shall contain the material terms and
conditions (including price and form of consideration) of the Proposed Transfer
and the identity of the Prospective Transferee.  To exercise its Right of First
Refusal under this Section 4, the Company must deliver an Exercise Notice

 

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to the selling Shareholder within fifteen (15) days after delivery of the
Proposed Transfer Notice.

 

(c)                                  Grant of Secondary Refusal Right to the
Shareholders.  Subject to the terms of Section 5 below, each Shareholder hereby
unconditionally and irrevocably grants to each other Shareholder a Secondary
Refusal Right to purchase all or any portion of the Shares not purchased by the
Company pursuant to the Right of First Refusal, as provided in this
Section 4.1(c).  If the Company does not intend to exercise its Right of First
Refusal with respect to all Shares subject to a Proposed Transfer, the Company
must deliver a Non-exercise Notice to the selling Shareholder and to each other
Shareholder to that effect, accompanied by a copy of the Proposed Transfer
Notice, no later than thirty (30) days after the selling Shareholder delivers
the Proposed Transfer Notice pursuant to Section 4.1(b).  To exercise its
Secondary Refusal Right, a Shareholder must deliver an Exercise Notice to the
selling Shareholder and the Company within forty (40) days after the Company’s
deadline for its delivery of the Non-exercise Notice as provided in the
preceding sentence.  Each Shareholder who timely exercises such Shareholder’s
Secondary Refusal Right by delivering the Exercise Notice provided for above in
this Section 4.1(c) shall have the right to purchase in the Proposed Transfer a
pro rata portion of the Shares subject to the Proposed Transfer equal to the
product obtained by multiplying (i) the aggregate number of Shares subject to
the Proposed Transfer (excluding Shares purchased by the Company pursuant to the
Company’s Right of First Refusal) by (ii) a fraction, the numerator of which is
the number of Shares owned by such Shareholder immediately before consummation
of the Proposed Transfer and the denominator of which is the total number of
Shares owned, in the aggregate, by all Shareholders immediately prior to the
consummation of the Proposed Transfer.

 

(d)                                 Undersubscription of Shares.  If options to
purchase under this Section 4 have been exercised by the Company and the
Shareholders with respect to some but not all of the Shares subject to a
Proposed Transfer by the end of the 40-day period specified in the
second-to-last sentence of Section 4.1(c) (the “Shareholder Notice Period”),
then the Company shall, immediately after the expiration of the Shareholder
Notice Period, send written notice (the “Company Undersubscription Notice”) to
those Shareholders who fully exercised their Secondary Refusal Right within the
Shareholder Notice Period (the “Exercising Shareholders”).  Each Exercising
Shareholder shall, subject to the provisions of this Section 4.1(d), have an
additional option to purchase all or any part of the balance of any such
remaining unsubscribed Shares on the terms and conditions set forth in the
Proposed Transfer Notice.  To exercise such option, an Exercising Shareholder
must deliver an Undersubscription Notice to the selling Shareholder and the
Company within ten (10) days after the expiration of the Shareholder Notice
Period.  In the event there are two or more such Exercising Shareholders that
choose to exercise the last-mentioned option for a total number of remaining
shares in excess of the number available, the remaining Shares available for
purchase under this Section 4.1(d) shall be allocated to such Exercising
Shareholders pro rata based on the number of Shares such Exercising Shareholders
have elected to purchase pursuant to the Secondary Refusal Right (without giving
effect to any Shares that any such Exercising Shareholder has elected to
purchase pursuant to the Company Undersubscription Notice).  If the options to
purchase the remaining Shares are exercised in full by the Exercising
Shareholders, the

 

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Company shall immediately notify all of the Exercising Shareholders and the
selling Shareholder of that fact.

 

(e)                                  Forfeiture of Rights.  Notwithstanding the
foregoing, if the total number of Shares that the Company and the Shareholders
have agreed to purchase pursuant to the exercise of the Right of First Refusal
and the Secondary Refusal Right, respectively, is less than the total number of
Shares subject to the Proposed Transfer, then the Company and the Shareholders
shall be deemed to have forfeited any right to purchase such Shares, and the
selling Shareholder shall be free to sell all, but not less than all, of such
Shares to the Prospective Transferee on terms and conditions substantially
similar to (and in no event more favorable to the Proposed Transferee than) the
terms and conditions set forth in the Proposed Transfer Notice, it being
understood and agreed that (i) any such sale or transfer shall be subject to the
other terms and restrictions of this Agreement, including without limitation the
terms and restrictions set forth in this Section 4; (ii) any future Proposed
Transfer shall remain subject to the terms and conditions of this Agreement,
including this Section 4; and (iii) such sale shall be consummated within ninety
(90) days after receipt of the Proposed Transfer Notice by the Company and, if
such sale is not consummated within such ninety (90) day period, such sale shall
again become subject to the Right of First Refusal and the Secondary Refusal
Right on the terms set forth herein.

 

(f)                                   Consideration; Closing.  If the
consideration proposed to be paid for the Shares subject to a Proposed Transfer
is in property, services or other non-cash consideration, the Company or such
Shareholder may pay the cash value equivalent thereof, as determined in good
faith by the Company and as set forth in its Exercise Notice.  If the Proposed
Transfer is involuntary or by operation of law, the purchase price to be paid by
the Company and the purchasing Shareholders hereunder shall be equal to
appraised value for the Shares being transferred, as determined by an appraiser
selected by those purchasing a majority of the Shares being purchased.  The
closing of the purchase by the Company and/or the Shareholders of Shares subject
to a Proposed Transfer pursuant to this Section 4 shall take place, and all
payments from the Company and the Shareholders shall have been delivered to the
selling Shareholder, by the later of (i) the date specified in the Proposed
Transfer Notice as the intended date of the Proposed Transfer and (ii) ninety
(90) days after delivery of the Proposed Transfer Notice.

 

(g)                                  Prohibited Transferees.  Notwithstanding
the foregoing, and subject to the provisions of Section 5, no Shareholder shall
transfer any Shares to any Person that, in the determination of the Board
directly or indirectly competes with the Company.

 

4.2                               Right of Co-Sale.

 

(a)                                 Exercise of Right.  If any Shares subject to
a Proposed Transfer are not purchased pursuant to Section 4.1 above and
thereafter are to be sold to a Prospective Transferee, each respective
Shareholder may elect to exercise its Right of Co-Sale and participate on a pro
rata basis in the Proposed Transfer as set forth in Section 4.2(b) below and
otherwise on the same terms and conditions specified in the Proposed Transfer
Notice.  Each Shareholder who desires to exercise its Right of Co-Sale must give
the selling Shareholder written notice to that effect within fifteen (15) days
after the deadline

 

10

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for delivery of the Secondary Notice described above, and upon giving such
notice such Shareholder shall be deemed to have effectively exercised the Right
of Co-Sale.

 

(b)                                 Shares Includable.  Each Shareholder who
timely exercises such Shareholder’s Right of Co-Sale by delivering the written
notice provided for above in Section 4.2(a) may include in the Proposed Transfer
(i) if the Proposed Transfer is a transfer of Common Stock, all or any part of
the shares of Common Stock held by such Shareholder (including shares issuable
upon conversion of Series A Preferred Stock) equal to the Pro Rata Amount (as
defined below) or (ii) if the Proposed Transfer is a transfer of Series A
Preferred Stock, all or any part of the shares of Series A Preferred Stock (if
any) held by such Shareholder equal to the Pro Rata Amount (as defined below). 
For purposes of this Agreement, “Pro Rata Amount” shall equal to the product
obtained by multiplying (i) the aggregate number of Shares subject to the
Proposed Transfer (excluding Shares purchased by the Company or the Shareholders
pursuant to the Right of First Refusal or Secondary Refusal Right) by (ii) a
fraction, the numerator of which is the number of Shares owned by such
Shareholder immediately before consummation of the Proposed Transfer (including
any shares that such Shareholder has agreed to purchase pursuant to the
Secondary Refusal Right) and the denominator of which is the total number of
Shares owned, in the aggregate, by all Shareholders immediately prior to the
consummation of the Proposed Transfer (including any shares that all
Shareholders have collectively agreed to purchase pursuant to the Secondary
Refusal Right).

 

(c)                                  Delivery of Certificates.  Each Shareholder
shall effect its participation in the Proposed Transfer by delivering to the
transferring Shareholder, no later than fifteen (15) days after such
Shareholder’s exercise of the Right of Co-Sale, one or more stock certificates,
properly endorsed for transfer to the Prospective Transferee, representing the
number of Shares that such Shareholder elects to include in the Proposed
Transfer.

 

(d)                                 Purchase Agreement.  The parties hereby
agree that the terms and conditions of any sale pursuant to this Section 4.2
will be memorialized in, and governed by, a written purchase and sale agreement
with customary terms and provisions for such a transaction and the parties
further covenant and agree to enter into such an agreement as a condition
precedent to any sale or other transfer pursuant to this Section 4.2.

 

(e)                                  Deliveries.  Each stock certificate a
Shareholder delivers to the selling Shareholder pursuant to Section 4.2(c) above
will be transferred to the Prospective Transferee against payment therefor in
consummation of the sale of the Shares pursuant to the terms and conditions
specified in the Proposed Transfer Notice and the purchase and sale agreement,
and the selling Shareholder shall concurrently therewith remit or direct payment
to each Shareholder the portion of the sale proceeds to which such Shareholder
is entitled by reason of its participation in such sale.  If any Prospective
Transferee refuses to purchase securities subject to the Right of Co-Sale from
any Shareholder exercising its Right of Co-Sale hereunder, no Shareholder may
sell any Shares to such Prospective Transferee or Transferees unless and until,
simultaneously with such sale, such Shareholder purchases all securities subject
to the Right of Co-Sale from such Shareholder on the same terms and conditions
(including the proposed purchase price) as set forth in the Proposed Transfer
Notice.

 

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(f)                                   Additional Compliance.  If any Proposed
Transfer is not consummated within ninety (90) days after receipt of the
Proposed Transfer Notice by the Company, the Shareholders proposing the Proposed
Transfer may not sell any Shares unless they first comply in full with each
provision of this Section 4.  The exercise or election not to exercise any right
by any Shareholder hereunder shall not adversely affect its right to participate
in any other sales of Shares subject to this Section 4.2.

 

4.3                               Effect of Failure to Comply; Inapplicability
to Acquisition Option.

 

(a)                                 Transfer Void; Equitable Relief.  Any
Proposed Transfer not made in compliance with the requirements of this Agreement
(including without limitation, the provisions of Section 4 and Section 9.2)
shall be null and void ab initio, shall not be recorded on the books of the
Company or its transfer agent and shall not be recognized by the Company.  Each
party hereto acknowledges and agrees that any breach of this Agreement would
result in substantial harm to the other parties hereto for which monetary
damages alone could not adequately compensate.  Therefore, the parties hereto
unconditionally and irrevocably agree that any non-breaching party hereto shall
be entitled to seek protective orders, injunctive relief and other remedies
available at law or in equity (including, without limitation, seeking specific
performance or the rescission of purchases, sales and other transfers of Shares
not made in strict compliance with this Agreement).

 

(b)                                 Violation of Refusal Rights.  If any
Shareholder becomes obligated to sell any Shares to the Company or any
Shareholder under this Agreement and fails to deliver such Shares in accordance
with the terms of this Agreement, the Company and/or such Shareholders may, at
its option, in addition to all other remedies it may have, send to such
Shareholder the purchase price for such Shares as is herein specified and
transfer to the name of the Company or such Shareholder (or request that the
Company effect such transfer in the name of or such Shareholder) on the
Company’s books the certificate or certificates representing the Shares to be
sold.

 

(c)                                  Inapplicability to Accuray Acquisition
Option.  The provisions of Sections 4.1 and 4.2, including the rights and
obligations of the parties thereunder, shall not be applicable to the exercise
by Accuray of the Acquisition Option pursuant to this Agreement, the Merger
Agreement (as defined below) or the Stock Sale Agreement (as defined below) and
the transactions contemplated hereby, including without limitation, any
acquisition, sale or transfer of capital stock or Convertible Securities to
Accuray in a merger or stock purchase transaction upon exercise of the
Acquisition Option.

 

5.                                      Accuray Acquisition Option and
Distribution Option.

 

5.1                               Accuray Options.

 

(a)                                 Upon either (i) achievement by the Company
of the Monterey Milestone, as confirmed by Accuray pursuant to Schedule E (the
“Monterey Milestone Trigger Event”) or (ii) the occurrence of a Liquidation
Event (as defined in Section 5.1(b) of this Agreement), the sale of a majority
of the outstanding equity interest of the Company (a

 

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“Stock Sale”), the approval by the Board or the shareholders of the Company of a
Liquidation Event or a Stock Sale, or the approval by the Board or the
shareholders of the Company of a bona fide term sheet or letter of intent
relating to a Liquidation Event or a Stock Sale (a “Potential Sale Trigger
Event”, and together with the Monterey Milestone Trigger Event, an “Option
Trigger Event”), Accuray shall have the right, at its option and in its sole
discretion, subject to Section 5.2 and 5.3 below, to (A) acquire all of the
capital stock, Options and Convertible Securities of the Company (collectively,
the “Company Equity”) pursuant to the provisions of Section 5.5 below (the
“Stock Acquisition Option”); (B) acquire all of the Company Equity via a merger
of a wholly-owned subsidiary of Accuray with and into the Company (the “Merger”)
pursuant to the provisions of the Merger Agreement and Section 5.6 below (the
“Merger Acquisition Option” and, together with the Stock Acquisition Option, the
“Acquisition Option”) or (C) enter into a non-exclusive supply and distribution
agreement for the Company’s DWA products, pursuant to the provisions of
Section 5.8 below (the “Distribution Option”).

 

(b)                                 For purposes of this Agreement, a
“Liquidation Event” shall mean any of the following:

 

(i)                                     a merger, consolidation or share
exchange in which:

 

(A)                               the Company is a constituent party or

 

(B)                                a subsidiary of the Company is a constituent
party and the Company issues shares of its capital stock pursuant to such
merger, consolidation or share exchange;

 

except any such merger, consolidation or share exchange involving the Company or
a subsidiary in which the shares of capital stock of the Company outstanding
immediately prior to such merger, consolidation or share exchange continue to
represent, or are converted into or exchanged for shares of capital stock that
represent, immediately following such merger, consolidation or share exchange at
least a majority, by voting power, of the capital stock of (1) the surviving or
resulting corporation or (2) if the surviving or resulting corporation is a
wholly owned subsidiary of another corporation immediately following such
merger, consolidation or share exchange, the parent corporation of such
surviving or resulting corporation; or

 

(ii)                                  the sale, lease, transfer, exclusive
license or other disposition, in a single transaction or series of related
transactions, by the Company or any subsidiary of the Company of all or
substantially all the assets of the Company and its subsidiaries taken as a
whole, or the sale or disposition (whether by merger or otherwise) of one or
more subsidiaries of the Company if substantially all of the assets of the
Company and its subsidiaries taken as a whole are held by such subsidiary or
subsidiaries, except where such sale, lease, transfer, exclusive license or
other disposition is to a wholly owned subsidiary of the Company;

 

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(iii)                               any voluntary or involuntary liquidation,
dissolution or winding up of the Company

 

(iv)                              any other event or action that constitutes a
liquidation event or deemed liquidation event under the Company’s articles of
incorporation.

 

5.2                               Monterey Milestone Option Process.  The
provisions of this Section 5.2 shall be applicable if the Option Trigger Event
is the Monterey Milestone Trigger Event.

 

(a)                                 The Company shall provide written notice to
Accuray at least sixty (60) days (but not more than seventy-five (75) days)
prior to the Company’s good faith anticipated date of the Monterey Milestone
Trigger Event.  If the Company provides Accuray such prior notice, Accuray will
use its reasonable efforts to commence its initial due diligence of the Company
and collect relevant information to help its board of directors make an informed
decision as to whether to exercise the Acquisition Option or the Distribution
Option during the Option Period (as defined below).  The Company shall afford
Accuray and its representatives complete access (including for inspection and
copying) at all reasonable times to the officers, directors, employees, agents,
auditors, advisors, bankers and other representatives, properties, offices,
plants and other facilities, and books and records of the Company, and shall
furnish Accuray with such financial, operating and other data and information as
Accuray may reasonably request.

 

(b)                                 Following provision of the notice by the
Company to Accuray as set forth in Section 5.2(a), Accuray and the Company shall
commence, and in good faith carry out, the process set forth in Section 5.4
below to determine the Company Fair Market Value (as defined in Section 5.4). 
The Company and Accuray shall provide to each other copies of the appraisals
prepared by the Designated Appraisers (as defined in Section 5.4) promptly
following receipt of such appraisals.  The Company shall provide written notice
to Accuray promptly upon the occurrence of the Monterey Milestone Trigger Event.

 

(c)                                  If Accuray elects to exercise its rights
pursuant to Section 5.1, it shall exercise its rights by providing written
notice to the Company during the Option Period and entering into the Stock Sale
Agreement, Merger Agreement or Distribution Agreement (each as defined below)
prior to the end of the Option Period.  The “Option Period” with respect to a
Monterey Milestone Trigger Event shall begin on the date of the Option Trigger
Event (the “Option Trigger Date”) and shall end at the close of business on the
forty-fifth (45th) day following the later of (i) the Monterey Milestone Trigger
Event and (ii) the delivery to Accuray by the Company of the final appraisal of
Company Fair Market Value by the Company’s Designated Appraiser; provided,
however, that the Option Period shall be extended beyond such 45th day (a) until
the third business day following the Company obtaining Board approval or any
required shareholder approval of the transactions contemplated by the Stock Sale
Agreement, the Merger Agreement or the Distribution Agreement (as applicable),
if such approvals have not been obtained prior to such 45th day, and (b) during
such period of time that a breach of any terms of this Agreement by the Company
or the Shareholders has delayed or prevented Accuray from entering into the
Stock Sale Agreement, the Merger Agreement or the Distribution Agreement (as
applicable).

 

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5.3                               Potential Sale Option Process.  The provisions
of this Section 5.3 shall be applicable if the Option Trigger Event is a
Potential Sale Trigger Event.

 

(a)                                 The Company shall provide written notice to
Accuray promptly upon the occurrence of Potential Sale Trigger Event.  Upon
receipt of such notice, Accuray will use its reasonable efforts to commence its
due diligence of the Company and collect relevant information to help its board
of directors make an informed decision as to whether to exercise the Acquisition
Option or the Distribution Option during the Option Period (as defined below). 
The Company shall afford Accuray and its representatives complete access
(including for inspection and copying) at all reasonable times to the officers,
directors, employees, agents, auditors, advisors, bankers and other
representatives, properties, offices, plants and other facilities, and books and
records of the Company, and shall furnish Accuray with such financial, operating
and other data and information as Accuray may reasonably request.

 

(b)                                 Following provision of the notice by the
Company to Accuray as set forth in Section 5.3(a), Accuray and the Company shall
commence, and in good faith carry out, the process set forth in Section 5.4
below to determine the Company Fair Market Value (as defined in Section 5.4). 
The Company and Accuray shall provide to each other copies of the appraisals
prepared by the Designated Appraisers (as defined in Section 5.4) promptly
following receipt of such appraisals.

 

(c)                                  If Accuray elects to exercise its rights
pursuant to Section 5.1, it shall exercise its rights by providing written
notice to the Company during the Option Period (as defined below) and entering
into the Stock Sale Agreement Merger Agreement or Distribution Agreement (each
as defined below) prior to the end of the Option Period.  The “Option Period”
with respect to a Potential Sale Trigger Event shall begin on the date of the
Option Trigger Date and shall end at the close of business on the sixtieth
(60th) day following the Option Trigger Event; provided, however, that the
Option Period shall be extended beyond such 60th day (a) until the third
business day following the Company obtaining Board approval or any required
shareholder approval of the transactions contemplated by the Stock Sale
Agreement, the Merger Agreement or the Distribution Agreement (as applicable),
if such approvals have not been obtained prior to such 60th day, and (b) during
such period of time that a breach of any terms of this Agreement by the Company
or the Shareholders has delayed or prevented Accuray from entering into the
Stock Sale Agreement, the Merger Agreement or the Distribution Agreement (as
applicable).

 

5.4                               Company Fair Market Value.  For purposes of
the Stock Sale Agreement pursuant to the Stock Acquisition Option and the Merger
Agreement pursuant to the Merger Acquisition Option, the “Company Fair Market
Value” shall be equal to the price at which a willing buyer would purchase one
hundred percent of the outstanding Company Equity (on fully diluted basis, net
of any applicable aggregate exercise prices) from a willing seller in an
arms-length transaction, calculated as of the Option Trigger Date (the
“Valuation Date”).  Accuray and the Company shall negotiate in good faith to
mutually agree upon the Company Fair Market Value.  If Accuray and the Company
cannot mutually agree upon the Company Fair Market Value within ten
(10) business days of the Option Trigger Date (or such longer period as the
Company

 

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and Accuray may mutually agree upon), then within five (5) business days of the
end of such 10-business day period, each of Accuray and the Company shall select
an unaffiliated, independent appraiser who has expertise and experience in the
valuation of companies similar to the Company (the “Designated Appraisers”) and
shall request each Designated Appraiser to separately determine the Company Fair
Market Value as of the Valuation Date.  Accuray and the Company shall provide to
the Designated Appraisers such information, including without limitation,
financial and other business information, regarding the Company as may be
reasonably requested by either of the Designated Appraisers.  The Company and
Accuray shall use their commercially reasonable efforts to cause each Designated
Appraiser to render a written decision regarding its determination of the
Company Fair Market Value within fifteen (15) business days following the
submission thereof.  If only one party designates a Designated Appraiser, then
the Company Fair Market Value shall be as determined by such Designated
Appraiser.  If the Company Fair Market Values determined by the two Designated
Appraisers are within ten percent (10%) of each other, then the Company Fair
Market Value shall be deemed to equal the average of such values.  If the values
determined by the two Designated Appraisers are not within ten percent (10%),
then the determination of the Company Fair Market Value shall be submitted to a
third unaffiliated, independent appraiser who has expertise and experience in
the valuation of companies similar to the Company (the “Jointly Selected
Appraiser”), which appraiser shall be selected by mutual agreement of the
Company and Accuray or by the Designated Appraisers within five (5) business
days following the determination of Company Fair Market Value by both of the
Designated Appraisers.  If neither the Company and Accuray nor the Designated
Appraisers can agree upon the Jointly Selected Appraiser, then either party can
request that the Jointly Selected Appraiser be selected by the American
Arbitration Association.  Accuray and the Company may submit written information
(including without limitation, any bona fide, arms-length term sheet or letter
of intent with a third party relating to a proposed Liquidation Event or
proposed Stock Sale) to the Jointly Selected Appraiser regarding their
respective opinions of the Company Fair Market Value, and the Jointly Selected
Appraiser may use the reports, data, and work papers of the Designated
Appraisers.  The Company and Accuray shall use their commercially reasonable
efforts to cause the Jointly Selected Appraiser to render a written decision
regarding its determination of the Company Fair Market Value within fifteen (15)
business days following the submission thereof.  The Company Fair Market Value
as determined by the Jointly Selected Appraiser shall be between the two values
of Company Fair Market Value as determined by the Designated Appraisers. The
determination of the Company Fair Market Value pursuant to this Section 5.4
shall be final and binding upon the Company, Accuray and each of the other
parties to this Agreement.  Accuray and the Company shall use their commercially
reasonable efforts to work diligently, in good faith, and without undue delay to
assist the Designated Appraisers and the Jointly Selected Appraiser in making
their determinations pursuant to this Section 5.4 in an expeditious manner.  The
fees and expenses of the Designated Appraisers shall be borne by the respective
party that selected such Designated Appraiser, and the fees and expenses of the
Jointly Selected Appraiser (and any fees of the American Arbitration Association
in connection with its selection of the Jointly Selected Appraiser, if
applicable) shall be split equally between the Company and Accuray.

 

5.5                               Stock Acquisition Option.  If Accuray elects
the Stock Acquisition Option, the Company, the Shareholders and Accuray will
work diligently and in good faith, and will cooperate with each other in good
faith, towards consummation as promptly as practicable of the

 

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acquisition by Accuray of all of the Company Equity pursuant to the provisions
of this Section 5.4 and a stock acquisition agreement (“Stock Sale Agreement”). 
Accuray shall have the right, upon exercise of the Stock Acquisition Option, to
acquire from each Shareholder all of such Shareholder’s Series A Preferred
Stock, Series A Common Stock, Series B Common Stock and other Company Equity. 
Upon exercise of the Stock Acquisition Option, Accuray shall provide to each
Shareholder written notice (the “Stock Acquisition Notice”) of its election to
exercise the Stock Acquisition Option.  Such Stock Acquisition Notice shall set
forth the Company Fair Market Value as determined pursuant to Section 5.4 above,
as well as the price per share for each series and class of Company Equity
(including any Shares held by Accuray and its Affiliates), which shall be
determined based upon the Company Fair Market Value and in accordance with the
liquidation provisions of the Company’s articles of incorporation then in
effect.  The Stock Acquisition Notice also shall set forth the closing date for
the purchase by Accuray.  If Accuray desires to exercise the Stock Acquisition
Option, it will use reasonable efforts to provide initial drafts of the
applicable agreement(s) for the Company’s consideration (subject to the terms of
this Section 5.5) early during the Option Period, as long as Accuray deems it
practicable at the time.  With the delivery of the drafts, Accuray will also
provide a proposed Option Period timeline for additional diligence (if any) and
for the negotiation and execution of the Stock Sale Agreement.  Notwithstanding
the foregoing, Accuray’s right (without any obligation) to exercise the Stock
Acquisition Option shall continue until the end of the Option Period.  The
Company and the Shareholders shall use reasonable efforts to provide all
documents and other information, including without limitation, disclosure
schedules, that are required to enter into the Stock Sale Agreement, and the
Company shall provide Accuray reasonable access to the employees of the Company
to discuss employment arrangements.  The closing of the purchase of the Company
Equity by Accuray shall occur at the principal office of the Company on date
designated by Accuray, which date shall be on or before twenty (20) business
days following Accuray’s delivery of the Stock Acquisition Notice, subject to
the requirements of applicable law.  Each Shareholder shall be obligated to sell
to Accuray all of such Shareholder’s Company Equity in accordance with the
provisions of this Section 5.5 and shall be obligated to deliver to Accuray at
such closing the original stock certificates duly endorsed or with appropriate
stock powers properly executed representing all shares of capital stock of the
Company held by such Shareholder and originals of all other instruments
representing any other Company Equity held by such Shareholder.  At such
closing, Accuray shall deliver to each selling Shareholder, against delivery of
such duly endorsed certificates and other instruments, cash in an amount equal
to the corresponding purchase price for such Company Equity, as applicable,
which amount shall be paid, at the discretion of Accuray, by check or by wire
transfer of funds to an account designated in writing by the Shareholder.  The
acquisition of the Company Equity pursuant to the Stock Acquisition Option will
be pursuant to the Stock Sale Agreement among Accuray, the Company and each
Shareholder, which shall contain customary terms (including without limitation,
representations and warranties by the Company, escrow, indemnification, and
other terms similar to the Merger Agreement, as applicable) and in which each
Shareholder shall make all customary representations and warranties given by
sellers of equity securities, including, without limitation, representations and
warranties as to: (1) valid and binding execution of the purchase agreement; (2)
enforceability of its obligations under the purchase agreement; (3) authority,
capacity and power to execute and deliver the purchase agreement and the
agreements contemplated thereby; (4) good and marketable title to the Company
Equity held by the selling Shareholder, free and clear of liens

 

17

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PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

and encumbrances; (5) proper approval of such proposed sale; and (6) no
violation of any other agreement to which the selling Shareholder is a party. 
The Company will cooperate with Accuray and use its reasonable efforts to ensure
that all Company Equity will be transferred to Accuray and that no Company
Equity will be held by any Shareholder or other third party upon consummation of
the transactions under the Stock Sale Agreement.  Notwithstanding the foregoing,
Accuray’s right (without any obligation) to exercise the Stock Acquisition
Option shall continue until the end of the Option Period, and, at any time prior
to executing the Stock Sale Agreement, Accuray may decline to exercise the Stock
Acquisition Option and determine not to enter into the Stock Sale Agreement, in
which event Accuray shall have no liability or obligation to the Company or the
Shareholders relating to the Stock Acquisition Option and the acquisition of the
Company Equity pursuant to this Section 5.5.

 

5.6                               Merger Acquisition Option.  If Accuray elects
the Merger Acquisition Option, the Company and Accuray will work diligently and
in good faith, and will cooperate with each other in good faith, towards
consummation of the Merger as promptly as practicable subject to and pursuant to
the terms of the Merger Agreement and the provisions of this Section 5.6.  If
Accuray elects the Merger Acquisition Option, (i) the Company and the
Shareholders shall use reasonable efforts to provide all documents and other
information, including without limitation, disclosure schedules, that are
required to enter into the Merger Agreement, (ii) the Company shall provide
Accuray reasonable access to the employees of the Company to discuss employment
arrangements, and (iii) the Board shall promptly take all action as may be
necessary to approve, adopt and enter into the Merger Agreement, to execute and
deliver to Accuray the Merger Agreement, and to submit the Merger Agreement to
the shareholders of the Company for approval.  Notwithstanding the foregoing,
Accuray’s right (without any obligation) to exercise the Merger Acquisition
Option shall continue until the end of the Option Period, and, at any time prior
to executing the Merger Agreement, Accuray may decline to exercise the Merger
Acquisition Option and determine not to enter into the Merger Agreement, in
which event Accuray shall have no liability or obligation to the Company or the
Shareholders relating to the Merger Acquisition Option and the Merger.

 

5.7                               Purchase Price Provisions and Other Matters.

 

(a)                                 Minimum Purchase Price Upon Monterey
Milestone.  If the applicable Option Trigger Event is the achievement by the
Company of the Monterey Milestone and if Accuray elects an Acquisition Option,
then the Company Fair Market Value for purposes of the Stock Sale Agreement or
the Merger Agreement (as applicable) shall be no less than an amount equal to
{*********}, including the amounts of any bridge loans and other loans
(principal and interest) converted into, exchanged for or otherwise cancelled or
used as consideration for the purchase of, Series A Preferred Stock and
Series A-1 Preferred Stock pursuant to the Purchase Agreement.

 

(b)                                 Accuray Stock as Consideration.  The Company
and Shareholders acknowledge that Accuray may desire to use its capital stock as
consideration for all or a

 

18

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PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

portion of the purchase price under the Stock Sale Agreement or the Merger
Agreement.  If, upon the occurrence of an Option Trigger Event, Accuray requests
that the Company and Shareholders consider the use of Accuray capital stock as
consideration for all or a portion of the purchase price, the Company and
Shareholders will consider such request in good faith, provided that the use of
Accuray capital stock as consideration shall be subject to the approval of both
the Company and Accuray.

 

(c)                                  Pre-Closing Financing.  If Accuray elects
the Acquisition Option, then Accuray, upon the request of the Company, will
consider in good faith providing interim operating financing for the Company
with respect to the period between the signing and closing of the Stock Sale
Agreement or the Merger Agreement, as applicable, on terms and conditions that
are mutually acceptable to the Company and Accuray.

 

5.8                               Distribution Option.

 

(a)                                 Supply and Distribution.  Upon exercise of
the Distribution Option during the Option Period, Accuray and the Company shall
work diligently, in good faith, and without undue delay to enter into
expeditiously a binding, non-exclusive supply and distribution agreement (the
“Distribution Agreement”) for the Company’s DWA products prior to the end of the
Option Period.  Accuray will use reasonable efforts to provide initial drafts of
the Distribution Agreement for the Company’s consideration early during the
Option Period, as long as Accuray in its discretion deems it practicable at the
time.  With the delivery of the drafts, Accuray will also provide a proposed
Option Period timeline for additional diligence (if any), negotiations, and
execution of the Distribution Agreement. The Distribution Agreement will provide
that {**********}.

 

(b)                                 Term.  The term of the Distribution
Agreement shall be {*****} years from the effective date of the Distribution
Agreement.

 

(c)                                  Initial Price of DWAs.  For the initial
three (3) year period following the shipment of the first commercial DWA product
(the “Initial Pricing Term”), the price per DWA shall be determined by the
Company and Accuray through good faith negotiations and shall be consistent with
transfer prices for similar products among similarly situated parties; provided
that, at any time when the Company is selling DWAs in the medical field to other
distributors, Accuray shall have “most-favored-nation” pricing (that is, the
price to be paid by Accuray shall, in any event, be no greater than the lowest
price at which the Company has sold any DWA in the medical field). 
Notwithstanding the foregoing, the pricing of the first five (5) DWA products
sold by the Company shall not be used for determining “most-favored-nation”
pricing.

 

(d)                                 Renegotiation of Purchase Price.  Effective
as of the end of the Initial Pricing Term, and every three (3) years thereafter,
Accuray and the Company shall mutually negotiate in good faith regarding pricing
and other terms that are fair to both

 

19

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parties and that are consistent with market terms for the next three (3) year
period.  The MFN Pricing outlined above will be included in any renegotiated
pricing terms.

 

(e)                                  Warranty.  The Company would provide a one
year warranty, commensurate with industry standards, with respect to any DWA
products it sells to Accuray or to customers through Accuray.

 

(f)                                   Service.  Subject to the Company’s
warranty obligations, Accuray shall be responsible for any service obligations
on the DWAs for systems it sells.

 

(g)                                  Specified Provisions.  ISO Certification
and Additional Processes.  The Distribution Agreement shall provide that the
Company will establish ISO 9001 certification and the following processes:
(i) Change Control Process; (ii) Training Process; (iii) Non-Conforming Process;
and (iv) Corrective and Preventive Actions (CAPA) Process.

 

(h)                                 Other Customary Terms.  Except as otherwise
agreed by Accuray and the Company, the Distribution Agreement shall contain such
other terms as are customary for similar agreements and similar companies in the
industry.

 

5.9                               Restrictions Regarding Distribution
Agreements, Etc.  The Company will not enter into a distribution agreement or
similar agreement with a third party involving the sale of DWA products in the
medical field, unless (1) such distribution or similar agreement may be
(i) terminated by Accuray or the Company without premium, penalty, or other
obligation upon the exercise by Accuray of the Acquisition Option and (ii) made
non-exclusive (if applicable) by Accuray or the Company without premium,
penalty, or other obligation upon exercise of the Distribution Option, (2) the
Option Period has ended and Accuray has not exercised the Acquisition Option or
the Distribution Option, or (3) Accuray, in its sole discretion, has agreed in
writing to the terms of such distribution or similar agreement.

 

5.10                        Voting in Favor of the Acquisition Option or
Distribution Option.  At any meeting (whether annual or special and whether or
not an adjourned or postponed meeting) of the shareholders of the Company or
pursuant to any written consent of the shareholders of the Company, each
Shareholder agrees to be present, in person or represented by proxy, or
otherwise cause such Shareholder’s Shares to be counted for purposes of
determining the presence of a quorum at such meeting, and to vote, or cause to
be voted, all Shares owned by such Shareholder, or over which such Shareholder
has voting control, from time to time and at all times, in whatever manner as
shall be necessary, as follows:

 

(a)                                 in favor of the adoption of the Stock
Acquisition Agreement, the Merger, the Merger Agreement or the Distribution
Agreement, as applicable;

 

(b)                                 in favor of the adoption of any other
agreement to be entered into in connection with the Stock Sale Agreement, the
Merger Agreement or the Distribution Agreement and in favor of any proposal
(including without limitation, any amendment to the Company’s certificate of
incorporation) that could reasonably be expected to facilitate the consummation
of the Stock Sale Agreement, the Merger, the Merger Agreement or the
Distribution Agreement, as applicable;

 

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(c)                                  in favor of any proposal to adjourn the
meeting of the shareholders of the Company to a later date if there are not
sufficient votes for adoption of the Stock Sale Agreement, the Merger, the
Merger Agreement or the Distribution Agreement, as applicable, or the document
and other proposals referred to in clause (b) above on the date on which the
Company shareholder meeting is held; and

 

(d)                                 against any proposal that could reasonably
be expected to, directly or indirectly, impede, interfere with, delay, postpone,
discourage or adversely affect the consummation of the Stock Sale Agreement, the
Merger, the Merger Agreement or the Distribution Agreement, as applicable,
including without limitation, any competing acquisition proposal.

 

5.11                        Right of Accuray to Appoint Directors.  If at any
time after Accuray exercises the Acquisition Option pursuant to Section 5.1, the
Company does not fulfill its obligations under this Agreement, the Stock Sale
Agreement (if Accuray elects the Stock Acquisition Option) or the Merger
Agreement (if Accuray elects the Merger Acquisition Option) or the Company does
not use its best efforts to take, or cause to be taken, all appropriate action
to do, or cause to be done, all things necessary, proper or advisable to
consummate the Stock Sale (if Accuray elects the Stock Acquisition Option) or
the Merger (if Accuray elects the Merger Acquisition Option), then Accuray may
provide written notice of such failure to the Company and the Shareholders.  If
the Company does not cure such failure to fulfill its obligations or to so use
its best efforts within a period of ten (10) business days from the date of the
date of such notice, then the Company and the Shareholders agree that as of the
end of such 10-business day period and thereafter, Accuray shall have the right
to designate for election to the Board a number of new Board members who would
represent a majority of the Board seats.  In connection with this Section 5.11
and notwithstanding the provisions of Section 1 of this Agreement, the Company
and the Shareholders shall take any and all actions required of them (including
without limitation, voting or causing to be voted, all Shares held by the
Shareholders) to provide for the increase in the size of the Board and/or the
removal of directors from the Board and the election of the new Board members
and effectuation of the rights of the new Board members under this
Section 5.11.  If there is a conflict between the provisions of this
Section 5.11 and the provisions of Section 1, the provisions of this
Section 5.11 shall prevail.

 

5.12                        Irrevocable Proxy to Accuray.  Each party to this
Agreement hereby constitutes and appoints Accuray with full power of
substitution, as the proxy of the party with respect to the matters set forth in
this Section 5, including without limitation, Sections 5.10 and 5.11, and hereby
authorizes each of them to represent and to vote, if and only if the party
(i) fails to vote or (ii) attempts to vote (whether by proxy, in person or by
written consent), in a manner which is inconsistent with the terms of this
Section 5 and this Agreement, all of such party’s Shares in accordance with the
provisions of this Section 5.  The proxy granted pursuant to the immediately
preceding sentence is given in consideration of the agreements and covenants of
the Company and the parties in connection with the transactions and other
matters contemplated by this Section 5 and, as such, is coupled with an interest
and shall be irrevocable unless and until this Agreement terminates or expires
pursuant to Section 8 hereof or all of the provisions of this Section 5 are no
longer in effect.  Each party hereto hereby revokes any and all previous proxies
with respect to the Shares and shall not hereafter, unless and until this
Agreement terminates or expires pursuant to Section 8 hereof, purport to grant
any other proxy or power of attorney with

 

21

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respect to any of the Shares, deposit any of the Shares into a voting trust or
enter into any agreement (other than this Agreement), arrangement or
understanding with any Person, directly or indirectly, to vote, grant any proxy
or give instructions with respect to the voting of any of the Shares, in each
case, with respect to any of the matters set forth herein; provided, however, it
is agreed and acknowledged that, pursuant to Section 6.2 each party to this
Agreement is granting an irrevocable proxy to certain officers of the Company
with respect to the matters set forth in this Agreement other than Section 5 and
that the irrevocable proxy granted pursuant to this Section 5.12 shall only
cover the matters set forth in Section 5; and, provided, further, that if there
is a conflict between the irrevocable proxy granted pursuant to this
Section 5.12 and pursuant to Section 6.2, the irrevocable proxy granted pursuant
to this Section 5.12 shall prevail.

 

5.13                        Waiver of Dissenters’ Rights.  To the fullest extent
permitted by law, each Shareholder hereby irrevocably and forever waives, and
agrees in the future to waive, any and all dissenters’ rights and appraisal
rights that such Shareholder may otherwise be entitled to in connection with
this Agreement, the Merger, the Merger Agreement or the Acquisition Option,
including without limitation, any dissenters’ rights under Section 180.1301 et
seq. of the Wisconsin Business Corporation Law (“WBCL”).  Without limiting the
foregoing, each Shareholder agrees not to submit to the Company any notice of
intent to demand payment pursuant to Section 180.1321 of the WBCL or any demand
for payment under Section 180.1323 or Section 180.1328 of the WBCL in connection
with this Agreement, the Merger, the Merger Agreement or the Acquisition Option.

 

5.14                        No Obligation to Exercise Option.  In no event shall
Accuray be obligated to elect the Acquisition Option or the Distribution
Option.  If Accuray does elect to exercise the Acquisition Option or the
Distribution Option, it may determine, in its sole discretion, at any time prior
to entering into the Stock Sale Agreement, the Merger Agreement or the
Distribution Agreement, to not consummate such Acquisition Option or
Distribution Option.  In such event, Accuray shall not have any liability to the
Company or any Shareholder or other holder of Company Equity, and, provided that
neither the Company nor the Shareholders have breached any provision of this
Agreement, Accuray shall have no further right to exercise an Acquisition Option
or Distribution Option under this Agreement.

 

6.                                      Remedies.

 

6.1                               Covenants of the Company.  The Company agrees
to use its best efforts, within the requirements of applicable law, to ensure
that the rights granted under this Agreement are effective and that the parties
enjoy the benefits of this Agreement.  Such actions include, without limitation,
the use of the Company’s best efforts to cause the nomination and election of
the directors as provided in this Agreement.

 

6.2                               Irrevocable Proxy.  Each party to this
Agreement hereby constitutes and appoints the President and Treasurer of the
Company, and each of them, with full power of substitution, as the proxies of
the party with respect to the matters set forth herein (other than the matters
set forth in Section 5), including without limitation, election of persons as
members of the Board in accordance with Section 1 hereof and hereby authorizes
each of them to represent and to vote, if and only if the party (i) fails to
vote or (ii) attempts to vote (whether by proxy, in person or by written
consent), in a manner which is inconsistent with the terms of this Agreement,
all of such

 

22

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party’s Shares in favor of the election of persons as members of the Board
determined pursuant to and in accordance with the terms and provisions of this
Agreement.  The proxy granted pursuant to the immediately preceding sentence is
given in consideration of the agreements and covenants of the Company and the
parties in connection with the transactions contemplated by this Agreement
(other than Section 5) and, as such, is coupled with an interest and shall be
irrevocable unless and until this Agreement terminates or expires pursuant to
Section 8 hereof.  Each party hereto hereby revokes any and all previous proxies
with respect to the Shares and shall not hereafter, unless and until this
Agreement terminates or expires pursuant to Section 8 hereof, purport to grant
any other proxy or power of attorney with respect to any of the Shares, deposit
any of the Shares into a voting trust or enter into any agreement (other than
this Agreement), arrangement or understanding with any Person, directly or
indirectly, to vote, grant any proxy or give instructions with respect to the
voting of any of the Shares, in each case, with respect to any of the matters
set forth herein; provided, however, it is agreed and acknowledged that,
pursuant to Section 5.12 each party to this Agreement is granting an irrevocable
proxy to Accuray with respect to the matters set forth in Section 5 and that the
irrevocable proxy granted pursuant to this Section 6.2 shall not cover the
matters set forth in Section 5; and, provided, further, that if there is a
conflict between the irrevocable proxy granted pursuant to Section 5.12 and
pursuant to this Section 6.2, the irrevocable proxy granted pursuant to
Section 5.12 shall prevail.

 

6.3                               Specific Enforcement.  Each party hereto
acknowledges and agrees that every party hereto will be irreparably damaged in
the event any of the provisions of this Agreement are not performed by the
parties in accordance with their specific terms or are otherwise breached. 
Accordingly, it is agreed that each of Accuray, the Company and the Shareholders
shall be entitled to an injunction to prevent breaches of this Agreement, and to
specific enforcement of this Agreement and its terms and provisions in any
action instituted in any court of the United States or any state having subject
matter jurisdiction.

 

6.4                               Remedies Cumulative.  All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.

 

7.                                      “Market Stand-Off” Agreement.  Each
Shareholder hereby agrees that, if requested by the managing underwriter, it
will not, without the prior written consent of the managing underwriter, during
the period commencing on the date of the final prospectus relating to the
registration by the Company of Shares or any other equity securities of the
Company under the Securities Act on a registration statement on Form S-1 or
Form S-3, and ending on the date specified by the Company and the managing
underwriter (such period not to exceed (x) one hundred eighty (180) days in the
case of the IPO, or such other period as may be requested by the Company or an
underwriter to accommodate regulatory restrictions on (1) the publication or
other distribution of research reports and (2) analyst recommendations and
opinions, including, but not limited to, the restrictions contained in FINRA
Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or
amendments thereto, or (y) ninety (90) days in the case of any registration
other than the IPO, or such other period as may be requested or such other
period as may be requested by the Company or an underwriter to accommodate
regulatory restrictions on (1) the publication or other distribution of research
reports and (2) analyst recommendations and opinions, including, but not limited
to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4),
or any successor provisions or amendments thereto) (i) lend; offer; pledge;
sell;

 

23

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contract to sell; sell any option or contract to purchase; purchase any option
or contract to sell; grant any option, right, or warrant to purchase; or
otherwise transfer or dispose of, directly or indirectly, any Shares or any
securities convertible into or exercisable or exchangeable (directly or
indirectly) for Common Stock (whether such Shares or any such securities are
then owned by the Holder or are thereafter acquired); or (ii) enter into any
swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of such securities, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash, or otherwise.  The foregoing
provisions of this Section 7 shall not apply to the sale of any shares to an
underwriter pursuant to an underwriting agreement, and shall be applicable to
the Shareholders only if all officers and directors are subject to the same
restrictions.  The underwriters in connection with such registration are
intended third-party beneficiaries of this Section 7 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.  Each Shareholder further agrees to execute such agreements as may be
reasonably requested by the underwriters in connection with such registration
that are consistent with this Section 7 or that are necessary to give further
effect thereto.  Any discretionary waiver or termination of the restrictions of
any or all of such agreements by the Company or the underwriters shall apply pro
rata to all Shareholders subject to such agreements, based on the number of
shares subject to such agreements, except that, notwithstanding the foregoing,
the Company and the underwriters may, in their sole discretion, waive or
terminate these restrictions with respect to up to 1,000,000 shares of the
Common Stock.

 

8.                                      Term.  This Agreement shall be effective
as of the date hereof and shall continue in effect until and shall terminate
upon the earliest to occur of (a) the consummation of the IPO (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to its stock option, stock purchase or similar plan or an
SEC Rule 145 transaction); and (b) termination of this Agreement in accordance
with Section 9.8 below.

 

9.                                      Miscellaneous.

 

9.1                               Additional Parties.  In the event that after
the date of this Agreement, the Company enters into an agreement with any Person
to issue shares of capital stock to such Person, then, the Company shall cause
such Person, as a condition precedent to entering into such agreement, to become
a party to this Agreement by executing a Joinder Agreement in the form attached
hereto as Exhibit B, agreeing to be bound by and subject to the terms of this
Agreement as a Shareholder and thereafter such Person shall be deemed a
Shareholder for all purposes under this Agreement.

 

9.2                               Transfers.  Each transferee or assignee of any
Shares subject to this Agreement shall continue to be subject to the terms
hereof, and, as a condition precedent to any transfer of any Shares or
Convertible Securities the Company’s recognizing such transfer, each transferee
or assignee shall agree in writing to be subject to each of the terms of this
Agreement by executing and delivering a Joinder Agreement substantially in the
form attached hereto as Exhibit B.  Upon the execution and delivery of a Joinder
Agreement by any transferee, such transferee shall be deemed to be a party
hereto as if such transferee were the transferor and such transferee’s signature
appeared on the signature pages of this Agreement and shall be deemed to be a
Shareholder.  In addition to all other restrictions on the transfer of Shares
set forth in this

 

24

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Agreement, the Company shall not permit the transfer of Shares or Convertible
Securities subject to this Agreement on its books or issue a new certificate
representing any such Shares unless and until such transferee shall have
complied with the terms of this Section 9.2.  Each certificate representing the
Shares subject to this Agreement shall be endorsed by the Company with the
legend set forth in Section 9.12.

 

9.3                               Successors and Assigns.  The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties.  Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.  Without limiting the foregoing
or any other provision of this Agreement, any rights and obligations of
TomoTherapy under this Agreement and any Shares held by TomoTherapy may be
assigned and transferred to Accuray upon notice to the parties to this
Agreement.

 

9.4                               Governing Law.  This Agreement and any
controversy arising out of or relating to this Agreement shall be governed by
and construed in accordance with the laws of the State of Wisconsin without
regard to conflict of law principles that would result in the application of any
law other than the law of the State of Wisconsin and without regard to any
rules of construction concerning the draftsman hereof.

 

9.5                               Counterparts; Facsimile.  This Agreement may
be executed and delivered by facsimile or PDF signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

9.6                               Titles and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

9.7                               Notices.  All notices and other communications
given or made pursuant to this Agreement shall be in writing and shall be deemed
effectively given upon the earlier of actual receipt or: (i) personal delivery
to the party to be notified; (ii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid; or
(iii) one (1) business day after the business day of deposit with a nationally
recognized overnight courier, freight prepaid, specifying next-day delivery,
with written verification of receipt.  All communications shall be sent to the
respective parties at their addresses as set forth on Schedule A, Schedule B,
Schedule C or Schedule D hereto, or to the principal office of the Company and
to the attention of the Chief Executive Officer, in the case of the Company, or
to such email address, facsimile number, or address as subsequently modified by
written notice given in accordance with this Section 9.7.

 

9.8                               Consent Required to Amend, Terminate or
Waive.  This Agreement may be amended or terminated and the observance of any
term hereof may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a written instrument executed by
(i) Accuray, (ii) the Company, (iii) holders of a majority of the outstanding
shares of Series A Common Stock (other than TomoTherapy), (iv) holders of a
majority of the outstanding shares of Series B Common Stock, and (v) holders of
a majority of the outstanding shares of Series A Preferred Stock; provided that
any amendment, termination, or waiver applicable to

 

25

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Series A Preferred Holders, Series A Holders, Series B Holders, Major Investors,
or Shareholders, must apply to all such Series A Preferred Holders, Series A
Holders, Series B Holders, Major Investors, or Shareholders, respectively as the
case may be, in substantially the same fashion.  Notwithstanding the foregoing:

 

(a)                                 Schedules A, B, C and D hereto may be
amended by the Company from time to time to add information regarding additional
Shareholders without the consent of the other parties hereto; and

 

(b)                                 any provision hereof may be waived by the
waiving party on such party’s own behalf, without the consent of any other
party.

 

The Company shall give prompt written notice of any amendment, termination or
waiver hereunder to any party directly affected thereby that did not consent in
writing thereto.  Any amendment, termination or waiver effected in accordance
with this Section 9.8 shall be binding on each party and all of such party’s
successors and permitted assigns, whether or not any such party, successor or
assign entered into or approved such amendment, termination or waiver.

 

9.9                               Delays or Omissions.  No delay or omission to
exercise any right, power or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power or remedy of such non-breaching or non-defaulting party
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default previously or thereafter occurring.  Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing.  All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.

 

9.10                        Severability.  The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability of
any other provision.

 

9.11                        Entire Agreement.  This Agreement (including the
Schedules and Exhibits hereto) and the other Transaction Agreements constitute
the full and entire understanding and agreement among the parties with respect
to the subject matter hereof, and any other written or oral agreement relating
to the subject matter hereof existing between the parties, including the Prior
Agreement, is expressly superseded.

 

9.12                        Legend on Share Certificates.  Each certificate
representing any Shares shall be endorsed by the Company with a legend reading
substantially as follows:

 

“THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A SHAREHOLDER AGREEMENT, AS MAY BE
AMENDED FROM TIME TO TIME, (A COPY OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST
FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON
ACCEPTING SUCH INTEREST SHALL

 

26

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

 

BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF THAT
SHAREHOLDER AGREEMENT, INCLUDING CERTAIN RESTRICTIONS ON TRANSFER AND OWNERSHIP
SET FORTH THEREIN.”

 

The Company, by its execution of this Agreement, agrees that it will cause the
certificates evidencing the Shares issued after the date hereof to bear the
legend required by this Section 9.12, and it shall supply, free of charge, a
copy of this Agreement to any holder of a certificate evidencing Shares upon
written request from such holder to the Company at its principal office.  The
parties to this Agreement do hereby agree that the failure to cause the
certificates evidencing the Shares to bear the legend required by this
Section 9.12 herein and/or the failure of the Company to supply, free of charge,
a copy of this Agreement as provided hereunder shall not affect the validity or
enforcement of this Agreement.

 

9.13                        Stock Splits, Stock Dividends, Etc.  In the event of
any issuance of Shares hereafter to any of the Shareholders (including, without
limitation, in connection with any stock split, stock dividend,
recapitalization, reorganization, or the like), such Shares shall become subject
to this Agreement and shall be endorsed with the legend set forth in
Section 9.12.

 

9.14                        Manner of Voting.  The voting of Shares pursuant to
this Agreement may be effected in person, by proxy, by written consent or in any
other manner permitted by applicable law.

 

9.15                        Further Assurances.  At any time or from time to
time after the date hereof, the parties agree to cooperate with each other, and
at the request of any other party, to execute and deliver any further
instruments or documents and to take all such further action as the other party
may reasonably request in order to evidence or effectuate the consummation of
the transactions contemplated hereby and to otherwise carry out the intent of
the parties hereunder.

 

9.16                        Dispute Resolution.  The parties (a) hereby
irrevocably and unconditionally submit to the jurisdiction of the federal and
state courts located within the geographic boundaries of Dane County in the
State of Wisconsin for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
the federal and state courts located within the geographic boundaries of Dane
County in the State of Wisconsin, and (c) hereby waive, and agree not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.

 

9.17                        Costs of Enforcement.  If any party to this
Agreement seeks to enforce its rights under this Agreement by legal proceedings,
the non-prevailing party shall pay all costs and expenses incurred by the
prevailing party, including, without limitation, all reasonable attorneys’ fees.

 

27

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

 

9.18                        Aggregation of Stock.  All Shares held or acquired
by a Shareholder and/or its Affiliates shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement
(including without limitation, in determining whether a Shareholder is a Major
Investor), and such Affiliated persons may apportion such rights as among
themselves in any manner they deem appropriate.

 

9.19                        Spousal Consent.  If any individual Shareholder is
married on the date of this Agreement, such Shareholder’s spouse shall execute
and deliver to the Company a consent of spouse in the form of Exhibit C hereto
(“Consent of Spouse”), effective on the date hereof.  Notwithstanding the
execution and delivery thereof, such consent shall not be deemed to confer or
convey to the spouse any rights in such Shareholder’s Shares that do not
otherwise exist by operation of law or the agreement of the parties.  If any
individual Shareholder should marry or remarry subsequent to the date of this
Agreement, such Shareholder shall within thirty (30) days thereafter obtain his
or her new spouse’s acknowledgement of and consent to the existence and binding
effect of all restrictions contained in this Agreement by causing such spouse to
execute and deliver a Consent of Spouse acknowledging the restrictions and
obligations contained in this Agreement and agreeing and consenting to the same.

 

9.20                        Public Announcement.  No party to this Agreement
will issue any press release with respect to the terms of, or the transactions
contemplated by, this Agreement, the Merger Agreement or any other Transaction
Agreement, or otherwise issue any verbal or written public statements with
respect to such terms or transactions without the prior consultation with, and
the approval of, the Company and Accuray, except as may be required by
applicable law or by obligations pursuant to any listing agreement with or
rules of any national securities exchange.

 

[Signature Page Follows]

 

28

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

 

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

 

 

 

COMPANY:

 

COMPACT PARTICLE ACCELERATION CORPORATION

 

 

 

 

 

By:

 

 

 

James Schultz, Interim CEO

 

[Signature Page to CPAC Shareholder Agreement]

 

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

 

 

SHAREHOLDERS:

 

 

 

 

 

 

 

ACCURAY INCORPORATED

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

DANEVEST TECH FUND I, LP

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

DANEVEST TECH SIDE FUND I, LP

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

THE ENDEAVORS GROUP, LLC

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

LIBBY ONE LLC

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

[Signature Page to CPAC Shareholder Agreement]

 

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

 

 

TOMOPRO INVESTMENT, LLC

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

TOMOTHERAPY INCORPORATED

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

CONTINUUM INVESTMENT LIMITED PARTNERSHIP

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

AERO INVESTMENTS, LLC

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

 

 

 

WADE FETZER III

 

 

 

 

 

 

 

JEFFREY B. RUSINOW REVOCABLE LIVING TRUST U/A DATED 2/15/05

 

 

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

Signature Page to CPAC Shareholder Agreement]

 

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

 

 

 

 

RAY SIDNEY

 

 

 

 

 

DAVID WALSH

 

 

 

 

 

GOSHEN HEALTH SYSTEM, INC.

 

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

OPEN PRAIRIE VENTURES II, L.P.

 

 

 

 

BY:

 

 

NAME:

 

 

ITS:

 

 

 

 

 

 

 

 

GORDON GRADO

 

 

 

 

 

 

 

MARY GRADO

 

 

 

 

DEVPRON BV

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

OPEN PRAIRIE CPAC JOINT VENTURE

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

[Signature Page to CPAC Shareholder Agreement]

 

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

 

 

UNIVERSITY OF WISCONSIN HOSPITALS AND CLINICS AUTHORITY

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

LAWRENCE LIVERMORE

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

 

 

 

GREY GHOST, LLC

 

 

 

 

 

 

 

By:

 

 

Name:

 

 

Its:

 

 

 

 

 

 

ROCK MACKIE

 

[Signature Page to CPAC Shareholder Agreement]

 

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

 

SCHEDULE A

 

SERIES A HOLDERS

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

Name and Address

 

Number of Shares

 

 

 

TomoTherapy Incorporated
c/o Accuray Incorporated
Attn: General Counsel
1310 Chesapeake Terrace
Sunnyvale, CA 94089

 

{****}

 

 

 

Mary and Gordon Grado

 

{****}

{****}

 

 

 

 

 

DEVPRON BV

 

{****}

{****}

 

 

 

 

 

The Endeavors Group, LLC

 

{****}

{****}

 

 

 

 

 

University of Wisconsin Hospital and Clinics

 

{****}

{****}

 

 

 

 

 

Lawrence Livermore

 

{****}

{****}

 

 

 

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

 

SCHEDULE B

 

SERIES B HOLDERS

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

Name and Address

 

Number of Shares

 

 

 

DaneVest Tech Fund I, LP

 

{****}

{****}

 

 

 

 

 

DaneVest Tech Side Fund I, LLC

 

{****}

{****}

 

 

 

 

 

Libby One LLC

 

{****}

{****}

 

 

 

 

 

TomoPro Investment, LLC

 

{****}

{****}

 

 

 

 

 

Goshen Health System, Inc.

 

{****}

{****}

 

 

 

 

 

Continuum Investment Partners, LP

 

{****}

{****}

 

 

 

 

 

Wade Fetzer III

 

{****}

{****}

 

 

 

 

 

David Walsh

 

{****}

{****}

 

 

 

 

 

Jeffrey B. Rusinow Revocable Living Trust

 

{****}

{****}

 

 

 

 

 

AERO Investments, LLC

 

{****}

{****}

 

 

 

 

 

Ray Sidney

 

{****}

{****}

 

 

 

 

 

Open Prairie Ventures II, L.P.

 

{****}

{****}

 

 

 

 

 

Open Prairie CPAC Joint Venture

 

{****}

{****}

 

 

 

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

 

SCHEDULE C

 

SERIES A PREFERRED HOLDERS

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

Name and Address

 

Number of Shares

 

 

 

Open Prairie Ventures II, L.P.

 

{****}

{****}

 

 

 

 

 

Open Prairie CPAC Joint Venture

 

{****}

{****}

 

 

 

 

 

DaneVest Tech Side Fund I, LLC

 

{****}

{****}

 

 

 

 

 

The Endeavors Group, LLC

 

{****}

{****}

 

 

 

 

 

Mary and Gordon Grado

 

{****}

{****}

 

 

 

 

 

Accuray Incorporated

 

{****}

Attn: General Counsel

 

 

1310 Chesapeake Terrace

 

 

Sunnyvale, CA 94089

 

 

 

 

 

Rock Mackie

 

{****}

{****}

 

 

 

 

 

Grey Ghost, LLC

 

{****}

{****}

 

 

 

 

 

TomoPro Investment, LLC

 

{****}

{****}

 

 

 

 

 

AERO Investments, LLC

 

{****}

{****}

 

 

 

 

 

David Walsh

 

{****}

{****}

 

 

 

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

 

SCHEDULE D

 

SERIES A-1 PREFERRED HOLDERS

 

PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY
{*****}) HAS BEEN OMITTED FROM THIS DOCUMENT AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A CONFIDENTIAL TREATMENT
APPLICATION FILED WITH THE COMMISSION.

 

Name and Address

 

Number of Shares

 

 

 

Open Prairie Ventures II, L.P.

 

{****}

{****}

 

 

 

 

 

Open Prairie CPAC Joint Venture

 

{****}

{****}

 

 

 

 

 

DaneVest Tech Side Fund I, LLC

 

{****}

{****}

 

 

 

 

 

DaneVest Tech Fund I, LP

 

{****}

{****}

 

 

 

 

 

The Endeavors Group, LLC

 

{****}

{****}

 

 

 

 

 

TomoTherapy Incorporated

 

{****}

c/o Accuray Incorporated

 

 

Attn: General Counsel

 

 

1310 Chesapeake Terrace

 

 

Sunnyvale, CA 94089

 

 

 

 

 

TomoPro Investment, LLC

 

{****}

{****}

 

 

 

 

 

Wade Fetzer III

 

{****}

{****}

 

 

 

 

 

Jeffrey B. Rusinow Revocable Living Trust

 

{****}

{****}

 

 

 

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

 

SCHEDULE E

 

MONTEREY MILESTONE

 

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

 

EXHIBIT A

 

DEFINITIONS

 

“Affiliate” means, with regard to any Person, another Person who, directly or
indirectly, controls, is controlled by or is under common control with such
Person, including, without limitation, any general partner, managing member,
officer or director of such Person or any venture capital fund now or hereafter
existing that is controlled by one or more general partners or managing members
of, or shares the same management company with, such Person.

 

“Convertible Securities” means any evidences of indebtedness, shares or other
securities directly or indirectly convertible into or exchangeable for Common
Stock, but excluding Options.

 

“Derivative Securities” means any securities or rights convertible into, or
exercisable or exchangeable for (in each case, directly or indirectly), Common
Stock, including options and warrants.

 

“Exchange Act” means the Exchange Act of 1934, as amended.

 

“Exempted Securities” means all of the following:

 

(a)           shares of Common Stock, Options or Convertible Securities issued
as a dividend or distribution on Common Stock;

 

(b)           shares of Series A Preferred Stock and Warrants issued pursuant to
the Purchase Agreement;

 

(c)           shares of Series B Common Stock issued pursuant to the Series B
Common Stock Purchase Agreement;

 

(d)           shares of Series A Preferred Stock and Series A-1 Preferred Stock
issued pursuant to the conversion of bridge loans to the Company pursuant to the
Purchase Agreement;

 

(e)           shares of Series B Common Stock issued pursuant to the conversion
of shares of Series A Preferred Stock or the exercise of the Warrants issued
pursuant to the Purchase Agreement;

 

(f)            shares of Common Stock, Options or Convertible Securities issued
by reason of a dividend, stock split, split-up or other distribution on shares
of Common Stock, including any reorganization, recapitalization,
reclassification, consolidation or merger involving the Company in which the
Common Stock is converted into or exchanged for securities, cash or other
property;

 

(g)           shares of Common Stock or Options issued to employees or directors
of, or consultants or advisors to, the Company or any of its subsidiaries
pursuant to a plan, agreement or arrangement approved by the Board;

 

A-1

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

 

(h)           shares of Common Stock or Convertible Securities actually issued
upon the exercise of Options or shares of Common Stock actually issued upon the
conversion or exchange of Convertible Securities, in each case provided such
issuance is pursuant to the terms of such Option or Convertible Security;

 

(i)            shares of Common Stock, Options or Convertible Securities issued
to banks, equipment lessors or other financial institutions, or to real property
lessors, pursuant to a debt financing, equipment leasing or real property
leasing transaction approved by the Board;

 

(j)            shares of Common Stock, Options or Convertible Securities issued
to suppliers or third-party service providers in connection with the provision
of goods or services pursuant to transactions approved by the Board;

 

(k)           shares of Common Stock, Options or Convertible Securities issued
pursuant to the acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other reorganization or joint
venture agreement, provided, that such issuances of substantially all of the
assets or other reorganization or to a joint venture agreement, provided, that
such issuances are approved by the Board; and

 

(l)            shares of Common Stock, Options or Convertible Securities issued
in connection with sponsored research, collaboration, technology license,
development, OEM, marketing or other similar agreements or strategic
partnerships approved by the Board.

 

“Exercise Notice” means, with respect to the Company or any Shareholder, a
written notice from such party notifying the selling Shareholder that such party
intends to exercise its Right of First Refusal (in the case of the Company) or
Secondary Refusal Right (in the case of a Shareholder) as to some or all of the
Shares with respect to any Proposed Transfer.

 

“Form S-1” means such form under the Securities Act as in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC.

 

“Form S-3” means such form under the Securities Act as in effect on the date
hereof or any registration form under the Securities Act subsequently adopted by
the SEC that permits incorporation of substantial information by reference to
other documents filed by the Company with the SEC.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“IPO” means the Company’s first underwritten public offering of its Common Stock
under the Securities Act.

 

“Major Investor” means any Shareholder that (i) holds outstanding shares of
Series A Common Stock, Series B Common Stock or Series A Preferred Stock that
have a collective original purchase price of at least Three Million Dollars
($3,000,000), (ii) is not in breach of this Agreement, the Investor Rights
Agreement or the Purchase Agreement, and (iii) the Board has

 

A-2

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

 

determined is not a competitor or an Affiliate of a competitor of the Company,
Accuray or TomoTherapy.

 

“Merger Agreement” means an Agreement and Plan of Merger, to be entered into
among the Company, Accuray, a wholly owned subsidiary of Accuray, and certain
other parties, substantially in the form attached hereto as Exhibit D.

 

“Monterey Milestone” means the milestones and other events set forth on
Schedule E.

 

“New Securities” means, collectively, equity securities of the Company, whether
or not currently authorized, as well as rights, options, or warrants to purchase
such equity securities, or securities of any type whatsoever that are, or may
become, convertible or exchangeable into or exercisable for such equity
securities.

 

“Non-exercise Notice” means a written notice from the Company notifying the
recipient that the sender does not intend to exercise its Right of First Refusal
as to all Shares subject to a Proposed Transfer.

 

“Option” means rights, options or warrants (including without limitation, the
Warrants) to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities.

 

“Person” means an individual, firm, corporation, partnership, association,
limited liability company, trust or any other entity.

 

“Proposed Transfer” means any assignment, sale, offer to sell, pledge, mortgage,
hypothecation, encumbrance, disposition of or any other like transfer or
encumbering of any Shares (or any interest therein) that is proposed by any
Shareholder, whether voluntary, involuntary or by operation of law, other than
(a) a transfer of Shares between Shareholders where the transferee is not, at
the time of such transfer and in the determination of the Board, a competitor of
the Company or an Affiliate thereof; (b) a transfer of Shares that is approved
by the Board; (c) a transfer of Shares to an Affiliate of a Shareholder or to
such Shareholder’s spouse, children (natural or adopted), grandchildren or a
trust, partnership or limited liability company exclusively for the benefit of
(or exclusively owned by) the Shareholder or any combination of the Persons
identified above; and (d) a transfer of Shares to Accuray, TomoTherapy or an
Affiliate of either Accuray or TomoTherapy.

 

“Proposed Transfer Notice” means written notice from a Shareholder setting forth
the terms and conditions of a Proposed Transfer.

 

“Prospective Transferee” means any person to whom a Shareholder proposes to make
a Proposed Transfer.

 

“Right of Refusal Right” means the right, but not an obligation, of the Company
to purchase some or all of the Shares subject to a Proposed Transfer, on the
terms and conditions specified in the Proposed Transfer Notice.

 

“Secondary Refusal Right” means the right, but not an obligation, of each
Shareholder to purchase up to its pro rata portion (based upon the total number
of shares of Shares then held by

 

A-3

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

 

all Shareholders) of any Shares subject to a Proposed Transfer that are not
purchased pursuant to the Right of First Refusal, on the terms and conditions
specified in the Proposed Transfer Notice.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Series B Common Stock Purchase Agreement” means that certain Series B Common
Stock Purchase Agreement dated as of the date hereof between the Company and
Accuray.

 

“Shares” shall mean and include any shares of the Common Stock and Series A
Preferred Stock, including without limitation, all shares of Common Stock and
Series A Preferred Stock, by whatever name called, now owned or subsequently
acquired by a Shareholder, however acquired, whether through stock splits, stock
dividends, reclassifications, recapitalizations, similar events or otherwise.

 

“Transaction Agreements” means this Agreement, the Investors’ Rights Agreement,
dated as of even date herewith, by and among the Company and certain
shareholders of the Company named therein, the Purchase Agreement, the Series B
Common Stock Purchase Agreement and the Merger Agreement.

 

“Warrants” means the warrants issued pursuant to the Purchase Agreement.

 

A-4

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

 

EXHIBIT B

 

JOINDER AGREEMENT

 

This Joinder Agreement (“Joinder Agreement”) is executed on                 ,
20   , by the undersigned (the “Holder”) pursuant to the terms of that certain
Shareholder Agreement dated as of                     , 2012 (the “Agreement”),
by and among the Company and certain of its Shareholders, as such Agreement may
be amended or amended and restated hereafter.  Capitalized terms used but not
defined in this Joinder Agreement shall have the respective meanings ascribed to
such terms in the Agreement.  By the execution of this Joinder Agreement, the
Holder agrees as follows.

 

1.1          Acknowledgement.  Holder acknowledges that Holder is acquiring
certain shares of the capital stock of the Company (the “Stock”) or options,
warrants or other rights to purchase such Stock (the “Options”), for one of the
following reasons (Check the correct box):

 

o                                    as a transferee of Shares from a party in
such party’s capacity as an “Shareholder” bound by the Agreement, and after such
transfer, Holder shall be considered a “Shareholder” for all purposes of the
Agreement.

 

o                                    as a new Shareholder in accordance with
Section 9.1 of the Agreement, in which case.

 

1.2          Agreement.  Holder hereby (a) agrees that the Stock and the
Options, and any other shares of capital stock or securities required by the
Agreement to be bound thereby, shall be bound by and subject to the terms of the
Agreement and (b) adopts the Agreement with the same force and effect as if
Holder were originally a party thereto.

 

1.3          Notice.  Any notice required or permitted by the Agreement shall be
given to Holder at the address or facsimile number listed below Holder’s
signature hereto.

 

HOLDER:

 

 

ACCEPTED AND AGREED:

 

 

 

By:

 

 

COMPACT PARTICLE ACCELERATION

Name and Title of Signatory

 

CORPORATION

 

 

 

 

Address:

 

 

By:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

Facsimile Number:

 

 

 

 

 

B-1

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

 

EXHIBIT C

 

 

CONSENT OF SPOUSE

 

I, [                                 ], spouse of
[                               ], acknowledge that I have read the Shareholder
Agreement, dated as of                                2012, to which this
Consent is attached (the “Agreement”), and that I know the contents of the
Agreement.  I am aware that the Agreement contains provisions regarding the
voting and transfer of shares of capital stock of the Company that my spouse may
own, including any interest I might have therein.

 

I hereby agree that my interest, if any, in any shares of capital stock of the
Company subject to the Agreement shall be irrevocably bound by the Agreement and
further understand and agree that any community property interest I may have in
such shares of capital stock of the Company shall be similarly bound by the
Agreement.

 

I am aware that the legal, financial and related matters contained in the
Agreement are complex and that I am free to seek independent professional
guidance or counsel with respect to this Consent.  I have either sought such
guidance or counsel or determined after reviewing the Agreement carefully that I
will waive such right.

 

Dated:

 

 

 

 

Signature

 

 

 

 

 

Name of Shareholder’s Spouse

 

C-1

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

 

EXHIBIT D

 

FORM OF MERGER AGREEMENT

 

See Attached.

 

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