(For Use In the U.S.)

EXHIBIT 10.3

VARIAN MEDICAL SYSTEMS, INC.

Third Amended and Restated 2005 Omnibus Stock Plan

PERFORMANCE UNIT AGREEMENT

Varian Medical Systems, Inc. (the “Company”) hereby awards to the designated
employee (“Employee”), Performance Units under the Company’s Third Amended and
Restated 2005 Omnibus Stock Plan (the “Plan”).  The Performance Units awarded
under this Performance Unit Agreement (the "Agreement") consist of the right to
receive shares of common stock of the Company (“Shares”).  The Grant Date is the
date of this Agreement (the “Grant Date”).  Subject to the provisions of
Appendix A of this Agreement ("Appendix A") (attached) and of the Plan, the
principal features of this award are as follows:

Number of Performance Units at or Below Threshold Performance: Zero (0)

Number of Performance Units at Target Performance: (Your Target Grant)

Maximum Number of Performance Units: (Potential Maximum)

Performance Period: September 28, 2013 through September 30, 2016 (the
“Performance Period”)

Performance Goals: The actual number of Shares to be earned under this award
will be determined based on the performance goals set forth in Appendix B which
shall be separately provided to Employee by the Company (the “Performance
Goals”). Such Performance Goals and the extent to which they have been achieved
will be determined by the Compensation and Management Development Committee (the
“Committee”) of the Board of Directors of the Company (the “Board”), in its sole
discretion.  The number of Shares earned on account of performance between
threshold and target or between target and maximum shall be determined in
accordance with the applicable performance curve(s) set forth in Appendix B
which shall be separately provided to Employee by the Company.

As provided in the Plan, this Agreement and Appendix A, this Award may terminate
before the end of the Performance Period. For example, if Employee’s employment
ends before the end of the Performance Period, this Award will terminate at the
same time as such termination unless an exception applies as set forth in
Appendix A.  Important additional information on vesting and forfeiture of the
Performance Units covered by this Award is contained in Paragraphs 2 through 7
of Appendix A.

Your signature below indicates your agreement and understanding that this award
is subject to all of the terms and conditions contained in Appendix A and the
Plan.  For example, important additional information on vesting and forfeiture
of the Performance Units covered by this award is contained in Paragraphs 1
through 7 of Appendix A.  PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH
CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT.  YOU CAN REQUEST A
COPY OF THE PLAN BY CONTACTING THE CORPORATE HUMAN RESOURCES OFFICE IN PALO
ALTO, CALIFORNIA.  TO THE EXTENT ANY CAPITALIZED TERMS USED IN APPENDIX A ARE
NOT DEFINED HEREIN, THEY WILL HAVE THE MEANING ASCRIBED TO THEM IN THE PLAN.

 

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VARIAN MEDICAL SYSTEMS, INC.

 

EMPLOYEE

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Title:

 

[NAME]

 

 

 

 

 

 

 

 

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(For Use In the U.S.)

APPENDIX A

TERMS AND CONDITIONS OF PERFORMANCE UNITS

1.        Award.  The Company hereby awards to the Employee under the Plan as a
separate incentive in connection with his or her employment, and not in lieu of
any salary or other compensation for his or her services, an award of (Your
Target Grant) Performance Units on the date hereof, subject to all of the terms
and conditions in this Agreement and the Plan.

2.         Vesting.  To the extent that the Performance Goals are achieved and
Shares are earned (which may range from zero to (Potential Maximum)), as
determined and certified by the Committee in its sole discretion, then the
earned Shares shall be paid following the end of the Performance Period no later
than December 15th immediately following the end of the Performance Period (the
“Settlement Date”) provided that Employee shall have been continuously employed
by the Company or by one of its Affiliates from the Grant Date through the last
day of the Performance Period (the “Employment Requirement”).  For the avoidance
of doubt, in the event that the Employment Requirement is waived pursuant to
Paragraph 3, 4 or 6, except as set forth in Paragraph 7, payout of the
Performance Units shall continue to depend on the extent to which the
Performance Goals are achieved and Shares are earned, as determined and
certified by the Committee in its sole discretion.

3.        Retirement  If Employee has a Termination of Service due to Retirement
(defined as 55 years or more of age with 10 or more years of service with the
Company or its Affiliates, or age 65 or older) on or prior to the last day of
the Performance Period,  Employee shall be treated for purposes of this
Agreement as having been continuously employed by the Company or by one of its
Affiliates through the last day of the Performance Period; provided, however,
that the threshold, target and maximum number of Performance Units subject to
this Agreement (and potential payouts in between) shall be adjusted
proportionally by the time during the three (3) year Performance Period that the
Employee remained an employee of the Company (based upon a 365 day year).  For
example, if the Employee is granted a target number of Performance Units equal
to 6,000 and the Employee Terminated Service due to the Employee's Retirement 30
days after the Grant Date, then the Employee's target number of Performance
Units would be reduced from 6,000 shares to 164 shares (6,000 x 30/1,095) and
the balance of the Performance Units would be cancelled.  For the avoidance of
doubt, except as set forth in Paragraph 7, the actual number of Shares earned
with respect to such adjusted number of Performance Units shall continue to
depend on the extent to which the Performance Goals are achieved and Shares are
earned, as determined and certified by the Committee in its sole discretion.

4.         Committee Discretion.  The Committee, in its absolute discretion, may
waive the Employment Requirement with respect to all or any portion of the
Performance Units at any time.

5.         Forfeiture.  Except as provided in Paragraphs 3, 4, 6 or 7(b) and
notwithstanding any contrary provision of this Agreement, in the event that
Employee ceases to be continuously employed by the Company or by one of its
Affiliates through the last day of the Performance Period, the Performance Units
shall thereupon be forfeited.

6.         Death of Employee.  In the event of the Employee's death prior to
Employee's Termination of Service, Employee shall be treated for purposes of
this Agreement as having been continuously employed by the Company or by one of
its Affiliates through the last day of the Performance Period.  Any distribution
or delivery to be made to the Employee under this Agreement shall, if the
Employee is then deceased, be made to the Employee’s designated beneficiary, or
if either no beneficiary survives the Employee or the Committee does not permit
beneficiary designations, to the administrator or executor of the Employee’s
estate.  Any designation of a beneficiary by the Employee shall be effective
only if such designation is made in a form and manner acceptable to the
Committee.  Any transferee must furnish the Company with (a) written notice of
his or her status as transferee, and (b) evidence satisfactory to the Company to
establish the validity of the transfer and compliance with any laws or
regulations pertaining to said transfer.

7.         Change in Control.

(a)        In the event of a Change in Control (defined below) in which the
Performance Units are assumed, the Performance Goals shall be deemed to be
satisfied at target and the target number of Shares (as adjusted pursuant to
Section 12 hereof) shall be paid to the Employee on the Settlement Date provided
that Employee shall have been continuously employed by the Company or by one of
its Affiliates from the Grant Date through the last day of the original
Performance Period (or shall have had an earlier Termination of Service due to
Retirement or death or as

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described in the second to last sentence of this Section 7(a)).  In the event
Employee shall have had an earlier Termination of Service due to Retirement,
such target number of Shares shall be prorated in accordance with Paragraph 3
hereof.   If Employee has entered into a Change in Control Agreement (the “CIC
Agreement”) with the Company on or prior to the date of the applicable Change in
Control and the Employee’s employment terminates under the circumstances
described in Section 2(d) or 4(a) of the CIC Agreement, then Employee shall
become vested in the target number of Shares (as adjusted pursuant to Section 12
hereof, if applicable) upon the Release Deadline (as defined in the CIC
Agreement) provided that Employee shall have executed and not revoked the
Release (as defined in the CIC Agreement) by the Release Deadline and such
Shares shall be paid to the Employee on the Settlement Date; provided, however,
that if a Change in Control is not consummated, Employee shall return to the
Company any payments provided to the Employee in connection with an employment
termination described in Section 2(d) of the CIC Agreement.  In the event of any
conflict between this Agreement and CIC Agreement, this Agreement shall control.

(b)         Notwithstanding the foregoing or anything to the contrary set forth
in the Plan or any other agreement or arrangement, in the event that the
Performance Units are not assumed in connection with a Change in Control, the
Performance Goals shall be deemed satisfied at target and the target number of
Shares shall be paid to the Employee on the Settlement Date in the same form,
and determined in accordance with the undiscounted value of, the consideration
received by the holders of Shares in the Change in Control without the
requirement that Employee shall have been continuously employed by the Company
or by one of its Affiliates from the Grant Date through the last day of the
original Performance Period and without the requirement that any portion of such
payment be subject to any escrow, earn-out or similar provision.

For purposes of this Agreement, Change in Control shall mean the occurrence of
any of the following:

(i) Any individual or group constituting a “person”, as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended,
(other than (A) the Company or any of its subsidiaries or (B) any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or of any of its subsidiaries), is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company’s outstanding securities then
entitled ordinarily (and apart from rights accruing under special circumstances)
to vote for the election of directors; or

(ii) Continuing Directors (directors of the Company in office on the date hereof
and any successor to any such director who was nominated or selected by a
majority of the Continuing Directors in office at the time of the director’s
nomination or selection and who is not an “affiliate” or “associate” (as defined
in Regulation 12B under the Securities Exchange Act of 1934, as amended) of any
person who is the beneficial owner, directly or indirectly, of securities
representing ten percent (10%) or more of the combined voting power of the
Company’s outstanding securities then entitled ordinarily to vote for the
election of directors) cease to constitute at least a majority of the Board; or

(iii) there occurs a reorganization, merger, consolidation or other corporate
transaction involving the Company (a “Transaction”), in each case with respect
to which the stockholders of the Company immediately prior to such Transaction
do not, immediately after the Transaction, own more than 50% of the combined
voting power of the Company or other corporation resulting from such
Transaction; or

(iv) all or substantially all of the assets of the Company are sold, liquidated
or distributed;

provided, however, that a “Change in Control” shall not be deemed to have
occurred under this Agreement if, prior to the occurrence of a specified event
that would otherwise constitute a Change in Control hereunder, the disinterested
Continuing Directors then in office, by a majority vote thereof, determine that
the occurrence of such specified event shall not be deemed to be a Change in
Control with respect to Employee hereunder if the Change in Control results from
actions or events in which Employee is a participant in a capacity other than
solely as an officer, employee or director of the Company.

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8.           Settlement of Performance Units.

(a)        Status as a Creditor.  Prior to settlement of any vested Performance
Units, the Performance Units will represent an unfunded and unsecured obligation
of the Company, payable (if at all) only from the general assets of the Company.
The Employee is an unsecured general creditor of the Company, and settlement of
vested Performance Units is subject to the claims of the Company’s creditors.

(b)        Form and Timing of Settlement.  Performance Units will automatically
be settled in the form of Shares on the Settlement Date to the extent earned in
accordance with the terms hereof.  Fractional Shares will not be issued with
respect to Performance Units. Where a fractional Share would be owed to the
Employee with respect to vested Performance Units, a cash payment equivalent
will be paid in place of any such fractional Share using the Fair Market Value
on the relevant Settlement Date.

9.           Tax Liability and Withholding.  The Company or one if its
Affiliates shall assess applicable tax liability and requirements in connection
with the Employee’s participation in the Plan, including, without limitation,
tax liability associated with the grant or settlement of Performance Units or
sale of the underlying Shares (the “Tax Liability”).  These requirements may
change from time to time as laws or interpretations change.  Regardless of the
Company’s or the Affiliate’s actions in this regard, the Employee hereby
acknowledges and agrees that the Tax Liability shall be the Employee’s
responsibility and liability.  The Employee acknowledges that the Company’s
obligation to issue or deliver Shares shall be subject to satisfaction of the
Tax Liability.  Unless otherwise determined by the Company, Tax Liability shall
be satisfied by the Company’s withholding all or a portion of any Shares that
otherwise would be issued to the Employee upon settlement of the vested
Performance Units; provided that amounts withheld shall not exceed the amount
necessary to satisfy the Company’s tax withholding obligations (minimum tax
withholding obligations if necessary to avoid adverse accounting consequences).
Such withheld Shares shall be valued based on the Fair Market Value as of the
date the withholding obligations are satisfied. The Company or one if its
Affiliates may, at their discretion, use other methods to satisfy the Tax
Liability.  Furthermore, the Employee agrees to pay the Company or the Affiliate
any Tax Liability that cannot be satisfied by the foregoing methods.

10.         Rights as Stockholder.  Neither the Employee nor any person claiming
under or through the Employee shall have any of the rights or privileges of a
stockholder of the Company in respect of any Performance Units (whether vested
or unvested) unless and until such Performance Units are settled in Shares and
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Employee.  After such issuance, recordation and delivery, the Employee shall
have all the rights of a stockholder of the Company with respect to voting such
Shares and receipt of dividends and distributions on such Shares.  This
Agreement does not provide for dividend equivalents.

11.        Acknowledgments.  The Employee acknowledges and agrees to the
following:

·

The Plan is discretionary in nature and the Committee may amend, suspend, or
terminate it at any time;

·

The grant of the Performance Units is voluntary and occasional and does not
create any contractual or other right to receive future grants of Performance
Units, or benefits in lieu of the Performance Units even if the Performance
Units have been granted repeatedly in the past;

·

All determinations with respect to such future Performance Units, if any,
including but not limited to, the times when the Performance Units shall be
granted or when the Performance Units shall vest, will be at the sole discretion
of the Committee;

·

The Employee’s participation in the Plan is voluntary;

·

The value of the Performance Units is an extraordinary item of compensation,
which is outside the scope of the Employee’s employment contract (if any),
except as may otherwise be explicitly provided in the Employee’s employment
contract (if any);

·

The Performance Units are not part of normal or expected compensation or salary
for any purpose, including, but not limited to, calculating termination,
severance, resignation, redundancy, end of service, or similar payments, or
bonuses, long-service awards, pension or retirement benefits;

·

The future value of the Shares is unknown and cannot be predicted with
certainty;

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·

No claim or entitlement to compensation or damages arises from the termination
of the Award or diminution in value of the Performance Units or Shares, and the
Employee irrevocably releases the Company and its Affiliates from any such claim
that may arise;

·

Neither the Plan nor the Performance Units shall be construed to create an
employment relationship where any employment relationship did not otherwise
already exist;

·

Nothing in this Agreement or the Plan shall confer upon the Employee any right
to continue to be employed by the Company or any Affiliate or shall interfere
with or restrict in any way the rights of the Company or the Affiliate, which
are hereby expressly reserved, to terminate the employment of the Employee under
applicable law;

·

The transfer of employment of the Employee between the Company and any one of
its Affiliates (or between Affiliates) shall not be deemed a Termination of
Service;

·

Nothing herein contained shall affect the Employee’s right to participate in and
receive benefits under and in accordance with the then current provisions of any
pension, insurance or other employee welfare plan or program of the Company or
any Affiliate.

12.        Changes in Stock.  In the event that as a result of a stock dividend,
stock split, reclassification, recapitalization, combination of Shares or the
adjustment in capital stock of the Company or otherwise, or as a result of a
merger, consolidation, spin-off or other reorganization, the Company’s common
stock shall be increased, reduced or otherwise changed, the Performance Units
shall, subject to Section 409A of the Code, be properly adjusted.

13.        Address for Notices.  Any notice to be given to the Company under the
terms of this Agreement shall be addressed to the Company, in care of its
Secretary, at 3100 Hansen Way, Palo Alto, California 94304, or at such other
address as the Company may hereafter designate in writing.

14.        Restrictions on Transfer.  Except as provided in Paragraph 6 above,
this award and the rights and privileges conferred hereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to sale under execution,
attachment or similar process.  Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this award, or of any right or privilege
conferred hereby, or upon any attempted sale under any execution, attachment or
similar process, this award and the rights and privileges conferred hereby
immediately shall become null and void.  Regardless of whether the transfer or
issuance of the Shares to be issued pursuant to this Agreement has been
registered under the Securities Act of 1933, as amended (the "1933 Act") or has
been registered or qualified under the securities laws of any state, the Company
may impose additional restrictions upon the sale, pledge, or other transfer of
the Shares (including the placement of appropriate legends on stock certificates
and the issuance of stop-transfer instructions to the Company’s transfer agent)
if, in the judgment of the Company and the Company’s counsel, such restrictions
are necessary in order to achieve compliance with the provisions of the 1933
Act, the securities laws of any state, or any other law.  Stock certificates
evidencing the Shares issued pursuant to this Agreement, if any, may bear such
restrictive legends as the Company and the Company’s counsel deem necessary
under applicable laws or pursuant to this Agreement.

15.        Binding Agreement.  Subject to the limitation on the transferability
of this award contained herein, this Agreement shall be binding upon and inure
to the benefit of the heirs, legatees, legal representatives, successors and
assigns of the parties hereto.

16.        Conditions for Issuance of Certificates for Stock.  The Shares
deliverable to the Employee upon settlement of vested Performance Units may be
either previously authorized but unissued Shares or issued Shares which have
been reacquired by the Company.  Subject to Section 409A of the Code, the
Company shall not be required to issue any certificate or certificates for
Shares hereunder prior to fulfillment of all the following conditions:  (a) the
admission of such Shares to listing on all stock exchanges on which such class
of stock is then listed; (b) the completion of any registration or other
qualification of such Shares under any state or federal law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; (c) the approval or other clearance
from any state or federal governmental regulatory body, which the Committee
shall, in its absolute discretion, determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following the Settlement Date as
the Committee may establish from time to time for reasons of administrative
convenience.

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17.        Plan Governs.  This Agreement is subject to all terms and provisions
of the Plan.  In the event of a conflict between one or more provisions of this
Agreement and one or more provisions of the Plan, the provisions of the Plan
shall govern.

18.        Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without reference to its
principles of conflicts of law.

19.        Committee Authority.  The Committee shall have the power to interpret
the Plan and this Agreement, and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules.  All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
binding upon the Employee, the Company and all other interested persons.  No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or this
Agreement.  In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under the Plan
and this Agreement.

20.        Captions.  Captions provided herein are for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.

21.        Severability.  In the event that any provision in this Agreement
shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.

22.        Modifications to the Agreement.  This Agreement constitutes the
entire understanding of the parties on the subjects covered.  The Employee
expressly warrants that he or she is not executing this Agreement in reliance on
any promises, representations, or inducements other than those contained
herein.  Modifications to this Agreement or the Plan can be made only in an
express written contract executed by a duly authorized officer of the Company.

23.        Amendment, Suspension or Termination of the Plan.  By accepting this
award, the Employee expressly warrants that he or she has received a right to an
equity based award under the Plan, and has received, read, and understood a
description of the Plan.  The Employee understands that the Plan is
discretionary in nature and may be modified, suspended, or terminated by the
Company at any time.

24.       Authorization to Release and Transfer Necessary Personal
Information.  The Employee hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of his or her
personal data by and among, as applicable, the Company and the Affiliates for
the exclusive purpose of implementing, administering and managing the Employee’s
participation in the Plan. The Employee understands that the Company and the
Affiliates may hold certain personal information about the Employee including,
but not limited to, the Employee’s name, home address and telephone number, date
of birth, social security number (or any other social or national identification
number), salary, nationality, job title, number of Shares held and the details
of all Performance Units or any other entitlement to Shares awarded, cancelled,
vested, unvested or outstanding for the purpose of implementing, administering
and managing the Employee’s participation in the Plan (the “Data”).  The
Employee understands that the Data may be transferred to the Company or any of
the Affiliates, or to any third parties assisting in the implementation,
administration and management of the Plan, that these recipients may be located
in the Employee’s country or elsewhere, and that the recipients’ country may
have different data privacy laws and protections than the Employee’s
country.  The Employee understands that he or she may request a list with the
names and addresses of any potential recipients of the Data by contacting his or
her local human resources representative.  The Employee authorizes the
recipients to receive, possess, use, retain and transfer the Data, in electronic
or other form, for the sole purpose of implementing, administering and managing
his or her participation in the Plan, including any requisite transfer of such
Data to a broker or other third party assisting with the administration of
Performance Units under the Plan or with whom Shares acquired pursuant to the
Performance Units or cash from the sale of such Shares may be
deposited.  Furthermore, the Employee acknowledges and understands that the
transfer of the Data to the Company or the Affiliates or to any third parties is
necessary for his or her participation in the Plan.  The Employee understands
that Data will be held only as long as is necessary to implement, administer and
manage his or her participation in the Plan.  The Employee understands that he
or she may, at any time, view the Data, request additional information about the
storage and processing of the Data, require any necessary amendments to the Data
or refuse or withdraw the consents herein by contacting his or her local human
resources representative in writing.  The Employee further acknowledges that
withdrawal of consent may affect his or her ability to vest in or realize
benefits from the Performance Units, and his or her ability to participate in
the Plan.  For

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more information on the consequences of refusal to consent or withdrawal of
consent, the Employee understands that he or she may contact his or her local
human resources representative.

25.        [Electronic Delivery:  By executing this Agreement Employee consents
to the electronic delivery of the Plan documents and this Agreement.]

26.        [Execution of this Agreement:  Execution of this Agreement, whether
in writing or electronic, shall have the same binding effect and shall fully
bind Employee and the Company to all of the terms and conditions set forth in
this Agreement and the Plan.]

 

 

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