Exhibit 10.1

 

October 22, 2008

 

Euan Thomson, Ph.D.

17150 Los Robles Way

Los Gatos, CA  95030

 

Re:                             AMENDED AND RESTATED EMPLOYMENT TERMS

 

Dear Euan:

 

Accuray Incorporated (the “Company”) is pleased to offer to continue your
employment as President and Chief Executive Officer of the Company on the terms
and conditions set forth in this letter, effective as of February 2, 2009 (the
“Effective Date”). This letter amends and restates in its entirety that certain
employment letter, dated as of November 10, 2006, between you and the Company
(the “Employment Letter”). You and the Company mutually agree to amend certain
provisions of the Employment Letter as a result of Section 409A of the Internal
Revenue Code of 1986, as amended.

 

1.               TERM. The employment relationship between you and the Company
will be at-will. You and the Company will have the right to terminate the
employment relationship at any time and for any reason whatsoever, with or
without cause, and without any liability or obligation except as may be
expressly provided herein.

 

2.               POSITION, DUTIES AND RESPONSIBILITIES. During the period of the
employment relationship between you and the Company (the “Term”), the Company
will employ you, and you agree to be employed by the Company, as Chief Executive
Officer of the Company. In the capacity of Chief Executive Officer, you will
have such duties and responsibilities as are normally associated with such
position and will devote your full business time and attention serving the
Company in such position. Your duties may be changed from time to time by the
Company, consistent with your position. You will report to the Board of
Directors of the Company (the “Board”), and will work full-time at our principal
offices located at 1310 Chesapeake Terrace, Sunnyvale, California 94089 (or such
other location in the greater Sunnyvale area as the Company may utilize as its
principal offices), except for travel to other locations as may be necessary to
fulfill your responsibilities.

 

3.               BASE COMPENSATION. During the Term, the Company will pay you a
base salary of $500,000 per year, less payroll deductions and all required
withholdings, payable in accordance with the Company’s normal payroll practices
and prorated for any partial month of employment. Your base salary may be
subject to increase pursuant to the Company’s policies as in effect from time to
time.

 

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4.               ANNUAL BONUS. In addition to the base salary set forth above,
during the Term, you will be eligible to participate in the Company’s executive
bonus plan applicable to similarly situated executives of the Company. The
amount of your annual bonus will be based on the attainment of performance
criteria established and evaluated by the Company in accordance with the terms
of such bonus plan as in effect from time to time, provided that, subject to the
terms of such bonus plan, your target (but not necessarily maximum) annual bonus
shall be 100% of your base salary actually paid for such year.

 

In accordance with the terms of such bonus plan, payment of each bonus shall be
made in a single lump-sum cash payment not later than the last day of the
applicable two and one-half (2 ½) month short-term deferral period with respect
to such bonus payment, within the meaning of Treasury Regulation
Section 1.409A-1(b)(4).

 

5.               STOCK OPTION AWARDS.

 

(a)                                  Subject to approval by the Board or the
Compensation Committee of the Board, the Company agrees to grant to you, not
later than the first regularly scheduled Board meeting of each calendar year
during the Term, a stock option to purchase 40,000 shares of the Company’s
common stock (each, a “Stock Option”). Each Stock Option shall be granted to you
as an “incentive stock option” (within the meaning of Section 422 of the Code)
at an exercise price per share equal to the fair market value of a share of the
Company’s common stock on the date of grant, as determined in accordance with
the Company’s incentive award plan under which such Stock Option is granted.
Subject to your continued employment with the Company, each Stock Option shall
vest and become exercisable over a four (4) year period, with 1/48th of the
shares subject thereto vesting in equal monthly installments on each monthly
anniversary of the date of grant. Consistent with the foregoing, the terms and
conditions of each Stock Option shall be set forth in a stock option agreement
to be entered into by the Company and you which shall evidence the grant of each
Stock Option (the “Stock Option Agreement”).

 

(b)                                 In the event of a Change in Control (as
defined in Exhibit A hereto), each of your then outstanding stock options to
purchase shares of the Company’s common stock (including, without limitation,
the Stock Options) will become fully vested and exercisable immediately prior to
the effective time of the Change in Control.

 

6.               BENEFITS AND VACATION. During the Term, you will be eligible to
participate in all incentive, savings and retirement plans, practices, policies
and programs maintained or sponsored by the Company from time to time which are
applicable to other similarly situated executives of the Company, subject to the
terms and conditions thereof. During the Term, you will also be eligible for
standard benefits, such as medical, vision and dental insurance, sick leave,
vacations and holidays to the extent applicable generally to other similarly
situated executives of the Company, subject to the terms and conditions of the
applicable Company plans or policies. The benefits described in this Section 6
will be subject to change from time to time as deemed appropriate and necessary
by the Company.

 

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7.               TERMINATION OF EMPLOYMENT.

 

(a)                                  In the event that you incur a “separation
from service” (within the meaning of Section 409A(a)(2)(A)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation
Section 1.409A-1(h)) (“Separation from Service”) by reason of (i) a termination
of your employment by the Company other than for Cause (as defined below), death
or disability, or (ii) a termination of your employment by you for Good Reason
(as defined below), and provided that you execute a general release of claims 
in a form prescribed by the Company (the “Release”) within twenty-one (21) days
(or, if required by applicable law, forty-five (45) days) after the date of such
Separation from Service (the “Separation Date”) and you do not revoke such
Release, then, subject to Section 17(b) below, in addition to any other accrued
amounts payable to you through the Separation Date (including any earned but
unpaid bonus), (1) the Company will, on the sixtieth (60th) day following the
Separation Date, pay you a lump-sum severance payment (the “Severance Payment”)
in an amount equal to the sum of (x) twelve (12) months of your annual base
salary as in effect immediately prior to the Separation Date plus (y) a pro rata
portion of your target annual bonus for the fiscal year of the Company in which
such Separation from Service occurs, calculated based on the number of days
elapsed in such fiscal year through the Separation Date plus (z) 100% of your
target annual bonus for the fiscal year of the Company in which such Separation
from Service occurs, (2) each of your then outstanding stock options to purchase
shares of the Company’s common stock will, immediately prior to the Separation
Date, become vested and exercisable with respect to that number of additional
shares that would have become vested during the twelve (12) month period
immediately following the Separation Date had you remained employed by the
Company through such period, and (3) provided that you properly elect COBRA
continuation coverage, the Company will pay the COBRA premium for health care
coverage for you and your spouse and children, as applicable and to the extent
eligible (the “Severance Benefits”), for the twelve (12) month period
immediately following the Separation Date, but in no event longer than the
period of time during which you would be entitled to continuation coverage under
Section 4980B of the Code absent this provision (the “COBRA Period”).

 

(b)                                 If a Change in Control occurs during the
Term and (i) within the twelve (12) month period immediately following the
effective date of the Change in Control, you incur a Separation from Service by
reason of (A) a termination of your employment by the Company other than for
Cause, death or disability, or (B) a termination of your employment by you for
Good Reason, or (ii) within the thirty (30) day period immediately following the
effective date of the Change in Control, you incur a Separation from Service by
reason of your resignation for any reason, and provided that you execute a
Release within twenty-one (21) days (or, if required by applicable law,
forty-five (45) days) after the Separation Date and you do not revoke such
Release, then, subject to Section 17(b) below, in lieu of the Severance Payment
and Severance Benefits described in paragraph (a) of this Section 7 and in
addition to any other accrued amounts payable to you through the Separation Date
(including any earned but unpaid bonus), (1) the Company will, on the sixtieth
(60th) day following the Separation Date, pay you a lump-sum Severance Payment
in an amount equal to the sum of (x) eighteen (18) months of your annual base
salary as in effect immediately prior to the Separation Date plus (y) a pro rata
portion of your target annual bonus for the fiscal year of the Company in which
such Separation from Service occurs, calculated based on the number of days
elapsed in such fiscal year through

 

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the Separation Date plus (z) 150% of your target annual bonus for the fiscal
year of the Company in which such Separation from Service occurs, and
(2) provided that you properly elect COBRA continuation coverage, the Company
will pay the Severance Benefits for the eighteen (18) month period immediately
following the Separation Date, but in no event longer than the COBRA Period.

 

(c)                                  Notwithstanding the foregoing, your right
to receive the payments and benefits set forth in this Section 7 is conditioned
on and subject to your execution and non-revocation of the Release. In no event
shall you or your estate or beneficiaries be entitled to any of the payments or
benefits set forth in this Section 7 upon any termination of your employment by
reason of your total and permanent disability or your death.

 

(d)                                 For purposes of this letter:

 

(A)  “Cause” shall mean (i) your commission of a felony, (ii) your commission of
a crime involving moral turpitude or your commission of any other act or
omission involving dishonesty, disloyalty, breach of fiduciary duty or fraud
with respect to the Company or any of its subsidiaries or any of their customers
or suppliers, or (iii) your failure to perform the normal and customary duties
of your position with the Company as reasonably directed by the Board, provided,
that any of the acts or omissions described in the foregoing clauses (i),
(ii) or (iii) are not cured to the Company’s reasonable satisfaction within
thirty (30) days after written notice thereof is given to you; and

 

(B)  “Good Reason” shall mean the occurrence of any one or more of the following
events without your prior written consent, unless the Company fully corrects the
circumstances constituting Good Reason within 30 days after notice from you that
Good Reason exists:  (i) a material reduction of your duties and
responsibilities hereunder; (ii) a relocation of your principal workplace more
than 35 miles outside the Company’s Sunnyvale corporate headquarters; or
(iii) the Company’s reduction of your annual base salary, each as in effect on
the date hereof or as the same may be increased from time to time; provided that
written notice of your resignation for Good Reason must be delivered to the
Company within 30 days after the date you first know or should reasonably know
of the occurrence of any such event in order for your resignation with Good
Reason to be effective hereunder.

 

8.               CODE SECTION 280G.

 

(a)                                  In the event it shall be determined that
any payment or distribution to you or for your benefit which is in the nature of
compensation and is contingent on a change in the ownership or effective control
of the Company or the ownership of a substantial portion of the assets of the
Company (within the meaning of Section 280G(b)(2) of the Code), whether paid or
payable pursuant to this letter or otherwise (a “Payment”), would constitute a
“parachute payment” under Section 280G(b)(2) of the Code and would be subject to
the excise tax imposed by Section 4999 of the Code (together with any interest
or penalties imposed with respect to such excise tax, the “Excise Tax”), then
the Payments shall be reduced to the extent necessary so that no portion thereof
shall be subject to the excise tax imposed by Section 4999 of the Code but only
if, by reason of such reduction, the net after-tax benefit received by you shall
exceed the net

 

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after-tax benefit received by you if no such reduction was made. The specific
Payments that shall be reduced and the order of such reduction shall be
determined so as to achieve the most favorable economic benefit to you, and to
the extent economically equivalent, the Payments shall be reduced pro rata, all
as determined by the Company in its sole discretion. For purposes of this
Section 8(a), “net after-tax benefit” shall mean (i) the Payments which you
receive or are then entitled to receive from the Company that would constitute
“parachute payments” within the meaning of Section 280G of the Code, less
(ii) the amount of all federal, state and local income taxes payable with
respect to the Payments calculated at the maximum marginal income tax rate for
each year in which the Payments shall be paid to you (based on the rate in
effect for such year as set forth in the Code as in effect at the time of the
first payment of the foregoing), less (iii) the amount of Excise Taxes imposed
with respect to the Payments.

 

(b)                                 All determinations required to be made under
this Section 8 shall be made by such nationally recognized accounting firm as
may be selected by the Audit Committee of the Board as constituted immediately
prior to the change in control transaction (the “Accounting Firm”), provided,
that the Accounting Firm’s determination shall be made based upon “substantial
authority” within the meaning of Section 6662 of the Code. The Accounting Firm
shall provide its determination, together with detailed supporting calculations
and documentation, to you and the Company within 15 business days following the
date of termination of your employment, if applicable, or such other time as
requested by you (provided that you reasonably believe that any of the Payments
may be subject to the Excise Tax) or the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company.

 

9.               RESTRICTIVE COVENANTS.

 

(a)                                  As a condition of your employment with the
Company, you agree that during the Term and thereafter, you will not directly or
indirectly disclose or appropriate to your own use, or the use of any third
party, any trade secret or confidential information concerning the Company or
its subsidiaries or affiliates (collectively, the “Company Group”) or their
businesses, whether or not developed by you, except as it is required in
connection with your services rendered for the Company. You further agree that,
upon termination of your employment, you will not receive or remove from the
files or offices of the Company Group any originals or copies of documents or
other materials maintained in the ordinary course of business of the Company
Group, and that you will return any such documents or materials otherwise in
your possession. You further agree that, upon termination of your employment,
you will maintain in strict confidence the projects in which any member of the
Company Group is involved or contemplating.

 

(b)                                 You further agree that during the Term and
continuing through the first anniversary of the date of termination of your
employment, you will not directly or indirectly solicit, induce, or encourage
any employee, consultant, agent, customer, vendor, or other parties doing
business with any member of the Company Group to terminate their employment,
agency, or other relationship with the Company Group or such member or to render
services for or transfer their business from the Company Group or such member
and you will not initiate discussion with any such person for any such purpose
or authorize or knowingly cooperate with the taking of any such actions by any
other individual or entity.

 

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(c)                                  While employed by the Company, you agree
that you will not engage in any business activity in competition with any member
of the Company Group nor make preparations to do so.

 

(d)                                 Upon the termination of your relationship
with the Company, you agree that you will promptly return to the Company, and
will not take with you or use, all items of any nature that belong to the
Company, and all materials (in any form, format, or medium) containing or
relating to the Company’s business.

 

(e)                                  In recognition of the facts that
irreparable injury will result to the Company in the event of a breach by you of
your obligations under Sections 9(a), (b), (c) or (d) above, that monetary
damages for such breach would not be readily calculable, and that the Company
would not have an adequate remedy at law therefor, you acknowledge, consent and
agree that in the event of such breach, or the threat thereof, the Company shall
be entitled, in addition to any other legal remedies and damages available, to
specific performance thereof and to temporary and permanent injunctive relief
(without the necessity of posting a bond) to restrain the violation or
threatened violation of such obligations by you.

 

10.         COMPANY RULES AND REGULATIONS. As an employee of the Company, you
agree to abide by Company policies, procedures, rules and regulations as set
forth in the Company’s Employee Handbook or as otherwise promulgated. In
addition, as a condition of your employment, you acknowledge that you and the
Company have entered into that certain Employee Confidentiality and Inventions
Agreement dated as of March 11, 2002, and you hereby agree to abide by the terms
of that certain Employee Confidentiality and Inventions Agreement dated as of
March 11, 2002, by and between you and the Company.

 

11.         DIRECTORS’ AND OFFICERS’ INSURANCE. During the Term, the Company
shall provide you with coverage under the Company’s directors’ and officers’
insurance policy, as in effect from time to time for senior executives of the
Company.

 

12.         WITHHOLDING. The Company may withhold from any amounts payable under
this letter such federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

 

13.         ARBITRATION. Except as set forth in Section 9(e) above, any
disagreement, dispute, controversy or claim arising out of or relating to this
letter or the interpretation of this letter or any arrangements relating to this
letter or contemplated in this letter or the breach, termination or invalidity
thereof shall be settled by final and binding arbitration administered by
JAMS/Endispute in Santa Clara County, California in accordance with the then
existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes. Except as provided herein, the Federal Arbitration Act shall govern
the interpretation, enforcement and all proceedings. The arbitrator shall apply
the substantive law (and the law of remedies, if applicable) of the state of
California, or federal law, or both, as applicable, and the arbitrator is
without jurisdiction to apply any different substantive law. The arbitrator
shall have the authority to entertain a motion to dismiss and/or a motion for
summary judgment by any party

 

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and shall apply the standards governing such motions under the Federal Rules of
Civil Procedure. Judgment upon the award may be entered in any court having
jurisdiction thereof. Each party shall pay his or its own attorneys’ fees and
expenses associated with such arbitration to the extent permitted by applicable
law.

 

14.         ENTIRE AGREEMENT. As of the Effective Date, this letter, together
with the Stock Option Agreement, constitutes the final, complete and exclusive
agreement between you and the Company with respect to the subject matter hereof
and replaces and supersedes any and all other agreements, offers or promises,
whether oral or written, made to you by any member of the Company Group
(including, without limitation, the Original Employment Letter).

 

15.         SEVERABILITY. Whenever possible, each provision of this letter will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this letter is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision of this letter, but such invalid, illegal or unenforceable
provision will be reformed, construed and enforced so as to render it valid,
legal, and enforceable consistent with the intent of the parties insofar as
possible.

 

16.         ACKNOWLEDGEMENT. You hereby acknowledge (a) that you have consulted
with or have had the opportunity to consult with independent counsel of your own
choice concerning this letter, and have been advised to do so by the Company,
and (b) that you have read and understand this letter, are fully aware of its
legal effect, and have entered into it freely based on your own judgment.

 

17.         SECTION 409A OF THE CODE.

 

(a)                                  The payments and benefits under this letter
are intended to comply with or be exempt from the application of Section 409A of
the Code. To the extent applicable, this letter will be interpreted and applied
in accordance with Section 409A of the Code and Department of Treasury
Regulations and other interpretive guidance issued thereunder. Notwithstanding
any provision of this letter to the contrary, if the Company determines that any
such compensation or benefits payable under this letter may not be exempt from
or compliant with Section 409A of the Code and related Department of Treasury
guidance, the Company may (without any obligation to do so or to indemnify you
for failure to do so), with your prior written consent, adopt such amendments to
this letter or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions,
that the Company determines are necessary or appropriate to (i) exempt the
compensation and benefits payable under this letter from Section 409A of the
Code and/or preserve the intended tax treatment of such compensation and
benefits, or (ii) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance.

 

(b)                                 Notwithstanding anything to the contrary in
this letter, no compensation or benefits, including without limitation any
severance payments or benefits payable under Section 7 above, shall be paid to
you during the six (6)-month period following your Separation from Service to
the extent that paying such amounts at the time or times indicated in this
letter would

 

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result in a prohibited distribution under Section 409A(a)(2)(b)(i) of the Code.
If the payment of any such amounts is delayed as a result of the previous
sentence, then on the first business day following the end of such six-month
period (or such earlier date upon which such amount can be paid under
Section 409A of the Code without resulting in a prohibited distribution,
including as a result of your death), the Company shall pay you a lump-sum
amount equal to the cumulative amount that would have otherwise been payable to
you during such six (6)-month period.

 

(c)                                  To the extent permitted under Section 409A
of the Code, any separate payment or benefit under this letter or otherwise will
not be deemed “nonqualified deferred compensation” subject to Section 409A and
the six (6) month delay requirement under 409A(a)(2)(B)(i) of the Code to the
extent provided in the exceptions in Treasury Regulation Section 1.409A-1(b)(4),
Section 1.409A-1(b)(9) or any other applicable exception or provision of
Section 409A of the Code.

 

(d)                                 To the extent that any reimbursements or
corresponding in-kind benefits provided to you under this letter are deemed to
constitute compensation to you, such amounts will be paid or reimbursed
reasonably promptly, but not later than December 31 of the year following the
year in which the expense was incurred. The amount of any such payments or
expense reimbursements in one year will not affect the expenses or in-kind
benefits eligible for payment or reimbursement in any other taxable year, and
your right to such payments or reimbursement of any such expenses will not be
subject to liquidation or exchange for any other benefit..

 

[SIGNATURE PAGE FOLLOWS]

 

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Please confirm your agreement to the foregoing by signing and dating the
enclosed duplicate original of this letter in the space provided below for your
signature and returning it to the Company. Please retain one fully-executed
original for your files.

 

 

Sincerely,

 

 

 

ACCURAY INCORPORATED,

 

a Delaware Corporation

 

 

 

 

 

By:

       /s/ Wayne Wu

 

Name:

Wayne Wu

 

Title:

Chairman of the Board of Directors

 

 

 

 

Accepted and Agreed,

 

October 22, 2008.

 

 

 

 

 

By:

      /s/ Euan Thomson

 

 

      Euan Thomson

 

 

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EXHIBIT A

 

FOR PURPOSES OF THIS LETTER, “CHANGE IN CONTROL” MEANS AND INCLUDES EACH OF THE
FOLLOWING:

 

(A)                            A TRANSACTION OR SERIES OF TRANSACTIONS (OTHER
THAN AN OFFERING OF THE COMPANY’S COMMON STOCK TO THE GENERAL PUBLIC THROUGH A
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION)
WHEREBY ANY “PERSON” OR RELATED “GROUP” OF “PERSONS” (AS SUCH TERMS ARE USED IN
SECTIONS 13(D) AND 14(D)(2) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
(THE “EXCHANGE ACT”)) (OTHER THAN THE COMPANY, ANY OF ITS SUBSIDIARIES, AN
EMPLOYEE BENEFIT PLAN MAINTAINED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OR A
“PERSON” THAT, PRIOR TO SUCH TRANSACTION, DIRECTLY OR INDIRECTLY CONTROLS, IS
CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, THE COMPANY) DIRECTLY OR
INDIRECTLY ACQUIRES BENEFICIAL OWNERSHIP (WITHIN THE MEANING OF RULE 13D-3 UNDER
THE EXCHANGE ACT) OF SECURITIES OF THE COMPANY POSSESSING MORE THAN 50% OF THE
TOTAL COMBINED VOTING POWER OF THE COMPANY’S SECURITIES OUTSTANDING IMMEDIATELY
AFTER SUCH ACQUISITION; OR

 

(B)                           DURING ANY PERIOD OF TWO CONSECUTIVE YEARS,
INDIVIDUALS WHO, AT THE BEGINNING OF SUCH PERIOD, CONSTITUTE THE BOARD TOGETHER
WITH ANY NEW DIRECTOR(S) (OTHER THAN A DIRECTOR DESIGNATED BY A PERSON WHO SHALL
HAVE ENTERED INTO AN AGREEMENT WITH THE COMPANY TO EFFECT A TRANSACTION
DESCRIBED IN CLAUSE (A) OR CLAUSE (C) HEREOF) WHOSE ELECTION BY THE BOARD OR
NOMINATION FOR ELECTION BY THE COMPANY’S STOCKHOLDERS WAS APPROVED BY A VOTE OF
AT LEAST TWO-THIRDS OF THE DIRECTORS THEN STILL IN OFFICE WHO EITHER WERE
DIRECTORS AT THE BEGINNING OF THE TWO-YEAR PERIOD OR WHOSE ELECTION OR
NOMINATION FOR ELECTION WAS PREVIOUSLY SO APPROVED, CEASE FOR ANY REASON TO
CONSTITUTE A MAJORITY THEREOF; OR

 

(C)                            THE CONSUMMATION BY THE COMPANY (WHETHER DIRECTLY
INVOLVING THE COMPANY OR INDIRECTLY INVOLVING THE COMPANY THROUGH ONE OR MORE
INTERMEDIARIES) OF (X) A MERGER, CONSOLIDATION, REORGANIZATION, OR BUSINESS
COMBINATION OR (Y) A SALE OR OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF
THE COMPANY’S ASSETS IN ANY SINGLE TRANSACTION OR SERIES OF RELATED TRANSACTIONS
OR (Z) THE ACQUISITION OF ASSETS OR STOCK OF ANOTHER ENTITY, IN EACH CASE OTHER
THAN A TRANSACTION:

 

(I)                                     WHICH RESULTS IN THE COMPANY’S VOTING
SECURITIES OUTSTANDING IMMEDIATELY BEFORE THE TRANSACTION CONTINUING TO
REPRESENT (EITHER BY REMAINING OUTSTANDING OR BY BEING CONVERTED INTO VOTING
SECURITIES OF THE COMPANY OR THE PERSON THAT, AS A RESULT OF THE TRANSACTION,
CONTROLS, DIRECTLY OR INDIRECTLY, THE COMPANY OR OWNS, DIRECTLY OR INDIRECTLY,
ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS OR OTHERWISE SUCCEEDS TO THE
BUSINESS OF THE COMPANY (THE COMPANY OR SUCH PERSON, THE “SUCCESSOR ENTITY”))
DIRECTLY OR INDIRECTLY, AT LEAST A MAJORITY OF THE COMBINED VOTING POWER OF THE
SUCCESSOR ENTITY’S OUTSTANDING VOTING SECURITIES IMMEDIATELY AFTER THE
TRANSACTION, AND

 

(II)                                  AFTER WHICH NO PERSON OR GROUP
BENEFICIALLY OWNS VOTING SECURITIES REPRESENTING 50% OR MORE OF THE COMBINED
VOTING POWER OF THE SUCCESSOR ENTITY; PROVIDED, HOWEVER, THAT NO PERSON OR GROUP
SHALL BE TREATED FOR PURPOSES OF THIS CLAUSE (C)(II) AS BENEFICIALLY OWNING 50%
OR MORE OF COMBINED VOTING POWER OF THE SUCCESSOR ENTITY SOLELY AS A RESULT OF
THE VOTING POWER HELD IN THE COMPANY PRIOR TO THE CONSUMMATION OF THE
TRANSACTION; OR

 

(d)                                 The Company’s stockholders approve a
liquidation or dissolution of the Company.

 

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