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.


 

















 


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 1⁄2) 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.