Exhibit 10.6


 


October 22, 2008


 


Theresa L. Dadone


6030 Crossmont Court


San Jose, CA  95120


 


Re:                                           AMENDED
AND RESTATED EMPLOYMENT TERMS


 


Dear
Theresa,


 


Accuray Incorporated (the “Company”)
is pleased to offer to continue your employment as Senior Vice President, Human
Resources 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 August 30, 2007,
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 Senior Vice President, Human Resources of the
Company.  In the capacity of Senior Vice President, Human Resources, 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 dual line report to the Chief
Executive Officer (the “CEO”) and the
Chief Financial Officer (the “CFO”) of the
Company, and will work full-time at our principal offices located at 1310
Chesapeake Terrace, Sunnyvale, California 94089 (or such other location in the
greater San Jose 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 $235,000 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 50% 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
OPTIONS.  As an added incentive, we will recommend to
the Compensation Committee of the Board of Directors that you be granted an
option (the “Option”) to purchase 65,000 shares of Accuray common stock at a per
share exercise price equal to the fair market value of a share of our common
stock on the date of the grant, as determined in accordance with the Accuray
Incorporated 2007 Incentive Award Plan (the “Incentive Plan”).   The grant of the Option is subject to and
conditioned on approval of the grant and its terms by the Compensation
Committee.  Subject to your continued
employment, the Option would vest with respect to 25% of the shares subject
thereto on the first anniversary of the Effective Date, and with respect to an
additional 1/48th of the shares subject thereto on each monthly anniversary
thereafter, such that the entire Option would be vested on the fourth anniversary
of your Effective Date.  The Option will
be subject to the terms and conditions of the Incentive Plan and a stock option
agreement in a form prescribed by Accuray, which you will be required to sign
as a condition to receiving the Option (the “Option
Agreement”).


 


6.             RESTRICTED
STOCK UNITS.  We will recommend to the Compensation
Committee of the Board of Directors that you be granted 8,000 restricted stock units (“RSUs”) under
the Accuray 2007 Incentive Award Plan. The grant of the RSUs is subject to and
conditioned on approval of the grant and its terms by the Compensation
Committee.  Subject to the your continued
service as an Employee through the applicable vesting date, twenty-five percent
(25%) of the RSUs shall vest on the first anniversary of the Effective Date and
an additional twenty-five percent (25%) of the RSUs shall vest on each of the
second, third and fourth anniversaries of the Effective Date.


 


Payment
in respect of any RSUs that vest in accordance with the grant agreement will be
made to you in whole shares of our common stock as soon as practicable after
the applicable vesting date, but in no event later than 60 days after such
vesting date.  The RSUs will be subject
to the terms and conditions of the Incentive Plan and a restricted stock unit
grant agreement in a form prescribed by Accuray, which you will be required to
sign as a condition to receiving the RSUs (the “RSU
Agreement”).


 


7.             BENEFITS AND PAID TIME OFF.  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, paid time
off, and holidays to the extent applicable generally to other similarly
situated executives of the Company, subject to the terms and conditions of the
applicable


 


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Company plans or policies.  The
benefits described in this Section 8 will be subject to change from time
to time as deemed appropriate and necessary by the Company.


 


8.              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 (1) a termination of your
employment by the Company other than for Cause (as defined below), death or
disability, or (2) 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, and further subject to Section 17(b) below,
then, in addition to any other accrued amounts payable to you through the
Separation Date (including any earned but unpaid bonus), the Company will, no
later than thirty (30) days after the Separation Date, pay you a lump-sum
severance payment (the “Severance Payment”) in an amount equal to the sum of (x) six
(6) 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) 50% of your target annual bonus for
the fiscal year of the Company in which such Separation from Service occurs,
and 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 six (6) 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.


 


(b)         If a Change in Control (as defined in Exhibit A
hereto) occurs within the first thirty-six (36) months of employment (from the
Effective Date through July 2, 2010) and, 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 (1) a termination of your
employment by the Company other than for Cause, death or disability, or (2) a
termination of your employment by you for Good Reason, then, subject to Section 17(b) below,
in addition to the amounts payable to you pursuant to paragraph (a) of
this Section 8, each of your then outstanding options to purchase shares
of the Company’s common stock (including, without limitation, the Options)
shall become fully vested and exercisable immediately prior to the Separation
Date and each of your then outstanding restricted stock units covering the
Company’s common stock (including, without limitation, the RSUs) shall become
fully vested immediately prior to the Separation Date.


 


(c)          Notwithstanding the foregoing, your right to
receive the payments and benefits set forth in this Section 8 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 8 upon any termination of your employment by reason
of your total and permanent disability or your death.


 


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(d)                       For purposes of this letter:


 


i)             “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 CEO,
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


 


ii)          “Good Reason” shall
mean the occurrence of any one or more of the following events without your
prior written consent:  (i) a
material diminution by the Company of your duties and responsibilities
hereunder; (ii) a material change in the geographic location at which you
must perform services under this letter, provided that in no event will a
change to a location within a 35 mile radius of the Company’s Sunnyvale
corporate headquarters be deemed material for purposes of this clause; or (iii) a
material diminution by the Company of your annual base salary as in effect on
the date hereof or as the same may be increased from time to time; provided,
however, that a termination of your employment by you shall only constitute a
termination for “Good Reason” hereunder if (a) you provide the Company
with written notice setting forth the specific facts or circumstances
constituting Good Reason within thirty (30) days after the initial existence of
such facts or circumstances, (b) the Company has failed to cure such facts
or circumstances within thirty (30) days after receipt of such written notice,
and (c) the Separation Date occurs no later than seventy-five (75) days
after the initial occurrence of the event constituting Good Reason.


 


9.              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 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 10(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


 


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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 10 shall
be made by such nationally recognized accounting firm as may be selected by the
Audit Committee of the Board of Directors of the Company 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.


 


10.       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.


 


(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


 


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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 11(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 therefore, 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.


 


11.       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 will be required to complete, sign, return, and abide
by the Employee Confidentiality and Inventions Agreement.


 


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 11(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 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
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 your
Original Offer 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.


 


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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 compensation and benefits payable under this letter are not
intended to constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code. 
Notwithstanding any provision of this letter to the contrary, in the
event that the Company determines that any payments or benefits payable
hereunder may be subject to Section 409A of the Code, the Company may
(without any obligation to do so or to indemnify you for failure to do so)
adopt such amendments to this letter or take any other actions that the Company
determines are necessary or appropriate to (a) exempt such payments and
benefits from Section 409A of the Code in order to preserve the intended
tax treatment of such payments or benefits, or (b) comply with the
requirements of Section 409A of the Code and thereby avoid the application
of penalty taxes thereunder.  To the
extent that any payments or benefits under this letter are deemed to be subject
to Section 409A of the Code, this letter will be interpreted in accordance
with Section 409A of the Code and Department of Treasury Regulations and
other interpretive guidance issued thereunder.


 


(b)         Notwithstanding anything to the contrary in this letter, no compensation
or benefits, including without limitation any severance payments or benefits
payable under Section 9 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 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 (6)-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-month period.


 


(c)          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 us in the enclosed, self-addressed stamped
envelope.  Please retain one
fully-executed original for your files.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  ACCURAY INCORPORATED,

  
	
   

  	
  a
  Delaware Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Euan Thomson

  
	
   

  	
  Name:

  	
  Euan
  Thomson, Ph.D.

  
	
   

  	
  Title:

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted
  and Agreed,

  	
   

  	
   

  
	
  October 22,
  2008.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Theresa Dadone

  	
   

  	
   

  	
   

  
	
   

  	
  Theresa
  Dadone

  	
   

  	
   

  	
   

  



 


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EXHIBIT
A


DEFINITION OF CHANGE IN CONTROL


 


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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