Exhibit
10.3


 


October 22, 2008


 


Eric P. Lindquist


120 Dunsmuir Way


Menlo Park, CA 94025


 


Re:                             AMENDED
AND RESTATED EMPLOYMENT TERMS


 


Dear Eric:


 


Accuray Incorporated (the “Company”) is pleased to offer to continue your employment as
Senior Vice President, Chief Marketing 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 Senior Vice President, Chief Marketing Officer of
the Company.  In the capacity of Senior
Vice President, Chief Marketing 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 Chief Executive
Officer of the Company (the “CEO”), 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 $316,250 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 65% 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.   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 5
will be subject to change from time to time as deemed appropriate and necessary
by the Company.


 


6.   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, and further subject to Section 16(b) below,
then, in addition to any other accrued amounts payable to you through the
Separation Date (including any earned but unpaid bonus), (1) 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) eight (8) 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) 66-2/3 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
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 eight
(8) month period immediately following the 


 


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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 during
the Term 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 (i) a termination of your employment by the Company other than
for Cause, death or disability, or (ii) a termination of your employment
by you for Good Reason, then, subject to Section 16(b) below, in
addition to the amounts payable to you pursuant to paragraph (a) of this Section 6,
each of your then outstanding options to purchase shares of the Company’s
common stock shall become fully vested and exercisable immediately prior to the
Separation Date.


 


(c)                                  Notwithstanding
the foregoing, your right to receive the payments and benefits set forth in
this Section 6 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 6 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 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


 


(B)  “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.


 


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7.   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 7(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 7 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.


 


8.   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


 


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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 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 8(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.


 


9.    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 October 12,
2004, and you hereby agree to abide by
the terms of that certain Employee Confidentiality and Inventions
Agreement dated as of October 12, 2004, by and between you and the Company.


 


10.   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.


 


11.   ARBITRATION.  Except
as set forth in Section 8(e) above, any disagreement, dispute,
controversy or claim arising out of or relating to this letter or the
interpretation of this letter or


 


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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.


 


12.   INDEMNIFICATION.  The Company shall indemnify you and hold you
harmless for any liabilities actually incurred by you to the extent that your
employment by the Company, in and of itself, results in a violation of your
BrainLAB Non-Competition Agreement (the “Non-Competition Agreement”),
provided that any such violation is not a result of any willful breach of the
Non-Competition Agreement by you or your negligence or misconduct.  In addition, you hereby acknowledge that the
Company has advised you to consult with separate legal counsel regarding the
Non-Competition Agreement and the provisions of this Section 12.  Should you choose to do so, the Company will
reimburse you for all reasonable legal consultation fees that you actually
incur and submit to the Company in connection therewith.


 


13.   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, the Original Employment Letter).


 


14.  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.


 


15.  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.


 


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16.  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 6 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 Euan Thomson, Ph.D.,
Chief Executive Officer of the Company. 
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: Chief Executive
  Officer

  
	
   

  	
   

  
	
  Accepted and Agreed,

  	
   

  
	
  This 22
  October 2008.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
      /s/
  Eric Lindquist

  	
   

  	
   

  
	
   

  	
  Eric Lindquist

  	
   

  
							



 


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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 of Directors of the Company 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 of
Directors of the Company 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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