Exhibit 10.8


 





 


 


2007 INCENTIVE AWARD PLAN


 


ARTICLE 1.




PURPOSE


 


The
purpose of the Accuray Incorporated 2007 Incentive Award Plan (the “Plan”)
is to promote the success and enhance the value of Accuray Incorporated by
linking the personal interests of the members of the Board, Employees, and
Consultants to those of Company stockholders and by providing such individuals
with an incentive for outstanding performance to generate superior returns to
Company stockholders.  The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of members of the Board, Employees,
and Consultants upon whose judgment, interest, and special effort the
successful conduct of the Company’s operation is largely dependent.


 


ARTICLE 2.



DEFINITIONS AND CONSTRUCTION


 


Wherever
the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural
where the context so indicates.


 


2.1                                 “Award”
means an Option, a Restricted Stock award, a Stock Appreciation Right award, a
Performance Share award, a Performance Stock Unit award, a Dividend Equivalents
award, a Stock Payment award, a Deferred Stock award, a Restricted Stock Unit
award, a Performance Bonus Award, or a Performance-Based Award granted to a
Participant pursuant to the Plan.


 


2.2                                 “Award
Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award, including through electronic medium.


 


2.3                                 “Board”
means the Board of Directors of the Company.


 


2.4                                 “Change in
Control” means and includes each of the following:


 


(a)                                  A transaction
or series of transactions (other than an offering of 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 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 


 


	
  2007 INCENTIVE
  AWARD PLAN STD 7.1.10

  	
   

  	
  ACCURAY CONFIDENTIAL

  



 


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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 Section 2.4(a) hereof
or Section 2.4(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 Section 2.4(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.


 


2.5                                 “Code”
means the Internal Revenue Code of 1986, as amended.


 


2.6                                 “Committee”
means the committee of the Board described in Article 12 hereof.


 


2.7                                 “Company”
means Accuray Incorporated, a California corporation, or any successor
corporation (including, without limitation, the surviving corporation in any
consolidation, merger or reincorporation effected exclusively to change the
domicile of the Company).


 


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2.8                                 “Consultant”
means any consultant or adviser if: (a) the consultant or adviser renders
bona fide services to the Company or any Subsidiary; (b) the services
rendered by the consultant or adviser are not in connection with the offer or
sale of securities in a capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Company’s securities; and (c) the
consultant or adviser is a natural person who has contracted directly with the
Company or any Subsidiary to render such services.


 


2.9                                 “Covered
Employee” means an Employee who is, or could be, a “covered employee”
within the meaning of Section 162(m) of the Code.


 


2.10                           “Deferred
Stock” means a right to receive a specified number of shares of Stock
during specified time periods pursuant to Section 8.5 hereof.


 


2.11                           “Disability”  means that the Participant qualifies to receive long-term
disability payments under the Company’s long-term disability insurance program,
as it may be amended from time to time.


 


2.12                           “Dividend
Equivalents” means a right granted to a Participant pursuant to
Section 8.3 hereof to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.


 


2.13                           “Effective
Date” shall have the meaning set forth in Section 13.1 hereof.


 


2.14                           “Eligible
Individual” means any person who is an Employee, a Consultant or an
Independent Director, as determined by the Committee.


 


2.15                           “Employee”
means any officer or other employee (as defined in accordance with Section 3401(c) of
the Code) of the Company or any Subsidiary.


 


2.16                           “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


2.17                           “Fair Market
Value” means, as of any given date, (a) if Stock is traded on an
exchange, the closing price of a share of Stock as reported in the Wall Street Journal (or such other source
as the Company may deem reliable for such purposes) for such date, or if no
sale occurred on such date, the first trading date immediately prior to such
date during which a sale occurred; or (b) if Stock is not traded on an
exchange but is quoted on a quotation system, the mean between the closing
representative bid and asked prices for the Stock on such date, or if no sale
occurred on such date, the first date immediately prior to such date on which
sales prices or bid and asked prices, as applicable, are reported by such
quotation system; or (c) if Stock is not publicly traded, the fair market
value established by the Committee acting in good faith.


 


2.18                           “Incentive
Stock Option” means an Option that is intended to meet the requirements of Section 422
of the Code or any successor provision thereto.


 


2.19                           “Independent
Director” means a member of the Board who is not an Employee of the
Company.


 


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2.20                           “Non-Employee
Director” means a member of the Board who qualifies as a “Non-Employee
Director” as defined in Rule 16b-3(b)(3) under the Exchange Act, or
any successor rule.


 


2.21                           “Non-Qualified
Stock Option” means an Option that is not intended to be an Incentive Stock
Option.


 


2.22                           “Option”
means a right granted to a Participant pursuant to Article 5 hereof to
purchase a specified number of shares of Stock at a specified price during
specified time periods.  An Option may be
either an Incentive Stock Option or a Non-Qualified Stock Option.


 


2.23                           “Participant”
means any Eligible Individual who, as a member of the Board, Consultant or
Employee, has been granted an Award pursuant to the Plan.


 


2.24                           “Performance-Based
Award” means an Award granted to selected Covered Employees pursuant to Section 8.7
hereof, but which is subject to the terms and conditions set forth in Article 9
hereof.  All Performance-Based Awards are
intended to qualify as Qualified Performance-Based Compensation.


 


2.25                           “Performance
Bonus Award” has the meaning set forth in Section 8.7 hereof.


 


2.26                           “Performance
Criteria” means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Participant for a
Performance Period.  The Performance
Criteria that will be used to establish Performance Goals are limited to the
following: net earnings (either before or after interest, taxes, depreciation
and amortization), economic value-added, sales or revenue, net income (either
before or after taxes), operating earnings, cash flow (including, but not
limited to, operating cash flow and free cash flow), cash flow return on
capital, return on net assets, return on stockholders’ equity, return on
assets, return on capital, stockholder returns, return on sales, gross or net
profit margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share of Stock,
and market share, any of which may be measured either in absolute terms or as
compared to any incremental increase or as compared to results of a peer
group.  The Committee shall define in an
objective fashion the manner of calculating the Performance Criteria it selects
to use for such Performance Period for such Participant.


 


2.27                           “Performance
Goals” means, for a Performance Period, the goals established in writing by
the Committee for the Performance Period based upon the Performance Criteria.  Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual.  The Committee,
in its discretion, may, within the time prescribed by Section 162(m) of
the Code, adjust or modify the calculation of Performance Goals for such
Performance Period in order to prevent the dilution or enlargement of the
rights of Participants (a) in the event of, or in anticipation of, any
unusual or extraordinary corporate item, transaction, event, or development, or
(b) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial statements of 


 


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the Company, or in response to, or in anticipation
of, changes in applicable laws, regulations, accounting principles, or business
conditions.


 


2.28                           “Performance
Period” means the one or more periods of time, which may be of varying and
overlapping durations, as the Committee may select, over which the attainment
of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance-Based
Award.


 


2.29                           “Performance
Share” means a right granted to a Participant pursuant to Section 8.1
hereof, to receive Stock, the payment of which is contingent upon achieving
certain Performance Goals or other performance-based targets established by the
Committee.


 


2.30                           “Performance
Stock Unit” means a right granted to a Participant pursuant to Section 8.2
hereof, to receive Stock, the payment of which is contingent upon achieving
certain Performance Goals or other performance-based targets established by the
Committee.


 


2.31                           “Plan”
means this Accuray Incorporated 2007 Incentive Award Plan, as it may be amended
from time to time.


 


2.32                           “Public
Trading Date” means the first date upon which Stock is listed (or approved
for listing) upon notice of issuance on any securities exchange or designated
(or approved for designation) upon notice of issuance as a national market
security on an interdealer quotation system.


 


2.33                           “Qualified
Performance-Based Compensation” means any compensation that is intended to
qualify as “qualified performance-based compensation” as described in
Section 162(m)(4)(C) of the Code.


 


2.34                           “Restricted
Stock” means Stock awarded to a Participant pursuant to Article 6
hereof that is subject to certain restrictions and may be subject to risk of
forfeiture.


 


2.35                           “Restricted
Stock Unit” means an Award granted pursuant to Section 8.6 hereof.


 


2.36                           “Securities
Act” shall mean the Securities Act of 1933, as amended.


 


2.37                           “Stock”
means the common stock of the Company, no par value per share. “Stock” shall also
include (i) the common stock of the surviving corporation in any
consolidation, merger or reincorporation effected exclusively to change the
domicile of the Company and (ii) such other securities of the Company that
may be substituted for Stock pursuant to Article 11 hereof.


 


2.38                           “Stock
Appreciation Right” or “SAR” means a right granted pursuant to Article 7
hereof to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the
applicable Award Agreement.


 


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2.39                           “Stock
Payment” means (a) a payment in the form of shares of Stock, or (b) an
option or other right to purchase shares of Stock, as part of any bonus,
deferred compensation or other arrangement, made in lieu of all or any portion
of the compensation, granted pursuant to Section 8.4 hereof.


 


2.40                           “Subsidiary”
means any “subsidiary corporation” as defined in Section 424(f) of
the Code and any applicable regulations promulgated thereunder or any other
entity of which a majority of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Company.


 


ARTICLE 3.



SHARES SUBJECT TO THE PLAN


 


3.1                                 Number of
Shares.


 


(a)                                  Subject to Article 11
hereof and Section 3.1(b) hereof, the aggregate number of shares of
Stock which may be issued or transferred pursuant to Awards under the Plan is
4,500,000.  In addition to the foregoing,
subject to Article 11 hereof, commencing on July 1, 2008 and on the
first day of each fiscal year of the Company thereafter during the term of the
Plan, the aggregate number of shares of Stock which may be issued or
transferred pursuant to Awards under the Plan shall be increased by that number
of shares of Stock equal to the least of (i) three percent (3%) of the
Company’s outstanding shares on such date, (ii) 1,500,000 shares, or (iii) a
lesser amount determined by the Board.


 


(b)                                 To the extent
that an Award terminates, expires, or lapses for any reason, any shares of
Stock subject to the Award shall again be available for the grant of an Award
pursuant to the Plan.  To the extent
permitted by applicable law or any exchange rule, shares of Stock issued in
assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any Subsidiary shall not
be counted against shares of Stock available for grant pursuant to this Plan.  To the extent that a SAR is exercised for or
settled in Stock, only the actual number of shares issued upon such exercise or
settlement shall be counted for purposes of calculating the aggregate number of
shares of Stock available for issuance under the Plan as set forth in Section 3.1(a).  To the extent that a SAR is exercised for or
settled in cash, no shares underlying such SAR shall be counted for purposes of
calculating the aggregate number of shares of Stock available for issuance
under the Plan as set forth in Section 3.1(a).  The payment of Dividend Equivalents in cash
in conjunction with any outstanding Awards shall not be counted against the
shares available for issuance under the Plan. 
Notwithstanding the provisions of this Section 3.1(b), no shares of
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under Section 422
of the Code.


 


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3.2                                 Stock Distributed.  Any
Stock distributed pursuant to an Award may consist, in whole or in part, of
authorized and unissued Stock, treasury Stock or Stock purchased on the open
market.


 


3.3                                 Limitation on Number of Shares Subject to Awards.  Notwithstanding any provision in the Plan to
the contrary, and subject to Article 11 hereof, the maximum number of
shares of Stock with respect to one or more Awards that may be granted to any
one Participant during any calendar year shall be 500,000 and the maximum
amount that may be paid in cash during any calendar year with respect to any
Performance-Based Award (including, without limitation, any Performance Bonus
Award) shall be $1,000,000; provided, however,
that the foregoing limitations shall not apply prior to the Public Trading Date
and, following the Public Trading Date, the foregoing limitations shall not
apply until the earliest of: (a) the first material modification of the
Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3.1 hereof); (b) the
issuance of all of the shares of Stock reserved for issuance under the Plan; (c) the
expiration of the Plan; (d) the first meeting of stockholders at which
members of the Board are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (e) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.


 


ARTICLE 4.



ELIGIBILITY AND PARTICIPATION


 


4.1                                 Eligibility.  Each Eligible Individual shall be eligible to
be granted one or more Awards pursuant to the Plan.


 


4.2                                 Participation.  Subject to
the provisions of the Plan, the Committee may, from time to time, select from
among all Eligible Individuals, those to whom Awards shall be granted and shall
determine the nature and amount of each Award. 
No Eligible Individual shall have any right to be granted an Award
pursuant to this Plan.


 


4.3                                 Foreign
Participants. 
Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws in other countries in which the Company and its
Subsidiaries operate or have Eligible Individuals, the Committee, in its sole
discretion, shall have the power and authority to: (i) determine which
Subsidiaries shall be covered by the Plan; (ii) determine which Eligible
Individuals outside the United States are eligible to participate in the Plan; (iii) modify
the terms and conditions of any Award granted to Eligible Individuals outside
the United States to comply with applicable foreign laws; (iv) establish
subplans and modify exercise procedures and other terms and procedures, to the
extent such actions may be necessary or advisable (any such subplans and/or
modifications shall be attached to this Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Sections
3.1 and 3.3 hereof; and (v) take any action, before or after an Award is
made, that it deems advisable to obtain approval or comply with any necessary
local governmental regulatory exemptions or approvals.  Notwithstanding the foregoing, the 


 


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Committee may not take any actions hereunder, and no
Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law or governing statute or any other applicable law.


 


ARTICLE 5.



STOCK OPTIONS


 


5.1                                 General.  The Committee is authorized to grant Options
to Participants on the following terms and conditions:


 


(a)                                  Exercise Price.  The exercise price per share of Stock subject
to an Option shall be determined by the Committee and set forth in the Award
Agreement; provided, that, subject to Section 5.2(c) hereof,
the per share exercise price for any Option shall not be less than 100% of the
Fair Market Value of a share of Stock on the date of grant.


 


(b)                                 Time and
Conditions of Exercise.  The
Committee shall determine the time or times at which an Option may be exercised
in whole or in part; provided
that the term of any Option granted under the Plan shall not exceed ten
years.  The Committee shall also
determine the performance or other conditions, if any, that must be satisfied
before all or part of an Option may be exercised.


 


(c)                                  Payment.  The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation: (i) cash, (ii) shares of Stock held
for such period of time as may be required by the Committee in order to avoid
adverse accounting consequences and having a fair market value on the date of
delivery equal to the aggregate exercise price of the Option or exercised
portion thereof, or (iii) other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided
that payment of such proceeds is then made to the Company upon settlement of
such sale), and the methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants. 
Notwithstanding any other provision of the Plan to the contrary, after
the Public Trading Date, no Participant who is a member of the Board or an “executive
officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option, or
continue any extension of credit with respect to the exercise price of an
Option with a loan from the Company or a loan arranged by the Company in
violation of Section 13(k) of the Exchange Act.


 


(d)                                 Evidence of
Grant.  All Options shall be evidenced
by an Award Agreement between the Company and the Participant.  The Award Agreement shall include such
additional provisions as may be specified by the Committee.


 


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5.2                                 Incentive Stock Options.  Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan, in addition to the requirements of Section 5.1 hereof, must
comply with the provisions of this Section 5.2.


 


(a)                                  Expiration.  Subject to Section 5.2(c) hereof,
an Incentive Stock Option shall expire and may not be exercised to any extent
by anyone after the first to occur of the following events:


 


(i)                                     Ten years from
the date it is granted, unless an earlier time is set in the Award Agreement;


 


(ii)                                  Three months
after the Participant’s termination of employment as an Employee other than by
reason of the Participant’s death or Disability; and


 


(iii)                               One year after
the date of the Participant’s termination of employment or service on account
of Disability or death.  Upon the
Participant’s Disability or death, any Incentive Stock Options exercisable at
the Participant’s Disability or death may be exercised by the Participant’s
legal representative or representatives, by the person or persons entitled to
do so pursuant to the Participant’s last will and testament, or, if the
Participant fails to make testamentary disposition of such Incentive Stock
Option or dies intestate, by the person or persons entitled to receive the
Incentive Stock Option pursuant to the applicable laws of descent and
distribution.


 


(b)                                 Dollar
Limitation.  The
aggregate Fair Market Value (determined as of the time the Option is granted)
of all shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000 or
such other limitation as imposed by Section 422(d) of the Code, or
any successor provision.  To the extent
that Incentive Stock Options are first exercisable by a Participant in excess
of such limitation, the excess shall be considered Non-Qualified Stock Options.


 


(c)                                  Ten Percent
Owners.  An Incentive Stock Option may
not be granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of all
classes of Stock of the Company unless such Option is granted at a price that
is not less than 110% of Fair Market Value on the date of grant and the Option
is exercisable for no more than five years from the date of grant.


 


(d)                                 Notice of
Disposition.  The
Participant shall give the Company prompt notice of any disposition of shares
of Stock acquired by exercise of an Incentive Stock Option within (i) two
years from the date of grant of such Incentive Stock Option or (ii) one
year after the transfer of such shares of Stock to the Participant.


 


(e)                                  Right to
Exercise.  Except as
set forth in Section 5.2(a)(iii) above, during a Participant’s
lifetime, an Incentive Stock Option may be exercised only by the Participant.


 


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(f)                                    Failure to Meet
Requirements.  Any Option
(or portion thereof) purported to be an Incentive Stock Option, which, for any
reason, fails to meet the requirements of Section 422 of the Code shall be
considered a Non-Qualified Stock Option.


 


ARTICLE 6.



RESTRICTED STOCK AWARDS


 


6.1                                 Grant of Restricted Stock.  The Committee is authorized to make Awards of
Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee.  All Awards of Restricted Stock shall be
evidenced by an Award Agreement.


 


6.2                                 Issuance and Restrictions.  Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).  These restrictions may lapse separately or in
combination at such times, pursuant to such circumstances, in such
installments, or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter.


 


6.3                                 Forfeiture.  Except as
otherwise determined by the Committee at the time of the grant of the Award or
thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited; provided,
however, that, the Committee may (a) provide in any Restricted
Stock Award Agreement that restrictions or forfeiture conditions relating to
Restricted Stock will lapse in whole or in part in the event of terminations
resulting from specified causes, and (b) provide in other cases for the
lapse in whole or in part of restrictions or forfeiture conditions relating to
Restricted Stock.


 


6.4                                 Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine.  If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company may, at its
discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.


 


ARTICLE 7.



STOCK APPRECIATION RIGHTS


 


7.1                                 Grant of Stock
Appreciation Rights.


 


(a)                                  A Stock
Appreciation Right may be granted to any Participant selected by the
Committee.  A Stock Appreciation Right
shall be subject to such terms and conditions not 


 


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inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.


 


(b)                                 A Stock
Appreciation Right shall entitle the Participant (or other person entitled to
exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or
a specified portion of the Stock Appreciation Right (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount
equal to the product of (i) the excess of (A) the Fair Market Value
of the Stock on the date the Stock Appreciation Right is exercised over (B) the
Fair Market Value of the Stock on the date the Stock Appreciation Right was
granted and (ii) the number of shares of Stock with respect to which the
Stock Appreciation Right is exercised, subject to any limitations the Committee
may impose.


 


7.2                                 Payment and
Limitations on Exercise.


 


(a)                                  Subject to Section 7.2(b) below,
payment of the amounts determined under Sections 7.1(b) above shall be in
cash, in Stock (based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both, as determined by the
Committee in the Award Agreement.


 


(b)                                 To the extent
any payment under Section 7.1(b) hereof is effected in Stock, it
shall be made subject to satisfaction of all provisions of Article 5 above
pertaining to Options.


 


ARTICLE 8.


 


OTHER TYPES OF AWARDS


 


8.1                                 Performance
Share Awards.  Any
Participant selected by the Committee may be granted one or more Performance
Share awards which shall be denominated in a number of shares of Stock and
which may be linked to any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee.  In making such determinations,
the Committee shall consider (among such other factors as it deems relevant in
light of the specific type of award) the contributions, responsibilities and
other compensation of the particular Participant.


 


8.2                                 Performance
Stock Units.  Any Participant selected by the
Committee may be granted one or more Performance Stock Unit awards which shall
be denominated in unit equivalent of shares of Stock and/or units of value
including dollar value of shares of Stock and which may be linked to any one or
more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee.  In making such determinations, the Committee
shall consider (among such other factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.


 


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8.3                                 Dividend
Equivalents.


 


(a)                                  Any Participant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on the shares of Stock that are subject to any Award, to be
credited as of dividend payment dates, during the period between the date the
Award is granted and the date the Award is exercised, vests or expires, as
determined by the Committee.  Such
Dividend Equivalents shall be converted to cash or additional shares of Stock
by such formula and at such time and subject to such limitations as may be
determined by the Committee.


 


(b)                                 Dividend
Equivalents granted with respect to Options or SARs that are intended to be
Qualified Performance-Based Compensation shall be payable, with respect to
pre-exercise periods, regardless of whether such Option or SAR is subsequently
exercised.


 


8.4                                 Stock Payments.  Any Participant selected by the Committee may
receive Stock Payments in the manner determined from time to time by the
Committee; provided, that unless
otherwise determined by the Committee such Stock Payments shall be made in lieu
of base salary, bonus, or other cash compensation otherwise payable to such
Participant.  The number of shares shall
be determined by the Committee and may be based upon the Performance Criteria
or other specific performance criteria determined appropriate by the Committee,
determined on the date such Stock Payment is made or on any date thereafter.


 


8.5                                 Deferred Stock.  Any Participant selected by the Committee may
be granted an award of Deferred Stock in the manner determined from time to
time by the Committee.  The number of
shares of Deferred Stock shall be determined by the Committee and may be linked
to the Performance Criteria or other specific performance criteria determined
to be appropriate by the Committee, in each case on a specified date or dates
or over any period or periods determined by the Committee.  Stock underlying a Deferred Stock award will
not be issued until the Deferred Stock award has vested, pursuant to a vesting
schedule or performance criteria set by the Committee.  Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the Deferred
Stock Award has vested and the Stock underlying the Deferred Stock Award has
been issued.


 


8.6                                 Restricted
Stock Units.  The
Committee is authorized to make Awards of Restricted Stock Units to any
Participant selected by the Committee in such amounts and subject to such terms
and conditions as determined by the Committee. 
At the time of grant, the Committee shall specify the date or dates on
which the Restricted Stock Units shall become fully vested and nonforfeitable,
and may specify such conditions to vesting as it deems appropriate.  At the time of grant, the Committee shall
specify the maturity date applicable to each grant of Restricted Stock Units
which shall be no earlier than the vesting date or dates of the Award and may
be determined at the election of the grantee.  On the maturity date, the Company shall,
subject to Section 10.5(b) hereof, transfer to the Participant one
unrestricted, fully transferable share of Stock for each Restricted Stock Unit
scheduled to be paid out on such date and not previously forfeited.


 


12

















 


8.7                                 Performance
Bonus Awards.  Any
Participant selected by the Committee may be granted a cash bonus (a “Performance
Bonus Award”) payable upon the attainment of Performance Goals that are
established by the Committee and relate to one or more of the Performance
Criteria or other specific performance criteria determined to be appropriate by
the Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee.  Any
such Performance Bonus Award paid to a Covered Employee may be a
Performance-Based Award and be based upon objectively determinable bonus
formulas established in accordance with Article 9 hereof.


 


8.8                                 Term.  Except as otherwise provided herein, the term
of any Award of  Performance Shares,
Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock
or Restricted Stock Units shall be set by the Committee in its discretion.


 


8.9                                 Exercise or
Purchase Price.  The
Committee may establish the exercise or purchase price, if any, of any Award of
Performance Shares, Performance Stock Units, Deferred Stock, Stock Payments or
Restricted Stock Units; provided, however,
that such price shall not be less than the par value of a share of Stock on the
date of grant, unless otherwise permitted by applicable state law.


 


8.10                           Exercise upon Termination of Employment or Service.  An Award of Performance Shares, Performance
Stock Units, Dividend Equivalents, Deferred Stock, Stock Payments and
Restricted Stock Units shall only be exercisable or payable while the
Participant is an Employee, Consultant or a member of the Board, as applicable;
provided, however, that the
Committee in its sole and absolute discretion may provide that an Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Stock
Payments, Deferred Stock or Restricted Stock Units may be exercised or paid
subsequent to a termination of employment or service, as applicable, or
following a Change in Control of the Company, or because of the Participant’s
retirement, death or Disability, or otherwise; provided,
however, that any such provision with respect to Performance Shares
or Performance Stock Units shall be subject to the requirements of Section 162(m) of
the Code that apply to Qualified Performance-Based Compensation.


 


8.11                           Form of
Payment.  Payments with respect to any
Awards granted under this Article 8 shall be made in cash, in Stock or a
combination of both, as determined by the Committee.


 


8.12                           Award Agreement.  All Awards under this Article 8 shall be
subject to such additional terms and conditions as determined by the Committee
and shall be evidenced by an Award Agreement.


 


ARTICLE 9.



PERFORMANCE-BASED AWARDS


 


9.1                                 Purpose.  The purpose
of this Article 9 is to provide the Committee the ability to qualify
Awards other than Options and SARs and that are granted pursuant to Articles 6
and 8 


 


13

















 


hereof as Qualified Performance-Based
Compensation.  If the Committee, in its discretion,
decides to grant a Performance-Based Award to a Covered Employee, the
provisions of this Article 9 shall control over any contrary provision
contained in Articles 6 or 8 hereof; provided,
however, that the Committee may in its discretion grant Awards to
Covered Employees that are based on Performance Criteria or Performance Goals
but that do not satisfy the requirements of this Article 9.


 


9.2                                 Applicability.  This Article 9
shall apply only to those Covered Employees selected by the Committee to
receive Performance-Based Awards.  The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period.  Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant
in such period or in any other period.


 


9.3                                 Procedures with Respect to Performance-Based Awards.  To the extent necessary to comply with the
Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles 6 or 8 hereof which
may be granted to one or more Covered Employees, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee
shall, in writing, (a) designate one or more Covered Employees, (b) select
the Performance Criteria applicable to the Performance Period, (c) establish
the Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period, and (d) specify the relationship
between Performance Criteria and the Performance Goals and the amounts of such
Awards, as applicable, to be earned by each Covered Employee for such
Performance Period.  Following the
completion of each Performance Period, the Committee shall certify in writing
whether the applicable Performance Goals have been achieved for such
Performance Period.  In determining the
amount earned by a Covered Employee, the Committee shall have the right to
reduce or eliminate (but not to increase) the amount payable at a given level
of performance to take into account additional factors that the Committee may
deem relevant to the assessment of individual or corporate performance for the
Performance Period.


 


9.4                                 Payment of Performance-Based Awards.  Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary
on the day a Performance-Based Award for such Performance Period is paid to the
Participant.  Furthermore, a Participant
shall be eligible to receive payment pursuant to a Performance-Based Award for
a Performance Period only if the Performance Goals for such period are
achieved.  In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.


 


9.5                                 Additional
Limitations. 
Notwithstanding any other provision of the Plan, any Award which is
granted to a Covered Employee and is intended to constitute Qualified 


 


14

















 


Performance-Based Compensation shall be subject to
any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as qualified performance-based compensation as described in Section 162(m)(4)(C) of
the Code, and the Plan shall be deemed amended to the extent necessary to
conform to such requirements.


 


ARTICLE 10.



PROVISIONS APPLICABLE TO AWARDS


 


10.1                           Stand-Alone and Tandem Awards.  Awards granted pursuant to the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted pursuant to the Plan.  Awards granted in addition to or in tandem
with other Awards may be granted either at the same time as or at a different
time from the grant of such other Awards.


 


10.2                           Award Agreement. 
Awards under the Plan shall be evidenced by Award Agreements that set
forth the terms, conditions and limitations for each Award which may include
the term of an Award, the provisions applicable in the event the Participant’s
employment or service terminates, and the Company’s authority to unilaterally
or bilaterally amend, modify, suspend, cancel or rescind an Award.


 


10.3                           Limits on Transfer.  No
right or interest of a Participant in any Award may be pledged, encumbered, or
hypothecated to or in favor of any party other than the Company or a
Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant
to any other party other than the Company or a Subsidiary.  Except as otherwise provided by the
Committee, no Award shall be assigned, transferred, or otherwise disposed of by
a Participant other than by will or the laws of descent and distribution.  The Committee by express provision in the
Award or an amendment thereto may permit an Award (other than an Incentive
Stock Option) to be transferred to, exercised by and paid to certain persons or
entities related to the Participant, including but not limited to members of
the Participant’s family, charitable institutions, or trusts or other entities
whose beneficiaries or beneficial owners are members of the Participant’s
family and/or charitable institutions, or to such other persons or entities as
may be expressly approved by the Committee, pursuant to such conditions and
procedures as the Committee may establish. 
Any permitted transfer shall be subject to the condition that the
Committee receive evidence satisfactory to it that the transfer is being made
for estate and/or tax planning purposes (or to a “blind trust” in connection
with the Participant’s termination of employment or service with the Company or
a Subsidiary to assume a position with a governmental, charitable, educational
or similar non-profit institution) and on a basis consistent with the Company’s
lawful issue of securities.


 


10.4                           Beneficiaries. 
Notwithstanding Section 10.3 hereof, a Participant may, in the
manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant’s death.  A
beneficiary, legal guardian, legal representative, or other person claiming any
rights 


 


15

















 


pursuant to the Plan is subject to all terms and
conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee.  If the Participant is married and resides in
a community property state, a designation of a person other than the
Participant’s spouse as his or her beneficiary with respect to more than 50% of
the Participant’s interest in the Award shall not be effective without the
prior written consent of the Participant’s spouse.  If no beneficiary has been designated or
survives the Participant, payment shall be made to the person entitled thereto
pursuant to the Participant’s will or the laws of descent and
distribution.  Subject to the foregoing,
a beneficiary designation may be changed or revoked by a Participant at any
time provided the change or revocation is filed with the Committee.


 


10.5                           Stock
Certificates; Book Entry Procedures.


 


(a)                                  Notwithstanding
anything herein to the contrary, the Company shall not be required to issue or
deliver any certificates evidencing shares of Stock pursuant to the exercise of
any Award, unless and until the Board has determined, with advice of counsel,
that the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the shares of Stock are listed or
traded.  All Stock certificates delivered
pursuant to the Plan are subject to any stop-transfer orders and other
restrictions as the Committee deems necessary or advisable to comply with
federal, state, or foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded.  The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock.  In addition to the terms and conditions
provided herein, the Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its discretion,
deems advisable in order to comply with any such laws, regulations, or
requirements. The Committee shall have the right to require any Participant to comply with any timing or
other restrictions with respect to the settlement or exercise of any Award,
including a window-period limitation, as may be imposed in the discretion of
the Committee.


 


(b)                                 Notwithstanding
any other provision of the Plan, unless otherwise determined by the Committee
or required by any applicable law, rule or regulation, the Company shall
not deliver to any Participant certificates evidencing shares of Stock issued in
connection with any Award and instead such shares of Stock shall be recorded in
the books of the Company (or, as applicable, its transfer agent or stock plan
administrator).


 


10.6                           Paperless
Exercise.  In the
event that the Company establishes, for itself or using the services of a third
party, an automated system for the exercise of Awards, such as a system using
an internet website or interactive voice response, then the paperless exercise
of Awards by a Participant may be permitted through the use of such an
automated system.


 


10.7                           Recoupment.  Notwithstanding anything to the contrary set
forth in the Plan or any Award Agreement, in the event of a restatement of
incorrect financial results, the Board will 


 


16

















 


review the conduct of executive officers in relation
to the restatement.  If the Board
determines that an executive officer has engaged in misconduct, or otherwise
violated the Company’s Code of Conduct and Ethics for Employees, Agents and
Contractors, and that such misconduct or violation contributed to such
restatement, then the Board may, in its discretion, take appropriate action to
remedy the misconduct or violation, including, without limitation, seeking
reimbursement of any portion of any performance-based or incentive compensation
paid or awarded to the employee that is greater than would have been paid or
awarded if calculated based on the restated financial results, to the extent
not prohibited by governing law. For this purpose, the term “executive officer”
means executive offers as defined by the Securities Exchange Act of 1934, as
amended. Any such action by the Board would be in addition to any other actions
the Board of the Company may take under the Company’s policies, as modified
from time to time, or any actions imposed by law enforcement, regulators or
other authorities.  If the Board takes
any such action, Participants shall be required to reimburse the Company such
amounts as directed by the Board, in its sole discretion.


 


ARTICLE 11.



CHANGES IN CAPITAL STRUCTURE


 


11.1                           Adjustments.


 


(a)                                  In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make proportionate
adjustments to any or all of the following in order to reflect such change: (a) the
aggregate number and kind of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Sections 3.1
and 3.3 hereof); (b) the
terms and conditions of any outstanding Awards (including, without limitation,
any applicable performance targets or criteria with respect thereto); and (c) the
grant or exercise price per share for any outstanding Awards under the
Plan.  Any adjustment affecting an Award
intended as Qualified Performance-Based Compensation shall be made consistent
with the requirements of Section 162(m) of the Code.


 


(b)                                 In the event of
any transaction or event described in Section 11.1(a) hereof or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations or accounting
principles, the Committee, in its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, either by the terms of the Award
or by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Participant’s request, is hereby authorized to
take any one or more of the following actions in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations
or principles:


 


17

















 


(i)                                     To provide for
either (A) termination of any such Award in exchange for an amount of
cash, if any, equal to the amount that would have been attained upon the
exercise of such Award or realization of the Participant’s rights (and, for the
avoidance of doubt, if as of the date of the occurrence of the transaction or
event described in this Section 11.1 the Committee determines in good
faith that no amount would have been attained upon the exercise of such Award
or realization of the Participant’s rights, then such Award may be terminated
by the Company without payment) or (B) the replacement of such Award with
other rights or property selected by the Committee in its sole discretion;


 


(ii)                                  To provide that
such Award be assumed by the successor or survivor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options, rights or
awards covering the stock of the successor or survivor corporation, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kind
of shares and prices;


 


(iii)                               To make
adjustments in the number and type of shares of Stock (or other securities or
property) subject to outstanding Awards, and in the number and kind of
outstanding Restricted Stock or Deferred Stock and/or in the terms and
conditions of (including the grant or exercise price), and the criteria
included in, outstanding options, rights and awards and options, rights and
awards which may be granted in the future;


 


(iv)                              To provide that
such Award shall be exercisable or payable or fully vested with respect to all
shares covered thereby, notwithstanding anything to the contrary in the Plan or
the applicable Award Agreement; and


 


(v)                                 To provide that
the Award cannot vest, be exercised or become payable after such event.


 


11.2                           Acceleration
Upon a Change in Control. 
Notwithstanding Section 11.1
hereof, and except as may otherwise be provided in any applicable Award
Agreement or other written agreement entered into between the Company and a
Participant, if a Change in Control occurs and a Participant’s Awards are not
converted, assumed, or replaced by a successor entity, then immediately prior
to the Change in Control such Awards shall become fully exercisable and all
forfeiture restrictions on such Awards shall lapse.  Upon, or in anticipation of, a Change in
Control, the Committee may cause any and all Awards outstanding hereunder to
terminate at a specific time in the future, including but not limited to the
date of such Change in Control, and shall give each Participant the right to
exercise such Awards during a period of time as the Committee, in its sole and
absolute discretion, shall determine.  In
the event that the terms of any agreement between the Company or any Company
subsidiary or affiliate and a Participant contains provisions that conflict
with and are more restrictive than the provisions of this Section 11.2,
this Section 11.2 shall prevail and control and the more restrictive terms
of such agreement (and only such terms) shall be of no force or effect.


 


11.3                           No Other Rights. 
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the 


 


18

















 


payment of any dividend, any increase or decrease in
the number of shares of stock of any class or any dissolution, liquidation,
merger, or consolidation of the Company or any other corporation.  Except as expressly provided in the Plan or
pursuant to action of the Committee under the Plan, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Stock subject to an Award or the grant
or exercise price of any Award.


 


ARTICLE 12.



ADMINISTRATION


 


12.1                           Committee.  Unless and
until the Board delegates administration of the Plan to a Committee as set
forth below, the Plan shall be administered by the full Board, and for such
purposes the term “Committee” as used in this Plan shall be deemed to refer to
the Board.  The Board, at its discretion
or as otherwise necessary to comply with the requirements of Section 162(m) of
the Code, Rule 16b-3 promulgated under the Exchange Act or to the extent
required by any other applicable rule or regulation, shall delegate
administration of the Plan to a Committee. 
The Committee shall consist solely of two or more members of the Board
each of whom is an “outside director,” within the meaning of Section 162(m) of
the Code, a Non-Employee Director and an “independent director” under the rules of
The NASDAQ Global Market (or other principal securities market on which shares
of Stock are traded), provided that any action taken by the Committee shall be
valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the
requirements for membership set forth in this Section 12.1 or otherwise
provided in the charter of the Committee.  Notwithstanding the foregoing: (a) the
full Board, acting by a majority of its members in office, shall conduct the
general administration of the Plan with respect to all Awards granted to
Independent Directors and for purposes of such Awards the term “Committee” as
used in this Plan shall be deemed to refer to the Board and (b) the
Committee may delegate its authority hereunder to the extent permitted by Section 12.5
hereof.  In its sole discretion, the
Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan except with respect to matters which
under Rule 16b-3 under the Exchange Act or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.  The governance of the Committee shall be
subject to the charter of the Committee as approved by the Board.


 


12.2                           Action by the Committee.  Each member of the Committee is entitled to,
in good faith, rely or act upon any report or other information furnished to
that member by any officer or other employee of the Company or any Subsidiary,
the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.


 


12.3                           Authority of Committee.  Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:


 


19

















 


(a)                                  Designate
Participants to receive Awards;


 


(b)                                 Determine the
type or types of Awards to be granted to each Participant;


 


(c)                                  Determine the
number of Awards to be granted and the number of shares of Stock to which an
Award will relate;


 


(d)                                 Determine the
terms and conditions of any Award granted pursuant to the Plan, including, but
not limited to, the exercise price, grant price, or purchase price, any reload
provision, any restrictions or limitations on the Award, any schedule for lapse
of forfeiture restrictions or restrictions on the exercisability of an Award,
and accelerations or waivers thereof, any provisions related to non-competition
and recapture of gain on an Award, based in each case on such considerations as
the Committee in its sole discretion determines; provided, however, that the Committee shall not have the
authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;


 


(e)                                  Determine
whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in, cash, Stock,
other Awards, or other property, or an Award may be canceled, forfeited, or
surrendered;


 


(f)                                    Prescribe the
form of each Award Agreement, which need not be identical for each Participant;


 


(g)                                 Decide all
other matters that must be determined in connection with an Award;


 


(h)                                 Establish,
adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;


 


(i)                                     Interpret the
terms of, and any matter arising pursuant to, the Plan or any Award Agreement;
and


 


(j)                                     Make all other
decisions and determinations that may be required pursuant to the Plan or as
the Committee deems necessary or advisable to administer the Plan.


 


12.4                           Decisions Binding.  The
Committee’s interpretation of the Plan, any Awards granted pursuant to the
Plan, any Award Agreement and all decisions and determinations by the Committee
with respect to the Plan are final, binding, and conclusive on all parties.


 


12.5                           Delegation of
Authority.  To the
extent permitted by applicable law, the Committee may from time to time
delegate to a committee of one or more members of the Board or one or more
officers of the Company the authority to grant or amend Awards to Participants
other than (a) senior executives of the Company who are subject to Section 16
of the Exchange Act, (b) Covered Employees, or (c) officers of the
Company (or members of the Board) to whom authority to grant or amend Awards
has been delegated hereunder.  Any
delegation hereunder shall be subject to the restrictions and limits that the
Committee specifies at the time of such 


 


20

















 


delegation, and the Committee may at any time
rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under
this Section 12.5 shall serve in such capacity at the pleasure of the
Committee.


 


ARTICLE 13.


 


EFFECTIVE AND EXPIRATION
DATE


 


13.1                           Effective Date.  The Plan is
effective as of the date the Plan is approved by the Company’s stockholders
(the “Effective Date”).  The Plan
will be deemed to be approved by the stockholders if it receives the
affirmative vote of the holders of a majority of the shares of stock of the
Company in accordance with applicable law and the applicable provisions of the
Company’s bylaws.


 


13.2                           Expiration Date.  The
Plan will expire on, and no Award may be granted pursuant to the Plan after,
the tenth anniversary of the date the Plan is approved by the Board.  Any Awards that are outstanding on the tenth
anniversary of the Effective Date shall remain in force according to the terms
of the Plan and the applicable Award Agreement.


 


ARTICLE 14.


 


AMENDMENT, MODIFICATION,
AND TERMINATION


 


14.1                           Amendment, Modification, and Termination.  Subject to Section 15.14 hereof, with
the approval of the Board, at any time and from time to time, the Committee may
terminate, amend or modify the Plan; provided,
however, that (a) to the extent necessary and desirable to
comply with any applicable law, regulation, or stock exchange rule, the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as required, and (b) stockholder approval shall be required
for any amendment to the Plan that (i) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11
hereof), (ii) permits the Committee to grant Options with an exercise
price that is below Fair Market Value on the date of grant, or (iii) permits
the Committee to extend the exercise period for an Option beyond ten years from
the date of grant.  Notwithstanding any
provision in this Plan to the contrary, absent approval of the stockholders of
the Company, no Option may be amended to reduce the per share exercise price of
the shares subject to such Option below the per share exercise price as of the
date the Option is granted and, except as permitted by Article 11 hereof,
no Option may be granted in exchange for, or in connection with, the
cancellation or surrender of an Option having a higher per share exercise
price.


 


14.2                           Awards Previously Granted.  Except with respect to amendments made
pursuant to Section 15.14 hereof, no termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted pursuant to the Plan without the prior written consent of
the Participant.


 


21














 


ARTICLE 15.



GENERAL PROVISIONS


 


15.1                           No Rights to Awards.  No
Eligible Individual or other person shall have any claim to be granted any
Award pursuant to the Plan, and neither the Company nor the Committee is
obligated to treat Eligible Individuals, Participants or any other persons
uniformly.


 


15.2                           No Stockholders Rights.  Except as otherwise provided herein, a
Participant shall have none of the rights of a stockholder with respect to
shares of Stock covered by any Award until the Participant becomes the record
owner of such shares of Stock.


 


15.3                           Withholding.  The Company
or any Subsidiary shall have the authority and the right to deduct or withhold,
or require a Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local and foreign taxes (including the Participant’s
employment tax obligations) required by law to be withheld with respect to any
taxable event concerning a Participant arising as a result of this Plan.  The Committee may in its discretion and in
satisfaction of the foregoing requirement allow a Participant to elect to have
the Company withhold shares of Stock otherwise issuable under an Award (or
allow the return of shares of Stock) having a Fair Market Value equal to the
sums required to be withheld.  Notwithstanding
any other provision of the Plan, the number of shares of Stock which may be
withheld with respect to the issuance, vesting, exercise or payment of any
Award (or which may be repurchased from the Participant of such Award within
six months (or such other period as may be determined by the Committee) after
such shares of Stock were acquired by the Participant from the Company) in
order to satisfy the Participant’s federal, state, local and foreign income and
payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Award shall be limited to the number of shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate
amount of such liabilities based on the minimum statutory withholding rates for
federal, state, local and foreign income tax and payroll tax purposes that are
applicable to such supplemental taxable income.


 


15.4                           No Right to Employment or Services.  Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant’s employment or services at any time,
nor confer upon any Participant any right to continue in the employ or service
of the Company or any Subsidiary.


 


15.5                           Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan
for incentive compensation.  With respect
to any payments not yet made to a Participant pursuant to an Award, nothing
contained in the Plan or any Award Agreement shall give the Participant any rights
that are greater than those of a general creditor of the Company or any
Subsidiary.


 


15.6                           Indemnification.  To
the extent allowable pursuant to applicable law, each member of the Committee
or of the Board shall be indemnified and held harmless by the Company from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by such member in connection with or resulting from any claim, action,
suit, or 


 


22

















 


proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her; provided he or she gives
the Company an opportunity, at its own expense, to handle and defend the same
before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled pursuant to the Company’s Certificate of
Incorporation or bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.


 


15.7                           Relationship to Other Benefits.  No payment pursuant to the Plan shall be
taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.


 


15.8                           Expenses.  The
expenses of administering the Plan shall be borne by the Company and its
Subsidiaries.


 


15.9                           Titles and Headings.  The
titles and headings of the Sections in the Plan are for convenience of
reference only and, in the event of any conflict, the text of the Plan, rather
than such titles or headings, shall control.


 


15.10                     Fractional Shares.  No
fractional shares of Stock shall be issued and the Committee shall determine,
in its discretion, whether cash shall be given in lieu of fractional shares or
whether such fractional shares shall be eliminated by rounding up or down as
appropriate.


 


15.11                     Limitations
Applicable to Section 16 Persons.  Notwithstanding any other provision of the
Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, shall be subject to any
additional limitations set forth in any applicable exemptive rule under Section 16
of the Exchange Act (including any amendment to Rule 16b-3 under the
Exchange Act) that are requirements for the application of such exemptive
rule.  To the extent permitted by
applicable law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule.


 


15.12                     Government and Other Regulations.  The obligation of the Company to make payment
of awards in Stock or otherwise shall be subject to all applicable laws, rules,
and regulations, and to such approvals by government agencies as may be
required.  The Company shall be under no
obligation to register pursuant to the Securities Act, as amended, any of the
shares of Stock paid pursuant to the Plan. 
If the shares paid pursuant to the Plan may in certain circumstances be
exempt from registration pursuant to the Securities Act, as amended, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.


 


23

















 


15.13                     Governing Law.  The Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of California.


 


15.14                     Section 409A.  To the extent that the Committee determines
that any Award granted under the Plan is subject to Section 409A of the
Code, the Award Agreement evidencing such Award shall incorporate the terms and
conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other
guidance that may be issued after the Effective Date.  Notwithstanding any provision of the Plan to
the contrary, in the event that following the Effective Date the Committee
determines that any Award may be subject to Section 409A of the Code and
related Department of Treasury guidance (including such Department of Treasury
guidance as may be issued after the Effective Date), the Committee may adopt
such amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, that the Committee determines
are necessary or appropriate to (a) exempt the Award from Section 409A
of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the Award, or (b) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance.


 


*  *  * 
*  *


 


I
hereby certify that the foregoing Plan was duly adopted by the Board of Directors
of Accuray Incorporated on January 15, 2007.


 


*  *  * 
*  *


 


I
hereby certify that the foregoing Plan was approved by the stockholders of
Accuray Incorporated on January 31, 2007.


 


*  *  * 
*  *


 


I
hereby certify that Board of Directors of Accuray Incorporated amended the
foregoing Plan to include Section 10.7 and such amendment was approved on August 24,
2010.


 


 


	
   

  	
  /s/ Darren J. Milliken

  
	
   

  	
  Corporate Secretary —
  Darren J. Milliken

  



 


 


24

















 


ACCURAY INCORPORATED

2007 INCENTIVE AWARD PLAN


 


STOCK OPTION GRANT NOTICE AND 

STOCK OPTION AGREEMENT


 


Accuray
Incorporated, a Delaware corporation (the “Company”), pursuant
to its 2007 Incentive Award Plan (the “Plan”), hereby
grants to the holder listed below (“Participant”), an
option to purchase the number of shares of the Company’s common stock (“Stock”), set forth below (the “Option”).  This
Option is subject to all of the terms and conditions set forth herein and in
the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the
Plan, which are incorporated herein by reference.  Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Grant Notice
and the Stock Option Agreement.


 


	
  Participant:

  	
   

  
	
   

  	
   

  
	
  Grant
  Date:

  	
   

  
	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
   

  
	
   

  	
   

  
	
  Total
  Exercise Price:

  	
   

  
	
   

  	
   

  
	
  Total
  Number of Shares Subject to the Option:

  	
   

  
	
   

  	
   

  
	
  Expiration
  Date:*

  	
   

  



 






	
   

  	
  *
  Or three months after termination of
  employment/services; Or one year after disability or death.

  
	
   

  	
   

  
	
  Type
  of Option:

  	
   

  
	
   

  	
   

  
	
  Vesting
  Schedule:

  	
  The
  Option shall vest and become exercisable with respect to twenty-five percent
  (25%) of the shares of Stock subject thereto on the first anniversary of the
  Grant Date and with respect to an additional 1/48th of the shares of Stock subject thereto on
  each monthly anniversary thereafter.

  



 


By
his or her signature, the Participant agrees to be bound by the terms and
conditions of the Plan, the Stock Option Agreement and this Grant Notice.  The Participant has reviewed the Stock Option
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant
Notice and fully understands all provisions of this Grant Notice, the Stock
Option Agreement and the Plan. 
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan or relating to the Option.


 


	
  ACCURAY
  INCORPORATED

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Derek A. Bertocci

  	
   

  
	
  Title:

  	
  Chief
  Financial Officer

  	
   

  



 

















 


EXHIBIT A


 


TO STOCK OPTION GRANT NOTICE


 


ACCURAY INCORPORATED STOCK OPTION AGREEMENT


 


Pursuant
to the Stock Option Grant Notice (the “Grant Notice”) to which
this Stock Option Agreement (this “Agreement”) is attached,
Accuray Incorporated, a Delaware corporation (the “Company”), has
granted to the Participant an option under the Company’s 2007 Incentive Award
Plan (as amended from time to time, the “Plan”) to
purchase the number of shares of Stock indicated in the Grant Notice.


 


ARTICLE I.




GENERAL


 


1.1                                 Defined Terms.  Wherever the following terms are used in this
Agreement they shall have the meanings specified below, unless the context
clearly indicates otherwise.  Capitalized
terms not specifically defined herein shall have the meanings specified in the
Plan and the Grant Notice.


 


(a)                                  “Termination of Consultancy” shall
mean the time when the engagement of the Participant as a Consultant to the
Company or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, by resignation, discharge, death or
retirement, but excluding:  (a) terminations
where there is a simultaneous employment or continuing employment of the
Participant by the Company or any Subsidiary, and (b) terminations where
there is a simultaneous re-establishment of a consulting relationship or
continuing consulting relationship between the Participant and the Company or
any Subsidiary.  The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Consultancy, including, but not by way of
limitation, the question of whether a particular leave of absence constitutes a
Termination of Consultancy.  Notwithstanding
any other provision of the Plan, the Company or any Subsidiary has an absolute
and unrestricted right to terminate a Consultant’s service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.


 


(b)                                 “Termination of Directorship” shall
mean the time when the Participant, if he or she is or becomes an Independent
Director, ceases to be a Director for any reason, including, but not by way of
limitation, a termination by resignation, failure to be elected, death or
retirement.  The Board, in its sole and
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Directorship with respect to Independent Directors.


 


(c)                                  “Termination of Employment” shall
mean the time when the employee-employer relationship between the Participant
and the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding:  (a) terminations where there is a
simultaneous reemployment or continuing employment of the Participant by the
Company or any Subsidiary, and (b) terminations where there is a
simultaneous establishment of a consulting relationship or continuing consulting
relationship between the Participant and the Company or any Subsidiary.  The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a particular leave of absence constitutes a Termination of Employment;
provided, however, that, if this Option is an Incentive Stock Option, unless
otherwise determined by the Committee in its discretion, a leave of absence, change
in status from an employee to an independent contractor or other change in the
employee-employer 


 


A-1

















 


relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section.


 


(d)                                 “Termination of Services” shall mean
the Participant’s Termination of Consultancy, Termination of Directorship or
Termination of Employment, as applicable.


 


1.2                                 Incorporation
of Terms of Plan.  The Option
is subject to the terms and conditions of the Plan which are incorporated
herein by reference.  In the event of any
inconsistency between the Plan and this Agreement, the terms of the Plan shall
control.


 


ARTICLE II.




GRANT OF OPTION


 


2.1                                 Grant of Option.  In consideration of the Participant’s past
and/or continued employment with or service to the Company or a Subsidiary and
for other good and valuable consideration, effective as of the Grant Date set
forth in the Grant Notice (the “Grant Date”), the
Company irrevocably grants to the Participant the Option to purchase any part
or all of an aggregate of the number of shares of Stock set forth in the Grant
Notice, upon the terms and conditions set forth in the Plan and this
Agreement.  Unless designated as a
Non-Qualified Stock Option in the Grant Notice, the Option shall be an
Incentive Stock Option to the maximum extent permitted by law.


 


2.2                                 Exercise Price.  The exercise price of the shares of Stock
subject to the Option shall be as set forth in the Grant Notice, without
commission or other charge; provided,
however, that the price per share
of the shares of Stock subject to the Option shall not be less than 100% of the
Fair Market Value of a share of Stock on the Grant Date.  Notwithstanding the foregoing, if this Option
is designated as an Incentive Stock Option and the Participant owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any “subsidiary
corporation” of the Company or any “parent corporation” of the Company (each
within the meaning of Section 424 of the Code), the price per share of the
shares of Stock subject to the Option shall not be less than 110% of the Fair
Market Value of a share of Stock on the Grant Date.


 


2.3                                 Consideration
to the Company.  In
consideration of the grant of the Option by the Company, the Participant agrees
to render faithful and efficient services to the Company or any
Subsidiary.  Nothing in the Plan or this
Agreement shall confer upon the Participant any right to continue in the employ
or service of the Company or any Subsidiary or shall interfere with or restrict
in any way the rights of the Company and its Subsidiaries, which rights are
hereby expressly reserved, to discharge or terminate the services of the
Participant at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and the Participant.


 


ARTICLE III.




PERIOD OF EXERCISABILITY


 


3.1                                 Commencement of
Exercisability.


 


(a)                                  Subject to
Sections 3.2, 3.3, 5.11 and 5.14, the Option shall become vested and
exercisable in such amounts and at such times as are set forth in the Grant
Notice.


 


A-2

















 


(b)                                 No portion of
the Option which has not become vested and exercisable at the date of the
Participant’s Termination of Employment, Termination of Directorship or
Termination of Consultancy shall thereafter become vested and exercisable,
except as may be otherwise provided by the Committee or as set forth in a
written agreement between the Company and the Participant.


 


3.2                                 Duration of
Exercisability.  The
installments provided for in the vesting schedule set forth in the Grant Notice
are cumulative.  Each such installment
which becomes vested and exercisable pursuant to the vesting schedule set forth
in the Grant Notice shall remain vested and exercisable until it becomes
unexercisable under Section 3.3.


 


3.3                                 Expiration of
Option.  The Option may not be
exercised to any extent by anyone after the first to occur of the following
events:


 


(a)                                  The expiration
of ten years from the Grant Date;


 


(b)                                 If this Option
is designated as an Incentive Stock Option and the Participant owned (within
the meaning of Section 424(d) of the Code), at the time the Option
was granted, more than 10% of the total combined voting power of all classes of
stock of the Company or any “subsidiary corporation” of the Company or any “parent
corporation” of the Company (each within the meaning of Section 424 of the
Code), the expiration of five years from the Grant Date;


 


(c)                                  The expiration
of three-months from the date of the Participant’s Termination of Services,
unless such termination occurs by reason of the Participant’s death or
Disability; or


 


(d)                                 The expiration
of one year from the date of the Participant’s Termination of Services by
reason of the Participant’s death or Disability.


 


The
Participant acknowledges that an Incentive Stock Option exercised more that
three months after the Participant’s Termination of Employment, other than by
reason of death or Disability, will be taxed as a Non-Qualified Stock Option.


 


3.4                                 Special Tax
Consequences.  The
Participant acknowledges that, to the extent that the aggregate Fair Market
Value (determined as of the time the Option is granted) of all shares of Stock
with respect to which Incentive Stock Options, including the Option (if
applicable), are exercisable for the first time by the Participant in any
calendar year exceeds $100,000, the Option and such other options shall be
Non-Qualified Stock Options to the extent necessary to comply with the
limitations imposed by Section 422(d) of the Code.  The Participant further acknowledges that the
rule set forth in the preceding sentence shall be applied by taking the
Option and other “incentive stock options” into account in the order in which
they were granted, as determined under Section 422(d) of the Code and
the Treasury Regulations thereunder.


 


ARTICLE IV.




EXERCISE OF OPTION


 


4.1                                 Person Eligible
to Exercise.  Except as
provided in Section 5.2(b), during the lifetime of the Participant, only
the Participant may exercise the Option or any portion thereof.  After the death of the Participant, any
exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.3, be exercised by the Participant’s
personal representative or by any person empowered to do so under the deceased
the Participant’s will or under the then applicable laws of descent and
distribution.


 


A-3

















 


4.2                                 Partial
Exercise.  Any exercisable
portion of the Option or the entire Option, if then wholly exercisable, may be
exercised in whole or in part at any time prior to the time when the Option or
portion thereof becomes unexercisable under Section 3.3.


 


4.3                                 Manner of
Exercise.  The Option,
or any exercisable portion thereof, may be exercised solely by delivery to the
Secretary of the Company (or any third party administrator or other person or
entity designated by the Company) of all of the following prior to the time
when the Option or such portion thereof becomes unexercisable under Section 3.3:


 


(a)                                  An Exercise
Notice in a form specified by the Committee, stating that the Option or portion
thereof is thereby exercised, such notice complying with all applicable rules established
by the Committee;


 


(b)                                 The receipt by
the Company of full payment for the shares of Stock with respect to which the
Option or portion thereof is exercised, including payment of any applicable
withholding tax, which may be in one or more of the forms of consideration
permitted under Section 4.4;


 


(c)                                  Any other
written representations as may be required in the Committee’s reasonable
discretion to evidence compliance with the Securities Act or any other
applicable law rule, or regulation; and


 


(d)                                 In the event the
Option or portion thereof shall be exercised pursuant to Section 4.1 by
any person or persons other than the Participant, appropriate proof of the
right of such person or persons to exercise the Option.


 


Notwithstanding
any of the foregoing, the Company shall have the right to specify all
conditions of the manner of exercise, which conditions may vary by country and
which may be subject to change from time to time.


 


4.4                                 Method of
Payment.  Payment of the exercise price
shall be by any of the following, or a combination thereof, at the election of
the Participant:


 


(a)                                  Cash;


 


(b)                                 Check;


 


(c)                                  With the
consent of the Committee, delivery of a notice that the Participant has placed
a market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate exercise price; provided,
that payment of such proceeds is then made to the Company at such time as may
be required by the Company, but in any event not later than the settlement of
such sale;


 


(d)                                 With the
consent of the Committee, surrender of other shares of Stock which have a fair
market value on the date of surrender equal to the aggregate exercise price of
the shares of Stock with respect to which the Option or portion thereof is
being exercised;


 


(e)                                  With the
consent of the Committee, surrendered shares of Stock issuable or transferable
upon the exercise of the Option having a fair market value on the date of
exercise equal to the aggregate exercise price of the shares of Stock with
respect to which the Option or portion thereof is being exercised; or


 


A-4

















 


(f)                                    With the
consent of the Committee, property of any kind which constitutes good and
valuable consideration.


 


4.5                                 Conditions to
Issuance of Stock Certificates.  The shares of Stock deliverable upon the
exercise of the Option, or any portion thereof, may be either previously authorized
but unissued shares of Stock or issued shares of Stock which have then been
reacquired by the Company.  Such shares
of Stock shall be fully paid and nonassessable. 
The Company shall not be required to issue or deliver any shares of
Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:


 


(a)                                  The admission
of such shares of Stock to listing on all stock exchanges on which such Stock
is then listed;


 


(b)                                 The completion
of any registration or other qualification of such shares of Stock under any
state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the
Committee shall, in its absolute discretion, deem necessary or advisable;


 


(c)                                  The obtaining
of any approval or other clearance from any state or federal governmental
agency which the Committee shall, in its absolute discretion, determine to be
necessary or advisable;


 


(d)                                 The receipt by
the Company of full payment for such shares of Stock, including payment of any
applicable withholding tax, which may be in one or more of the forms of
consideration permitted under Section 4.4; and


 


(e)                                  The lapse of
such reasonable period of time following the exercise of the Option as the
Committee may from time to time establish for reasons of administrative
convenience.


 


4.6                                 Rights as
Stockholder.  The holder
of the Option shall not be, nor have any of the rights or privileges of, a
stockholder of the Company in respect of any shares of Stock purchasable upon
the exercise of any part of the Option unless and until such shares of Stock
shall have been issued by the Company to such holder (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company).  No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the shares of Stock are issued, except as provided in Section 11.1
of the Plan.


 


ARTICLE V.




OTHER PROVISIONS


 


5.1                                 Administration.  The Committee shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon Participant, the Company and all other interested persons.  No member of the Committee or the Board shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, this Agreement or the Option.


 


A-5

















 


5.2                                 Option Not
Transferable.


 


(a)                                  Subject to Section 5.2(b),
the Option may not be sold, pledged, assigned or transferred in any manner
other than by will or the laws of descent and distribution, unless and until
the shares of Stock underlying the Option have been issued, and all
restrictions applicable to such shares of Stock have lapsed.  Neither the Option nor any interest or right
therein shall be liable for the debts, contracts or engagements of Participant
or his or her successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect,
except to the extent that such disposition is permitted by the preceding
sentence.


 


(b)                                 Notwithstanding
any other provision in this Agreement, with the consent of the Committee, the
Participant may transfer the Option (or any portion thereof) to any one or more
Permitted Transferees (as defined below), subject to the following terms and
conditions:  (i) any portion of the
Option transferred to a Permitted Transferee shall not be assignable or transferable
by the Permitted Transferee other than by will or the laws of descent and
distribution; (ii) any portion of the Option which is transferred to a
Permitted Transferee shall continue to be subject to all the terms and
conditions of the Option as applicable to the Participant (other than the
ability to further transfer the Option); and (iii) the Participant and the
Permitted Transferee shall execute any and all documents requested by the
Committee, including, without limitation documents to (A) confirm the
status of the transferee as a Permitted Transferee, (B) satisfy any
requirements for an exemption for the transfer under applicable federal and
state securities laws and (C) evidence the transfer.  For purposes of this Section 5.2(b), “Permitted
Transferee” shall mean, with respect to a Participant, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Participant’s household (other than a tenant or employee), a trust
in which these persons (or the Participant) control the management of assets,
charitable institutions, or trusts or other entities whose beneficiaries or
beneficial owners are these persons (or the Participant) and/or charitable
institutions, and any other entity in which these persons (or the Participant)
own more than fifty percent of the voting interests, or any other transferee
specifically approved by the Committee after taking into account any state or
federal tax or securities laws applicable to transferable Options.  Notwithstanding the foregoing, (i) in no
event shall the Option be transferable by the Participant to a third party
(other than the Company) for consideration, and (ii) no transfer of an
Incentive Stock Option will be permitted to the extent that such transfer would
cause the Incentive Stock Option to fail to qualify as an “incentive stock
option” under Section 422 of the Code.


 


5.3                                 Adjustments.  The Participant acknowledges that the Option
is subject to adjustment, modification and termination in certain events as
provided in this Agreement and Article 11 of the Plan.


 


5.4                                 Notices.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of the
Secretary of the Company at the address given beneath the signature of the
Company’s authorized officer on the Grant Notice, and any notice to be given to
Participant shall be addressed to Participant at the address given beneath
Participant’s signature on the Grant Notice. 
By a notice given pursuant to this Section 5.4, either party may
hereafter designate a different address for notices to be given to that
party.  Any notice which is required to
be given to Participant shall, if Participant is then deceased, be given to the
person entitled to exercise his or her Option pursuant to Section 4.1 by
written notice under this Section 5.4. 
Any notice shall be deemed duly given when sent via email or when sent
by certified mail (return receipt requested) and deposited (with 


 


A-6

















 


postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.


 


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


 


5.6                                 Governing Law;
Severability.  The laws of
the State of California shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.


 


5.7                                 Conformity to
Securities Laws.  The
Participant acknowledges that the Plan and this Agreement are intended to
conform to the extent necessary with all provisions of the Securities Act and
the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, and state securities laws and
regulations.  Notwithstanding anything
herein to the contrary, the Plan shall be administered, and the Option is
granted and may be exercised, only in such a manner as to conform to such laws,
rules and regulations.  To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and
regulations.


 


5.8                                 Amendments,
Suspension and Termination.  To the extent permitted by the Plan, this
Agreement may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Committee or the Board, provided, that, except as may otherwise
be provided by the Plan, no amendment, modification, suspension or termination
of this Agreement shall adversely effect the Option in any material way without
the prior written consent of the Participant.


 


5.9                                 Successors and
Assigns.  The Company may assign any of
its rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer
herein set forth in Section 5.2, this Agreement shall be binding upon
Participant and his or her heirs, executors, administrators, successors and
assigns.


 


5.10                           Notification of
Disposition.  If this
Option is designated as an Incentive Stock Option, Participant shall give
prompt notice to the Company of any disposition or other transfer of any shares
of Stock acquired under this Agreement if such disposition or transfer is made (a) within
two years from the Grant Date with respect to such shares of Stock or (b) within
one year after the transfer of such shares of Stock to Participant.  Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by Participant in such
disposition or other transfer.


 


5.11                           Limitations
Applicable to Section 16 Persons.  Notwithstanding any other provision of the
Plan or this Agreement, if Participant is subject to Section 16 of the
Exchange Act, the Plan, the Option and this Agreement shall be subject to any
additional limitations set forth in any applicable exemptive rule under Section 16
of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange
Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law,
this Agreement shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule


 


5.12                           Entire
Agreement.  The Plan,
the Grant Notice and this Agreement (including all Exhibits thereto) constitute
the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to the
subject matter hereof.


 


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5.13                           Section 409A.  This Option is not intended to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code (“Section 409A”).  However, notwithstanding any other provision
of the  Plan, this Agreement or the Grant
Notice, if at any time the Committee determines that the Option (or any portion
thereof) may be subject to Section 409A, the Committee shall have the
right, in its sole discretion, to adopt such amendments to the Plan, this
Agreement or the Grant Notice or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other
actions, as the Committee determines are necessary or appropriate either for
the Option to be exempt from the application of Section 409A or to comply
with the requirements of Section 409A.


 


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2007 INCENTIVE AWARD PLAN


RESTRICTED STOCK UNIT GRANT NOTICE


 


Accuray
Incorporated, a Delaware corporation (the “Company”),
pursuant to its 2007 Incentive Award Plan (the “Plan”),
hereby grants to the individual listed below (“Participant”),
the following award of Restricted Stock Units (“RSUs”).  This Restricted Stock Unit is subject to all
of the terms and conditions set forth herein and in the Restricted Stock Unit
Agreement attached hereto as Appendix A (the “Restricted
Stock Unit Agreement”) and in the Plan, each of which are
incorporated herein by reference.  All
capitalized terms used and not otherwise defined in this Grant Notice or the
Restricted Stock Unit Agreement shall have the meanings ascribed to such terms
in the Plan unless the context clearly indicates otherwise.


 


Participant:


 


Grant Date:


 


Number of RSUs:


 


Standard Vesting Schedule:  Subject to the Participant’s continued
service as an Employee, Consultant or Director through the applicable vesting
date (each such date, a “Vesting Date”),
the RSUs shall vest as follows:


 


(i)                                     Twenty-five
(25%) of the RSUs shall vest on the first anniversary of the Grant Date;


(ii)                                  Twenty-five
(25%) of the RSUs shall vest on the second anniversary of the Grant Date;


(iii)                               Twenty-five
(25%) of the RSUs shall vest on the third anniversary of the Grant Date; and


(iv)                              Twenty-five
(25%) of the RSUs shall vest on the fourth anniversary of the Grant Date.


 


Termination
of RSUs:  In the event that the
Participant ceases to be an Employee, Consultant or Independent Director for
any reason prior to the applicable Vesting Date, all RSUs that have not vested
as of the date of such termination shall thereupon automatically be forfeited
by the Participant as of such date of termination without payment of any
consideration therefor.


 


By
his or her signature and the Company’s signature below, the Participant agrees
to be bound by the terms and conditions of the Plan, the Restricted Stock Unit
Agreement and this Grant Notice. 
Participant has reviewed the Restricted Stock Unit Agreement, the Plan
and this Grant Notice in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Grant Notice and fully understands
all provisions of this Grant Notice, the Restricted Stock Unit Agreement and the
Plan.  Participant hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions arising under the Plan, this Grant Notice or the
Restricted Stock Unit Agreement.


 


 


	
  ACCURAY INCORPORATED:

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Derek A. Bertocci

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  



 


	
  RSU AGREEMENT STD

  	
   

  	
  ACCURAY CONFIDENTIAL

  



 


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APPENDIX A

TO RESTRICTED STOCK UNIT GRANT NOTICE


 


RESTRICTED STOCK UNIT AGREEMENT


 


1.                                       Grant.  Pursuant to the Restricted Stock Unit Grant
Notice (the “Grant Notice”) to which this
Restricted Stock Unit Agreement (the “Agreement”)
is attached, Accuray Incorporated, a Delaware corporation (the “Company”), has granted to the
Participant an award of %%TOTAL_SHARES_GRANTED%-%
RSUs under the Company’s 2007 Incentive Award Plan (the “Plan”)
as set forth in the Grant Notice, subject to all of the terms and conditions
contained in this Agreement and the Plan. 
All capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Plan and the Grant Notice unless the
context clearly indicates otherwise.


 


2.                                       Vesting and
Termination.    The RSUs
shall vest and shall terminate as set forth in the Grant Notice.  In the event of a termination of the
Participant’s status as an Employee, Consultant or Independent Director for any
reason prior to the applicable Vesting Date, all RSUs that have not vested as
of the date of such termination shall thereupon automatically be forfeited by
the Participant as of such date of termination without payment of any
consideration therefor.  RSUs which are
not vested as of the date of such termination shall not thereafter become
vested.


 


3.                                       RSUs.  As of the applicable Vesting Date, each RSU
that vests on such date shall represent the right to receive payment, in
accordance with Section 4 below, in the form of one share of Stock.  Unless and until an RSU vests, the
Participant will have no right to payment in respect of any such RSU.  Prior to actual payment in respect of any
vested RSU, such RSU will represent an unsecured obligation of the Company,
payable (if at all) only from the general assets of the Company.


 


4.                                       Payment after
Vesting; Code Section 409A.  Payment in respect of any RSUs that vest in
accordance herewith shall be made to the Participant (or in the event of the
Participant’s death, to the Participant’s estate) in whole shares of Stock as
soon as practicable after the applicable Vesting Date, but in no event later
than sixty (60) days, after such Vesting Date (for the avoidance of doubt, this
deadline is intended to comply with the “short-term deferral” exemption from Section 409A
of the Code).


 


5.                                       Tax Withholding.  The Company shall have the authority and the
right to deduct or withhold, or to require the Participant to remit to the
Company, an amount sufficient to satisfy all applicable federal, state and
local taxes (including the Participant’s employment tax obligations) required
by law to be withheld with respect to any taxable event arising in connection
with the RSUs.  Unless otherwise
determined by the Committee, the Company shall, in satisfaction of the
foregoing requirement, withhold shares of Stock otherwise issuable in respect
of any RSUs having a Fair Market Value equal to the sums required to be
withheld, and the Participant hereby agrees to such withholding of shares.


 


6.                                       Rights as
Shareholder.  Neither the
Participant nor any person claiming under or through the Participant will have
any of the rights or privileges of a shareholder of the Company in respect of
any shares of Stock that may become deliverable hereunder unless and until
certificates representing such shares of Stock shall have been issued, recorded
on the records of the Company or its transfer agents or registrars, and
delivered to the Participant or any person claiming under or through the
Participant.


 


7.                                       Non-Transferability.  Unless transferred to a Permitted Transferee
(as defined below), RSUs may not be sold, pledged, assigned or transferred in
any manner other than by will or the laws of descent and distribution.  For purposes of this Section 7,
“Permitted Transferee” shall mean, with respect to a Participant, 


 


	
  RSU AGREEMENT

  	
   

  	
  ACCURAY CONFIDENTIAL

  



 


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certain persons or entities
related to the Participant, including but not limited to members of the
Participant’s family, charitable institutions or trusts or other entities whose
beneficiaries or beneficial owners are members of Participant’s family and/or
charitable institutions, or to such other persons or entities as may be
expressly approved by the Committee, pursuant to any such conditions and
procedures the Committee may require. 
Neither the RSUs nor any interest or right therein shall be liable for
the debts, contracts or engagements of the Participant or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except
to the extent that such disposition is permitted by the preceding sentence.


 


8.                                       Distribution of
Stock.  Notwithstanding anything
herein to the contrary, no payment shall be made under this Agreement in the
form of shares of Stock prior to the fulfillment of all of the following
conditions:  (i) the admission of
such shares to listing on all stock exchanges on which the Stock is then
listed, (ii) the completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or other governmental regulatory body,
which the Committee shall, in its sole and absolute discretion, deem necessary
and advisable, (iii) the obtaining of any approval or other clearance from
any state or federal governmental agency that the Committee shall, in its
absolute discretion, determine to be necessary or advisable and (iv) the
lapse of any such reasonable period of time following the Vesting Date as the
Committee may from time to time establish for reasons of administrative
convenience.  All certificates delivered
pursuant to this Agreement shall be subject to any stop-transfer orders and
other restrictions as the Committee deems necessary or advisable to comply with
federal, state, or local securities or other laws, rules and regulations
and the rules of any national securities exchange or automated quotation
system on which the shares of Stock are listed, quoted, or traded.  The Committee may place legends on any
certificate to reference restrictions applicable to the shares of Stock.  In addition to the terms and conditions
provided herein, the Committee may require that the Participant make such
covenants, agreements, and representations as the Committee, in its sole
discretion, deems advisable in order to comply with any such laws, regulations,
or requirements. The Committee shall have the right to require the Participant
to comply with any timing or other restrictions with respect to the settlement
of any RSUs pursuant to this Agreement, including a window-period limitation,
as may be imposed in the discretion of the Committee.  Any shares of Stock distributed pursuant to
this Agreement may consist, in whole or in part, of authorized and unissued
shares, treasury shares or shares purchased on the open market.  No fractional shares shall be issued and the
Committee shall determine, in its sole discretion, whether cash shall be given
in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.


 


9.                                       No Effect on
Employment.  Nothing in
this Agreement or in the Plan shall confer upon the Participant any right to
continue to serve as an Employee, Consultant, member of the Board or other
service provider of the Company or any of its Subsidiaries.


 


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


 


11.                                 Tax
Consultation.  The
Participant understands that the Participant may suffer adverse tax
consequences in connection with the RSUs granted pursuant to this
Agreement.  The Participant represents
that the Participant has consulted with any tax consultants that the
Participant deems advisable in connection with the RSUs and that the
Participant is not relying on the Company for tax advice.


 


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12.                                 Amendments,
Suspension and Termination.  To the extent permitted by the Plan, this
Agreement may be wholly or partially amended or otherwise modified, suspended
or terminated at any time or from time to time by the Committee or the Board.


 


13.                                 Conformity to
Securities Laws.  The
Participant acknowledges that the Plan and this Agreement are intended to
conform to the extent necessary with all provisions of the Securities Act and
the Exchange Act and any and all regulations and rules promulgated by the
Securities and Exchange Commission thereunder, and all applicable state
securities laws and regulations. 
Notwithstanding anything herein to the contrary, the Plan shall be
administered, and the RSUs are granted, only in such a manner as to conform to
such laws, rules and regulations. 
To the extent permitted by applicable law, the Plan and this Agreement
shall be deemed amended to the extent necessary to conform to such laws, rules and
regulations.


 


14.                                 Limitations
Applicable to Section 16 Persons.  Notwithstanding any other provision of the
Plan or this Agreement, if the Participant becomes subject to Section 16
of the Exchange Act, the Plan, the RSUs and this Agreement shall be subject to
any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3
of the Exchange Act) that are requirements for the application of such
exemptive rule.  To the extent permitted
by applicable law, this Agreement shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.


 


15.                                 Code Section 409A.  The RSUs are not intended to constitute or
provide for “nonqualified deferred compensation” within the meaning of Section 409A
of the Code (“Section 409A”).  However, notwithstanding any other provision
of the Plan, this Agreement or the Grant Notice, if at any time the Committee
determines that the RSUs (or any portion thereof) may be subject to Section 409A,
the Committee shall have the right, in its sole discretion, to adopt such
amendments to the Plan, this Agreement or the Grant Notice or adopt other
policies and procedures (including amendments, policies and procedures with
retroactive effect), or take any other actions, as the Committee determines are
necessary or appropriate either for the RSUs to be exempt from the application
of Section 409A or to comply with the requirements of Section 409A.  Nothing herein shall, or shall be construed
so as to, limit the generality of Section 15.14 of the Plan.


 


16.                                 Adjustments.  The Participant acknowledges that the RSUs
are subject to modification and termination in certain events as provided in
this Agreement and Article 11 of the Plan.


 


17.                                 Notices.  Notices required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States mail by certified mail, with
postage and fees prepaid, addressed to the Participant to his or her address
shown in the Company records, and to the Company at its principal executive
office.


 


18.                                 Successors and
Assigns.  The Company may assign any of
its rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company.  Subject to the restrictions on
transfer contained herein, this Agreement shall be binding upon the Participant
and his or her heirs, executors, administrators, successors and assigns.


 


19.                                 Governing Law.  The laws of the State of California shall
govern the interpretation, validity, administration, enforcement and
performance of the terms of this Agreement regardless of the law that might be
applied under principles of conflicts of laws.


 


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


 


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