exv10w20



 





Exhibit 10.20





4/3/2007




TomoTherapy Incorporated




2007 Employee Stock Purchase Plan



TomoTherapy Incorporated hereby adopts the TomoTherapy Incorporated 2007 Employee Stock Purchase
Plan (the “Plan”), effective as of the Effective Date (as defined herein).





	 	1.	 	Purpose. The purposes of the Plan are as follows:
	 
	 	(a)	 	To assist employees of the Company and subsidiaries (as defined below) in
acquiring a stock ownership interest in the Company pursuant to a plan which is
intended to qualify as an “employee stock purchase plan” within the meaning of Section
423(b) of the Internal Revenue Code of 1986, as amended.
	 
	 	(b)	 	To help employees provide for their future security and to encourage them to
remain in the employment of the Company.
	 
	 	2.	 	Definitions.
	 
	 	(a)	 	“Administrator” shall mean the administrator of the Plan, as determined
pursuant to Section 14 hereof.
	 
	 	(b)	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	(c)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	(d)	 	“Committee” shall mean the committee appointed to administer the Plan pursuant
to Section 14 hereof.
	 
	 	(e)	 	“Common Stock” shall mean the common stock of the Company, $0.01 par value per
share. “Common 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 Common Stock pursuant to Section 19 hereof.
	 
	 	(f)	 	“Company” shall mean TomoTherapy Incorporated, a Wisconsin 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).
	 
	 	(g)	 	“Compensation” shall mean all base straight time gross earnings and
commissions, exclusive of payments for overtime, shift premium, incentive compensation,
incentive payments, bonuses, expense reimbursements, fringe benefits and other
compensation.





 









 






	 	(h)	 	“Effective Date” shall mean the date on which the Company’s Registration
Statement on Form S-1 filed with respect to the Company’s initial public offering
becomes effective.
	 
	 	(i)	 	“Eligible Employee” shall mean an Employee of the Company or a Subsidiary: (i)
who does not, immediately after the option is granted, own stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of
stock of the Company, a Parent or a Subsidiary (as determined under Section 423(b)(3)
of the Code); (ii) whose customary employment is for more than twenty (20) hours per
week; and (iii) whose customary employment is for more than five (5) months in any
calendar year. For purposes of clause (i), the rules of Section 424(d) of the Code with
regard to the attribution of stock ownership shall apply in determining the stock
ownership of an individual, and stock which an employee may purchase under outstanding
options shall be treated as stock owned by the employee. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the individual is
on sick leave or other leave of absence approved by the Company or Designated
Subsidiary and meeting the requirements of Treasury Regulation Section 1.421-7(h)(2).
Where the period of leave exceeds ninety (90) days and the individual’s right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the ninety-first (91st) day of such
leave. An Employee shall not be an Eligible Employee where such Employee’s
participation is prohibited by local law.
	 
	 	(j)	 	“Employee” shall mean any person who renders services to the Company or a
Subsidiary in the status of an employee within the meaning of Code Section 3401(c).
“Employee” shall not include any director of the Company or a Subsidiary who does not
render services to the Company or a Subsidiary in the status of an employee within the
meaning of Code Section 3401(c).
	 
	 	(k)	 	"Enrollment Date” shall mean the first Trading Day of each Offering Period. The
Enrollment Date for the first Offering Period under the Plan shall be the Effective
Date.
	 
	 	(l)	 	“Exercise Date” shall mean the last Trading Day of each Purchase Period.
	 
	 	(m)	 	“Fair Market Value” shall mean, as of any date, the average value of Common
Stock determined as follows:






	 	(i)	 	If the Common Stock is traded on an exchange, its Fair Market
Value shall be the mean closing sales price for a share of Common Stock as
reported in The Wall Street Journal (or such other source as the Administrator
may deem reliable for such purposes) for such date and the four trading days
after that date. If no sale occurred on such date, the Fair Market Value shall
be the mean closing sales price as of the first trading date





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	 	 	 	immediately prior to such date, along with the four trading days after such
date;






	 	(ii)	 	If the Common Stock is not traded on an exchange but is quoted
on a quotation system, its Fair Market Value shall be determined by first
calculating the mean between the closing representative bid and asked prices
for the Common Stock on such date, along with the mean for the four dates
immediately preceding and following 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,
along with the mean for the four most immediate dates after such date. The
Fair Market Value will then be determined by determining the mean of these five
amounts;
	 
	 	(iii)	 	In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator; or
	 
	 	(iv)	 	For purposes of the first Offering Period under the Plan, the
Fair Market Value on the Enrollment Date shall be the initial price to the
public as set forth in the final prospectus included within the registration
statement on Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company’s Common Stock (the “Registration
Statement”).






	 	(n)	 	“Offering Period” shall mean each period of twelve (12) months commencing on
December 1 and terminating on the last Trading Day on or before the next occurring
November 30, except for the first Offering Period under the Plan, which shall commence
on the Effective Date and end on November 30, 2007. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan, but in no event may an
Offering Period have a duration in excess of twenty-seven (27) months.
	 
	 	(o)	 	“Parent” means any corporation, other than the Company, in an unbroken chain of
corporations ending with the Company if, at the time of the determination, each of the
corporations other than the Company owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations in such
chain.
	 
	 	(p)	 	“Plan” shall mean this TomoTherapy Incorporated 2007 Employee Stock Purchase
Plan.
	 
	 	(q)	 	“Purchase Period” shall mean the twelve (12) month period commencing on each
Enrollment Date and ending with the next Exercise Date. Notwithstanding the foregoing,
the first Purchase Period with respect to the initial Offering Period




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	 	 	 	under the Plan shall commence on the Effective Date and end on October 31, 2007.






	 	(r)	 	“Purchase Price” shall mean 85% of the Fair Market Value of a share of Common
Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided,
however, that the Purchase Price may be adjusted by the Administrator pursuant to
Section 19 hereof; provided, further, that the Purchase Price shall not be less than
the par value of a share of Common Stock.
	 
	 	(s)	 	“Subsidiary” shall mean any corporation, other than the Company, in an unbroken
chain of corporations beginning with the Company if, at the time of the determination,
each of the corporations other than the last corporation in an unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
	 
	 	(t)	 	“Trading Day” shall mean a day on which national stock exchanges are open for
trading.
	 
	 	3.	 	Eligibility.
	 
	 	(a)	 	Any Eligible Employee who shall be employed by the Company or a Subsidiary on a
given Enrollment Date for an Offering Period shall be eligible to participate in the
Plan during such Offering Period, subject to the requirements of Section 5 hereof and
the limitations imposed by Section 423(b) of the Code.
	 
	 	(b)	 	Each person who, during the course of an Offering Period, first becomes an
Eligible Employee subsequent to the Enrollment Date will be eligible to become a
participant in the Plan on the first day of the first Purchase Period following the day
on which such person becomes an Eligible Employee, subject to the requirements of
Section 5 hereof and the limitations imposed by Section 423(b) of the Code.
	 
	 	(c)	 	No Eligible Employee shall be granted an option under the Plan which permits
his rights to purchase stock under the Plan, and to purchase stock under all other
employee stock purchase plans of the Company, any Parent or any Subsidiary subject to
the Section 423 of the Code, to accrue at a rate which exceeds $25,000 of fair market
value of such stock (determined at the time the option is granted) for each calendar
year in which the option is outstanding at any time. For purposes of the limitation
imposed by this subsection, the right to purchase stock under an option accrues when
the option (or any portion thereof) first becomes exercisable during the calendar year,
the right to purchase stock under an option accrues at the rate provided in the option,
but in no case may such rate exceed $25,000 of fair market value of such stock
(determined at the time such option is granted) for any one calendar year, and a right
to purchase stock which has accrued under an option may not be carried over to any
option. This limitation shall be applied in accordance with Section 423(b)(8) of the
Code and the




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	 	 	 	Treasury Regulations thereunder. The $25,000 amount referenced in this subsection
(c) shall be automatically increased or decreased to equal the maximum amount
available under Section 423(b)(8) of the Code.





     4.      Offering Periods. The Plan shall be implemented by consecutive Offering Periods which
shall continue until the Plan expires or is terminated in accordance with Section 20 hereof. The
Administrator shall have the power to change the duration of Offering Periods (including the
commencement dates thereof) with respect to future offerings without shareholder approval if such
change is announced at least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.




	 	5.	 	Participation.
	 
	 	(a)	 	Each Eligible Employee who is employed by the Company or a Subsidiary on the
calendar day immediately preceding the Effective Date shall automatically become a
participant in the Plan with respect to the first Offering Period. Each such
participant shall be granted an option to purchase shares of Common Stock. The option
shall be paid for pursuant to Section 6, including any form of subscription agreement
provided by the Company for the first Offering Period under this Plan. Except as
described in subsection (e) below, a participant may not make contributions by lump sum
payment for any Offering Period other than the first Offering Period.
	 
	 	(b)	 	Following the first Offering Period, an Eligible Employee may become a
participant in the Plan by completing a subscription agreement authorizing payroll
deductions in a form acceptable to the Administrator and filing it with the Company’s
payroll office fifteen (15) days (or such shorter or longer period as may be determined
by the Administrator, in its sole discretion) prior to the applicable Enrollment Date.
	 
	 	(c)	 	Each person who, during the course of an Offering Period, first becomes an
Eligible Employee subsequent to the Enrollment Date may become a participant in the
Plan by completing a subscription agreement authorizing payroll deductions in a form
acceptable to the Administrator and filing it with the Company’s payroll office fifteen
(15) days (or such shorter or longer period as may be determined by the Administrator,
in its sole discretion) prior to the first day of any Purchase Period during the
Offering Period in which such person becomes an Eligible Employee. The rights granted
to such participant shall have the same characteristics as any rights originally
granted during that Offering Period except that the first day of the Purchase Period in
which such person initially participates in the Plan shall be the “Enrollment Date” for
all purposes for such person, including determination of the Purchase Price.
	 
	 	(d)	 	Except as provided in subsection (a) hereof, payroll deductions for a
participant shall commence on the first payroll following the Enrollment Date and shall
end on the last payroll in the Offering Period to which such authorization is




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	 	 	 	applicable, unless sooner terminated by the participant as provided in Section 10
hereof.






	 	(e)	 	During a paid leave of absence approved by the Company or a Subsidiary and
meeting the requirements of Treasury Regulation Section 1.421-1(h)(2), a participant
may continue participating in the Plan by making cash payments to the Company on each
pay day equal to the amount of the participant’s payroll deductions under the Plan for
the pay day immediately preceding the first day of such participant’s leave of absence.
During an unpaid leave of absence approved by the Company or a Subsidiary and meeting
the requirements of Treasury Regulation Section 1.421-1(h)(2), a participant may
continue participating in the Plan but may not make any additional cash payments during
such unpaid leave. If a leave of absence is unapproved or fails to meet the
requirements of Treasury Regulation Section 1.421-1(h)(2), the participant will cease
automatically to participate in the Plan. In such event, the Company will automatically
cease to deduct the participant’s payroll under the Plan. The Company will pay to the
participant his or her total payroll deductions for the Purchase Period, in cash in one
lump sum (without interest), as soon as practicable after the participant ceases to
participate in the Plan.
	 
	 	(f)	 	A participant’s completion of a subscription agreement will enroll such
participant in the Plan for each successive Purchase Period and each subsequent
Offering Period on the terms contained therein until the participant either submits a
new subscription agreement, withdraws from participation under the Plan as provided in
Section 10 hereof or otherwise becomes ineligible to participate in the Plan.
	 
	 	(g)	 	The subscription agreement(s) used in connection with the Plan shall be in a
form prescribed by the Administrator, and the Administrator may, in its sole
discretion, determine whether such agreement shall be submitted in written or
electronic form.
	 
	 	6.	 	Payroll Deductions.
	 
	 	(a)	 	At the time a participant files his or her subscription agreement, he or she
shall elect to have payroll deductions made on each pay day during the Offering Period
in an amount from one percent (1%) to ten percent (10%) of the Compensation which he or
she receives on each pay day during the Offering Period.
	 
	 	(b)	 	All payroll deductions made for a participant shall be credited to his or her
account under the Plan and shall be withheld in whole percentages only. Except as
described in Section 5(a) hereof, a participant may not make any additional payments
into such account.
	 
	 	(c)	 	A participant may discontinue his or her participation in the Plan as provided
in Section 10 hereof, or may decrease (but not increase) the rate of his or her payroll
deductions during the Offering Period by completing or filing with the Company




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	 	 	 	a new subscription agreement authorizing a change in payroll deduction rate. The
Administrator may, in its discretion, limit the number of participation rate changes
during any Offering Period. The change in rate shall be effective with the first
full payroll period following five (5) business days after the Company’s receipt of
the new subscription agreement (or such shorter or longer period as may be
determined by the Administrator, in its sole discretion).






	 	(d)	 	Notwithstanding the foregoing, to the extent necessary to comply with Section
423(b)(8) of the Code and Section 3(c) hereof, a participant’s payroll deductions may
be decreased to zero percent (0%) at any time during a Purchase Period.
	 
	 	(e)	 	At the time the option is exercised, in whole or in part, or at the time some
or all of the Company’s Common Stock issued under the Plan is disposed of, the
participant must make adequate provision for the Company’s federal, state, or other tax
withholding obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but shall not be
obligated to, withhold from the participant’s compensation the amount necessary for the
Company to meet applicable withholding obligations, including any withholding required
to make available to the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by the Employee.





     7.      Grant of Option. On the Enrollment Date of each Offering Period, each Eligible Employee
participating in such Offering Period shall be granted an option to purchase on each Exercise Date
during such Offering Period (at the applicable Purchase Price) up to a number of shares of the
Company’s Common Stock determined by dividing such participant’s payroll deductions accumulated
prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by
the applicable Purchase Price; provided, however, that subject to the provisions of Sections 3(c)
and 13, the number of shares of Common Stock that a participant may purchase shall be the lesser
of: (i) the quotient of (A) the total contributions made by such participant in accordance with
Section 6 for the Offering Period divided by (B) the Purchase Price for each share of Common Stock
purchased pursuant to such Option, or (ii) the maximum number of shares that is established, and,
in the context of an aggregate maximum for all participants, allocated, by the Administrator with
respect to the Offering Period prior to the Enrollment Date which may be established as a fixed
number or vary based on a predetermined formula. The Administrator may determine whether and, if
so, how fractional shares will be included in the determination of the shares subject to each grant
of Options. The Administrator may, for future Offering Periods, increase or decrease, in its
absolute discretion, the maximum number of shares of the Common Stock a participant may purchase
during each Purchase Period and Offering Period. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof or otherwise
becomes ineligible to participate in the Plan. The option shall expire on the last day of the
Offering Period.



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     8.      Exercise of Option.




	 	(a)	 	Unless a participant withdraws from the Plan as provided in Section 10 hereof
or otherwise becomes ineligible to participate in the Plan, his or her option for the
purchase of shares shall be exercised automatically on the Exercise Date, and the
maximum number of full shares subject to the option shall be purchased for such
participant at the applicable Purchase Price with the accumulated payroll deductions in
his or her account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant’s account which are not sufficient to purchase a full
share shall be retained in the participant’s account for the subsequent Purchase Period
or Offering Period. During a participant’s lifetime, a participant’s option to purchase shares
hereunder is exercisable only by him or her.
	 
	 	(b)	 	If the Administrator determines that, on a given Exercise Date, the number of shares
with respect to which options are to be exercised may exceed (i) the number of shares
of Common Stock that were available for sale under the Plan on the Enrollment
Date of the applicable Offering Period, or (ii) the number of shares available for sale
under the Plan on such Exercise Date, the Administrator may in its sole discretion (x)
provide that the Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Enrollment Date or Exercise Date, as applicable, in as
uniform a manner as shall be practicable and as it shall determine in its sole
discretion to be equitable among all participants exercising options to purchase Common
Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y)
provide that the Company shall make a pro rata allocation of the shares available for
purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a
manner as shall be practicable and as it shall determine in its sole discretion to be
equitable among all participants exercising options to purchase Common Stock on such
Exercise Date, and terminate any or all Offering Periods then in effect pursuant to
Section 20 hereof. The Company may make pro rata allocation of the shares available on
the Enrollment Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional shares for issuance under the
Plan by the Company’s shareholders subsequent to such Enrollment Date. The balance of
the amount credited to the account of each participant which has not been applied to
the purchase of shares of stock shall be paid to such participant in one lump sum in
cash as soon as reasonably practicable after the Exercise Date, without any interest
thereon.





     9.      Deposit of Shares. As promptly as practicable after each Exercise Date on which a purchase
of shares occurs, the Company may arrange for the deposit, into each participant’s account with any
broker designated by the Company to administer this Plan, of the number of shares purchased upon
exercise of his or her option.



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	 	10.	 	Withdrawal.
	 
	 	(a)	 	A participant may withdraw all but not less than all of the payroll deductions
credited to his or her account and not yet used to exercise his or her option under the
Plan at any time by giving written notice to the Company in a form acceptable to the
Administrator. All of the participant’s payroll deductions credited to his or her
account during the Offering Period shall be paid to such participant as soon as
reasonably practicable after receipt of notice of withdrawal and such participant’s
option for the Offering Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made for such Offering Period.
If a participant withdraws from an Offering Period, payroll deductions shall not resume
at the beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
	 
	 	(b)	 	A participant’s withdrawal from an Offering Period shall not have any effect
upon his or her eligibility to participate in any similar plan which may hereafter be
adopted by the Company or in succeeding Offering Periods which commence after the
termination of the Offering Period from which the participant withdraws.





     11.      Termination of Employment. Upon a participant’s ceasing to be an Eligible Employee, for
any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to such participant’s account during the Offering Period shall be paid to such
participant or, in the case of his or her death, to the person or persons entitled thereto under
Section 15 hereof, as soon as reasonably practicable and such participant’s option for the Offering
Period shall be automatically terminated.



     12.      Interest. No interest shall accrue on the payroll deductions or lump sum contributions of
a participant in the Plan.




	 	13.	 	Shares Subject to Plan.
	 
	 	(a)	 	Subject to adjustment upon changes in capitalization of the Company as provided
in Section 19 hereof, the maximum number of shares of the Common Stock which shall be
made available for sale under the Plan shall be 400,000 shares.
	 
	 	(b)	 	With respect to shares of stock subject to an option granted under the Plan, a
participant shall not be deemed to be a shareholder of the Company, and the participant
shall not have any of the rights or privileges of a shareholder, until such shares have
been issued to the participant or his or her nominee following exercise of the
participant’s option. No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash securities, or other property) or distribution or other
rights for which the record date occurs prior to the date of such issuance, except as
otherwise expressly provided herein.
	 
	 	14.	 	Administration.





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	 	(a)	 	The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee as set forth below. The Board may delegate
administration of the Plan to a Committee comprised of two or more members of the
Board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 which
has been adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, and which is otherwise constituted to comply with
applicable law, and the term “Committee” shall apply to any persons to whom such
authority has been delegated, 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 14(a) or otherwise provided in the charter of the Committee. If
administration is delegated to a Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise, subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by
the Board. The governance of the Committee shall be subject to the charter of the
Committee as approved by the Board. References in this Plan to the “Administrator”
shall mean the Board unless administration is delegated to a Committee or subcommittee,
in which case references in this Plan to the Administrator shall thereafter be to the
Committee or subcommittee.
	 
	 	(b)	 	It shall be the duty of the Administrator to conduct the general administration
of the Plan in accordance with the provisions of the Plan. The Administrator shall have
the power to interpret the Plan and the terms of the options 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. The Administrator at its
option may utilize the services of an agent to assist in the administration of the Plan
including establishing and maintaining an individual securities account under the Plan
for each participant. In its absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Administrator under the
Plan.
	 
	 	(c)	 	All expenses and liabilities incurred by the Administrator in connection with
the administration of the Plan shall be borne by the Company. The Administrator may,
with the approval of the Board, employ attorneys, consultants, accountants, appraisers,
brokers or other persons. The Administrator, the Company and its officers and directors
shall be entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the Administrator
in good faith shall be final and binding upon all participants, the Company and all
other interested persons. No member of the Board shall be personally liable for any
action, determination or interpretation made in good faith with respect to the Plan or
the options, and all members of the Board shall be fully protected by the Company in
respect to any such action, determination, or interpretation.





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	 	15.	 	Designation of Beneficiary.
	 
	 	(a)	 	A participant may file a written designation of a beneficiary who is to receive
any shares and cash, if any, from the participant’s account under the Plan in the event
of such participant’s death subsequent to an Exercise Date on which the option is
exercised but prior to delivery to such participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is to
receive any cash from the participant’s account under the Plan in the event of such
participant’s death prior to exercise of the option. If a participant is married and
the designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
	 
	 	(b)	 	Such designation of a beneficiary may be changed by the participant at any time
by written notice to the Company. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the time of
such participant’s death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or relative is
known to the Company, then to such other person as the Company may designate.





     16.      Transferability. Neither payroll deductions credited to a participant’s account nor any
rights with regard to the exercise of an option or to receive shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds from an Offering Period in accordance
with Section 10 hereof.



     17.      Use of Funds. All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions.



     18.      Reports. Individual accounts shall be maintained for each participant in the Plan.
Statements of account shall be given to participating Employees at least annually, which statements
shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.



     19.      Adjustments. Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset
Sale.




	 	(a)	 	Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock which have been





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	 	 	 	authorized for issuance under the Plan but not yet placed under option, the maximum
number of shares each participant may purchase each Purchase Period (pursuant to
Section 7 hereof), as well as the price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised shall
be proportionately adjusted for any increase or decrease in the number of issued shares
of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase
or decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been “effected without receipt
of consideration.” Such adjustment shall be made by the Administrator, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, 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 or
price of shares of Common Stock subject to an option.
	 
	 	(b)	 	Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period then in progress shall be shortened by
setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately
prior to the consummation of such proposed dissolution or liquidation, unless provided
otherwise by the Administrator. The New Exercise Date shall be before the effective
date of the Company’s proposed dissolution or liquidation. The Administrator shall
notify each participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant’s option has been changed to
the New Exercise Date and that the participant’s option shall be exercised
automatically on the New Exercise Date, unless prior to such date the participant has
withdrawn from the Offering Period as provided in Section 10 hereof.
	 
	 	(c)	 	Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company with or
into another corporation, each outstanding option shall be assumed or an equivalent
option substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to assume or
substitute for the option, any Purchase Periods then in progress shall be shortened by
setting a New Exercise Date and any Offering Periods then in progress shall end on the
New Exercise Date. The New Exercise Date shall be before the effective date of the
Company’s proposed sale or merger. The Administrator shall notify each participant in
writing, at least ten (10) business days prior to the New Exercise Date, that the
Exercise Date for the participant’s option has been changed to the New Exercise Date
and that the participant’s option shall be exercised automatically on the New Exercise
Date, unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.





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	 	20.	 	Amendment or Termination.
	 
	 	(a)	 	The Board may at any time and for any reason terminate or amend the Plan.
Except as provided in Section 19 hereof, no such termination shall affect options
previously granted, provided that an Offering Period may be terminated by the Board if
the Board determines that the termination of the Offering Period or the Plan is in the
best interests of the Company and its shareholders. Except as provided in Section 19
hereof and this Section 20, no amendment may make any change in any option theretofore
granted which adversely affects the rights of any participant without the consent of
such participant. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other applicable law, regulation or stock
exchange rule), the Company shall obtain shareholder approval of any amendment in such
a manner and to such a degree as required.
	 
	 	(b)	 	Without shareholder consent and without regard to whether any participant
rights may be considered to have been “adversely affected,” the Administrator shall be
entitled to change the Offering Periods, limit the frequency and/or number of changes
in the amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a participant in order to adjust for
delays or mistakes in the Company’s processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the participant’s
Compensation, and establish such other limitations or procedures as the Administrator
determines in its sole discretion advisable which are consistent with the Plan.
	 
	 	(c)	 	In the event the Board determines that the ongoing operation of the Plan may
result in unfavorable financial accounting consequences, the Board may, in its
discretion and, to the extent necessary or desirable, modify or amend the Plan to
reduce or eliminate such accounting consequence including, but not limited to:






	 	(i)	 	altering the Purchase Price for any Offering Period including
an Offering Period underway at the time of the change in Purchase Price;
	 
	 	(ii)	 	shortening any Offering Period so that the Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of
the Administrator action; and
	 
	 	(iii)	 	allocating shares.





     Such modifications or amendments shall not require shareholder approval or the consent of any
Plan participants.



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     21.      Notices. All notices or other communications by a participant to the Company under or in
connection with the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.



     22.      Conditions to Issuance of Shares. The Company shall not be required to issue or deliver
any certificate or certificates for shares of Common Stock purchased upon the exercise of options
prior to fulfillment of all the following conditions:




	 	(a)	 	The admission of such shares to listing on all stock exchanges, if any, on
which the Common Stock is then listed; and
	 
	 	(b)	 	The completion of any registration or other qualification of such shares under
any state or federal law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body, which the Administrator
shall, in its absolute discretion, deem necessary or advisable; and
	 
	 	(c)	 	The obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator shall, in its absolute discretion,
determine to be necessary or advisable; and
	 
	 	(d)	 	The payment to the Company of all amounts which it is required to withhold
under federal, state or local law upon exercise of the option; and
	 
	 	(e)	 	The lapse of such reasonable period of time following the exercise of the
option as the Administrator may from time to time establish for reasons of
administrative convenience.





     23.      Term of Plan. Subject to approval by the Company’s shareholders, the Plan shall become
effective as of the Effective Date. The Plan shall be deemed to be approved by the Company’s
shareholders if it receives the requisite vote in accordance with applicable law and the applicable
provisions of the Company’s bylaws. Subject to approval by the shareholders of the Company in
accordance with this Section 23, the Plan shall be in effect until the tenth (10th) anniversary of
the date of the initial adoption of the Plan by the Board, unless sooner terminated under Section
20 hereof.



     24.      Equal Rights and Privileges. All Eligible Employees of the Company (or of any Designated
Subsidiary) will have equal rights and privileges under this Plan so that this Plan qualifies as an
“employee stock purchase plan” within the meaning of Section 423 of the Code or applicable Treasury
regulations thereunder. Any provision of this Plan that is inconsistent with Section 423 or
applicable Treasury regulations will, without further act or amendment by the Company, the Board or
the Administrator, be reformed to comply with the equal rights and privileges requirement of
Section 423 or applicable Treasury regulations.



     25.      Section 409A. The options to purchase shares of Common Stock under the Plan are not
intended to constitute “nonqualified deferred compensation” within the meaning of



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Section 409A of the Code. However, if at any time the Administrator determines that the
options may be subject to Section 409A of the Code, the Administrator shall have the right, in its
sole discretion, to amend the Plan and any outstanding options as it may determine is necessary or
desirable either to exempt the options from the application of Section 409A of the Code or to cause
the options to comply with the requirements of Section 409A of the Code.




     26.      No Employment Rights. Nothing in the Plan shall be construed to give any person
(including any Eligible Employee or participant) the right to remain in the employ of the Company,
a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to
terminate the employment of any person (including any Eligible Employee or participant) at any
time, with or without cause.



     27.      Notice of Disposition of Shares. Each participant shall give prompt notice to the Company
of any disposition or other transfer of any shares of stock purchased upon exercise of an option if
such disposition or transfer is made: (a) within two (2) years from the Enrollment Date of the
Offering Period in which the shares were purchased or (b) within one (1) year after the Exercise
Date on which such shares were purchased. 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 the participant in such disposition or other transfer.



     28.      Governing Law. The validity and enforceability of this Plan shall be governed by and
construed in accordance with the laws of the State of Wisconsin without regard to otherwise
governing principles of conflicts of law.



     I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of
TomoTherapy Incorporated on April 5, 2007.



     I hereby certify that the foregoing Plan was approved by the shareholders of TomoTherapy
Incorporated on                     , 2007.



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     Executed on this ___ day of April, 2007.



  
            
           
             
            
            
           
       

Corporate Secretary





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