Document:

Exhibit
10.3

 

October 22, 2008

 

Eric P. Lindquist

120 Dunsmuir Way

Menlo Park, CA 94025

 

Re:                             AMENDED
AND RESTATED EMPLOYMENT TERMS

 

Dear Eric:

 

Accuray Incorporated (the “Company”) is pleased to offer to continue your employment as
Senior Vice President, Chief Marketing Officer of the Company on the terms and
conditions set forth in this letter, effective as of February 2, 2009 (the “Effective
Date”).  This letter amends
and restates in its entirety that certain employment letter, dated as of November 10,
2006, between you and the Company (the “Employment Letter”).
You and the Company mutually agree to amend certain provisions of the
Employment Letter as a result of Section 409A of the Internal Revenue Code
of 1986, as amended.

 

1.   TERM.  The
employment relationship between you and the Company will be at-will.  You and the Company will have the right to
terminate the employment relationship at any time and for any reason
whatsoever, with or without cause, and without any liability or obligation
except as may be expressly provided herein.

 

2.   POSITION, DUTIES AND
RESPONSIBILITIES.  During the period
of the employment relationship between you and the Company (the “Term”), the Company will employ you, and you agree to be
employed by the Company, as Senior Vice President, Chief Marketing Officer of
the Company.  In the capacity of Senior
Vice President, Chief Marketing Officer, you will have such duties and
responsibilities as are normally associated with such position and will devote
your full business time and attention serving the Company in such
position.  Your duties may be changed
from time to time by the Company, consistent with your position.  You will report to the Chief Executive
Officer of the Company (the “CEO”), and will
work full-time at our principal offices located at 1310 Chesapeake Terrace,
Sunnyvale, California 94089 (or such other location in the greater Sunnyvale area
as the Company may utilize as its principal offices), except for travel to
other locations as may be necessary to fulfill your responsibilities.

 

3.   BASE COMPENSATION. 
During the Term, the Company will pay you a base salary of $316,250 per
year, less payroll deductions and all required withholdings, payable in
accordance with the Company’s normal payroll practices and prorated for any
partial month of employment.  Your base
salary may be subject to increase pursuant to the Company’s policies as in
effect from time to time.

 

 

4.   ANNUAL BONUS.  In
addition to the base salary set forth above, during the Term, you will be eligible
to participate in the Company’s executive bonus plan applicable to similarly
situated executives of the Company.  The
amount of your annual bonus will be based on the attainment of performance
criteria established and evaluated by the Company in accordance with the terms
of such bonus plan as in effect from time to time, provided that, subject to
the terms of such bonus plan, your target (but not necessarily maximum) annual
bonus shall be 65% of your base salary actually paid for such year. In
accordance with the terms of such bonus plan, payment of each bonus shall be
made in a single lump-sum cash payment not later than the last day of the
applicable two and one-half (2 1⁄2) month short-term deferral period with respect
to such bonus payment, within the meaning of Treasury Regulation Section 1.409A-1(b)(4).

 

5.   BENEFITS AND VACATION. 
During the Term, you will be eligible to participate in all incentive,
savings and retirement plans, practices, policies and programs maintained or
sponsored by the Company from time to time which are applicable to other
similarly situated executives of the Company, subject to the terms and
conditions thereof.  During the Term, you
will also be eligible for standard benefits, such as medical, vision and dental
insurance, sick leave, vacations and holidays to the extent applicable
generally to other similarly situated executives of the Company, subject to the
terms and conditions of the applicable Company plans or policies.  The benefits described in this Section 5
will be subject to change from time to time as deemed appropriate and necessary
by the Company.

 

6.   TERMINATION OF EMPLOYMENT.

 

(a)                                  In
the event that you incur a “separation from service” (within the meaning of Section 409A(a)(2)(A)(i) of
the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury
Regulation Section 1.409A-1(h)) (“Separation from Service”) by reason of (i) a
termination of your employment by the Company other than for Cause (as defined
below), death or disability, or (ii) a termination of your employment by
you for Good Reason (as defined below), and provided that you execute a general
release of claims in a form prescribed by the Company (the “Release”) within
twenty-one (21) days (or, if required by applicable law, forty-five (45) days)
after the date of such Separation from Service (the “Separation Date”) and you
do not revoke such Release, and further subject to Section 16(b) below,
then, in addition to any other accrued amounts payable to you through the
Separation Date (including any earned but unpaid bonus), (1) the Company
will, no later than thirty (30) days after the Separation Date, pay you a
lump-sum severance payment (the “Severance Payment”) in an amount equal to the
sum of (x) eight (8) months of your annual base salary as in effect
immediately prior to the Separation Date plus (y) a pro rata portion of
your target annual bonus for the fiscal year of the Company in which such
Separation from Service occurs, calculated based on the number of days elapsed
in such fiscal year through the Separation Date plus (z) 66-2/3 of your target annual bonus for the fiscal
year of the Company in which such Separation from Service occurs, and (2) provided
that you properly elect COBRA continuation coverage, the Company will pay the
COBRA premium for health care coverage for you and your spouse and children, as
applicable and to the extent eligible (the “Severance Benefits”), for the eight
(8) month period immediately following the 

 

2

 

Separation Date, but in
no event longer than the period of time during which you would be entitled to
continuation coverage under Section 4980B of the Code absent this
provision.

 

(b)                                 If
a Change in Control (as defined in Exhibit A hereto) occurs during
the Term and, within the twelve (12) month period immediately following the
effective date of the Change in Control, you incur a Separation from Service by
reason of (i) a termination of your employment by the Company other than
for Cause, death or disability, or (ii) a termination of your employment
by you for Good Reason, then, subject to Section 16(b) below, in
addition to the amounts payable to you pursuant to paragraph (a) of this Section 6,
each of your then outstanding options to purchase shares of the Company’s
common stock shall become fully vested and exercisable immediately prior to the
Separation Date.

 

(c)                                  Notwithstanding
the foregoing, your right to receive the payments and benefits set forth in
this Section 6 is conditioned on and subject to your execution and
non-revocation of the Release.  In no
event shall you or your estate or beneficiaries be entitled to any of the
payments or benefits set forth in this Section 6 upon any termination of
your employment by reason of your total and permanent disability or your death.

 

(d)                                 For
purposes of this letter:

 

(A)  “Cause”
shall mean (i) your commission of a felony, (ii) your commission of a
crime involving moral turpitude or your commission of any other act or omission
involving dishonesty, disloyalty, breach of fiduciary duty or fraud with
respect to the Company or any of its subsidiaries or any of their customers or
suppliers, or (iii) your failure to perform the normal and customary
duties of your position with the Company as reasonably directed by the CEO, provided,
that any of the acts or omissions described in the foregoing clauses (i), (ii) or
(iii) are not cured to the Company’s reasonable satisfaction within thirty
(30) days after written notice thereof is given to you; and

 

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

 

3

 

7.   CODE SECTION 280G.

 

(a)                                  In
the event it shall be determined that any payment or distribution to you or for
your benefit which is in the nature of compensation and is contingent on a
change in the ownership or effective control of the Company or the ownership of
a substantial portion of the assets of the Company (within the meaning of Section 280G(b)(2) of
the Code), whether paid or payable pursuant to this letter or otherwise (a “Payment”), would constitute a “parachute
payment” under Section 280G(b)(2) of the Code and would be subject to
the excise tax imposed by Section 4999 of the Code (together with any
interest or penalties imposed with respect to such excise tax, the “Excise Tax”), then the Payments shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax imposed by Section 4999 of the Code but only if, by reason
of such reduction, the net after-tax benefit received by you shall exceed the
net after-tax benefit received by you if no such reduction was made. The
specific Payments that shall be reduced and the order of such reduction shall
be determined so as to achieve the most favorable economic benefit to you, and
to the extent economically equivalent, the Payments shall be reduced pro rata,
all as determined by the Company in its sole discretion. For purposes of this Section 7(a),
“net after-tax benefit” shall mean (i) the Payments which you receive or
are then entitled to receive from the Company that would constitute “parachute
payments” within the meaning of Section 280G of the Code, less (ii) the
amount of all federal, state and local income taxes payable with respect to the
Payments calculated at the maximum marginal income tax rate for each year in
which the Payments shall be paid to you (based on the rate in effect for such
year as set forth in the Code as in effect at the time of the first payment of
the foregoing), less (iii) the amount of Excise Taxes imposed with respect
to the Payments.

 

(b)                                 All
determinations required to be made under this Section 7 shall be made by
such nationally recognized accounting firm as may be selected by the Audit
Committee of the Board of Directors of the Company as constituted immediately
prior to the change in control transaction (the “Accounting Firm”), provided,
that the Accounting Firm’s determination shall be made based upon “substantial
authority” within the meaning of Section 6662 of the Code.  The Accounting Firm shall provide its
determination, together with detailed supporting calculations and
documentation, to you and the Company within 15 business days following the
date of termination of your employment, if applicable, or such other time as
requested by you (provided that you reasonably believe that any of the Payments
may be subject to the Excise Tax) or the Company.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.

 

8.   RESTRICTIVE COVENANTS.

 

(a)                                  As
a condition of your employment with the Company, you agree that during the Term
and thereafter, you will not directly or indirectly disclose or appropriate to
your own use, or the use of any third party, any trade secret or confidential
information concerning the Company or its subsidiaries or affiliates
(collectively, the “Company Group”)
or their businesses, whether or not developed by you, except as it is required
in connection with your services rendered for the Company.  You further agree that, upon termination of
your employment, you will not receive or remove from the files or offices of
the Company Group any originals or copies of documents or other materials
maintained in the ordinary course of business

 

4

 

of the Company Group, and
that you will return any such documents or materials otherwise in your
possession.  You further agree that, upon
termination of your employment, you will maintain in strict confidence the
projects in which any member of the Company Group is involved or contemplating.

 

(b)                                 You
further agree that during the Term and
continuing through the first anniversary of the date of termination of your
employment, you will not directly or indirectly solicit, induce, or encourage
any employee, consultant, agent, customer, vendor, or other parties doing
business with any member of the Company Group to terminate their employment,
agency, or other relationship with the Company Group or such member or to
render services for or transfer their business from the Company Group or such
member and you will not initiate discussion with any such person for any such
purpose or authorize or knowingly cooperate with the taking of any such actions
by any other individual or entity.

 

(c)                                  While employed by the Company, you agree that
you will not engage in any business activity in competition with any member of the
Company Group nor make preparations to do so.

 

(d)                                 Upon the termination of your relationship
with the Company, you agree that you will promptly return to the Company, and
will not take with you or use, all items of any nature that belong to the
Company, and all materials (in any form, format, or medium) containing or
relating to the Company’s business.

 

(e)                                  In
recognition of the facts that irreparable injury will result to the Company in
the event of a breach by you of your obligations under Sections 8(a), (b), (c) or
(d) above, that monetary damages for such breach would not be readily
calculable, and that the Company would not have an adequate remedy at law
therefor, you acknowledge, consent and agree that in the event of such breach,
or the threat thereof, the Company shall be entitled, in addition to any other
legal remedies and damages available, to specific performance thereof and to
temporary and permanent injunctive relief (without the necessity of posting a
bond) to restrain the violation or threatened violation of such obligations by
you.

 

9.    COMPANY RULES AND
REGULATIONS.  As an employee
of the Company, you agree to abide by Company policies, procedures, rules and
regulations as set forth in the Company’s Employee Handbook or as otherwise
promulgated.  In addition, as a condition of your
employment, you acknowledge that you and the Company have entered into that
certain Employee Confidentiality and Inventions Agreement dated as of October 12,
2004, and you hereby agree to abide by
the terms of that certain Employee Confidentiality and Inventions
Agreement dated as of October 12, 2004, by and between you and the Company.

 

10.   WITHHOLDING.  The Company may withhold from any amounts
payable under this letter such federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

 

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

 

5

 

any arrangements relating
to this letter or contemplated in this letter or the breach, termination or
invalidity thereof shall be settled by final and binding arbitration
administered by JAMS/Endispute in Santa Clara County, California in accordance
with the then existing JAMS/Endispute Arbitration Rules and Procedures for
Employment Disputes.  Except as provided
herein, the Federal Arbitration Act shall govern the interpretation,
enforcement and all proceedings.  The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the state of California, or federal law, or both, as applicable,
and the arbitrator is without jurisdiction to apply any different substantive
law.  The arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure. 
Judgment upon the award may be entered in any court having jurisdiction
thereof.  Each party shall pay his or its
own attorneys’ fees and expenses associated with such arbitration to the extent
permitted by applicable law.

 

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

 

13.   ENTIRE AGREEMENT.  As
of the Effective Date, this letter constitutes the final, complete and
exclusive agreement between you and the Company with respect to the subject
matter hereof and replaces and supersedes any and all other agreements, offers
or promises, whether oral or written, made to you by any member of the Company
Group (including, without limitation, the Original Employment Letter).

 

14.  SEVERABILITY.  Whenever possible, each provision of this letter
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this letter is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision of this letter, but such invalid, illegal or
unenforceable provision will be reformed, construed and enforced so as to
render it valid, legal, and enforceable consistent with the intent of the
parties insofar as possible.

 

15.  ACKNOWLEDGEMENT.  You hereby acknowledge (a) that you have
consulted with or have had the opportunity to consult with independent counsel
of your own choice concerning this letter, and have been advised to do so by
the Company, and (b) that you have read and understand this letter, are
fully aware of its legal effect, and have entered into it freely based on your
own judgment.

 

6

 

16.  SECTION 409A OF THE CODE.

 

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

 

(b)                                 Notwithstanding anything to the contrary in
this letter, no compensation or benefits, including without limitation any
severance payments or benefits payable under Section 6 above, shall be
paid to you during the six (6)-month period following your Separation from
Service to the extent that paying such amounts at the time or times indicated
in this letter would result in a prohibited distribution under Section 409A(a)(2)(b)(i) of
the Code.  If the payment of any such
amounts is delayed as a result of the previous sentence, then on the first
business day following the end of such six (6)-month period  (or such earlier date upon which such amount
can be paid under Section 409A of the Code without resulting in a prohibited
distribution, including as a result of your death), the Company shall pay you a
lump-sum amount equal to the cumulative amount that would have otherwise been
payable to you during such six-month period.

 

(c)                                  To the extent that any reimbursements or
corresponding in-kind benefits provided to you under this letter are deemed to
constitute compensation to you, such amounts will be paid or reimbursed
reasonably promptly, but not later than December 31 of the year following
the year in which the expense was incurred. 
The amount of any such payments or expense reimbursements in one year
will not affect the expenses or in-kind benefits eligible for payment or
reimbursement in any other taxable year, and your right to such payments or
reimbursement of any such expenses will not be subject to liquidation or
exchange for any other benefit.

 

[SIGNATURE PAGE FOLLOWS]

 

7

 

Please confirm your agreement to the foregoing by
signing and dating the enclosed duplicate original of this letter in the space
provided below for your signature and returning it to Euan Thomson, Ph.D.,
Chief Executive Officer of the Company. 
Please retain one fully-executed original for your files.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  ACCURAY INCORPORATED,

  
	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/
  Euan Thomson

  	
   

  
	
   

  	
  Name: Euan Thomson,
  Ph.D.

  
	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
  Accepted and Agreed,

  	
   

  
	
  This 22
  October 2008.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
      /s/
  Eric Lindquist

  	
   

  	
   

  
	
   

  	
  Eric Lindquist

  	
   

  
							

 

8

 

EXHIBIT A

 

For purposes of this letter, “Change in
Control” means and includes each of the following:

 

(a)                            A
transaction or series of transactions (other than an offering of the Company’s
common stock to the general public through a registration statement filed with
the Securities and Exchange Commission) whereby any “person” or related “group”
of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company possessing more than 50% of the total
combined voting power of the Company’s securities outstanding immediately after
such acquisition; or

 

(b)                           During
any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board of Directors of the Company together with any new
director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in
clause (a) or clause (c) hereof) whose election by the Board of
Directors of the Company or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or

 

(c)                            The
consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of (x) a
merger, consolidation, reorganization, or business combination or (y) a
sale or other disposition of all or substantially all of the Company’s assets
in any single transaction or series of related transactions or (z) the
acquisition of assets or stock of another entity, in each case other than a
transaction:

 

(i)                                     Which
results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by
being converted into voting securities of the Company or the person that, as a
result of the transaction, controls, directly or indirectly, the Company or
owns, directly or indirectly, all or substantially all of the Company’s assets
or otherwise succeeds to the business of the Company (the Company or such
person, the “Successor Entity”)) directly or
indirectly, at least a majority of the combined voting power of the Successor
Entity’s outstanding voting securities immediately after the transaction, and

 

(ii)                                  After
which no person or group beneficially owns voting securities representing 50%
or more of the combined voting power of the Successor Entity; provided, however, that no person or group
shall be treated for purposes of this clause (c)(ii) as beneficially
owning 50% or more of combined voting power of the Successor Entity solely as a
result of the voting power held in the Company prior to the consummation of the
transaction; or

 

(d)                                 The
Company’s stockholders approve a liquidation or dissolution of the Company.

 

9Exhibit
10.4

 

October 22, 2008

 

Wade Hampton

1501 Caldwells Creek
Drive

Colleyville, TX 76034

 

Re:          AMENDED AND RESTATED EMPLOYMENT TERMS

 

Dear Wade:

 

Accuray
Incorporated (the “Company”) is
pleased to offer to continue your employment as Senior Vice President, Worldwide
Sales of the Company on the terms and conditions set forth in this letter,
effective as of February 2, 2009 (the
“Effective Date”).  This letter amends and restates in its
entirety that certain employment letter, dated as of November 10, 2006,
between you and the Company (the “Employment Letter”).
You and the Company mutually agree to amend certain provisions of the
Employment Letter as a result of Section 409A of the Internal Revenue Code
of 1986, as amended.

 

1.   TERM.  The
employment relationship between you and the Company will be at-will.  You and the Company will have the right to
terminate the employment relationship at any time and for any reason
whatsoever, with or without cause, and without any liability or obligation
except as may be expressly provided herein.

 

2.   POSITION, DUTIES AND
RESPONSIBILITIES.  During the period
of the employment relationship between you and the Company (the “Term”), the Company will employ you, and you agree to be
employed by the Company, as Senior Vice President, Worldwide Sales of the
Company.  In the capacity of Senior Vice
President, Worldwide Sales, you will have such duties and responsibilities as
are normally associated with such position and will devote your full business
time and attention serving the Company in such position.  Your duties may be changed from time to time
by the Company, consistent with your position. 
You will report to the Chief Executive Officer of the Company (the “CEO”), and will work primarily from your home in Texas,
however will also work as reasonably required from our principal offices
located at 1310 Chesapeake Terrace, Sunnyvale, California 94089 (or such other
location in the greater Sunnyvale area as the Company may utilize as its
principal offices), except for travel to other locations as may be necessary to
fulfill your responsibilities.

 

3.   BASE COMPENSATION.  During the Term, the Company will pay you a
base salary of $276,000 per year, less payroll deductions and all required
withholdings, payable in accordance with the Company’s normal payroll practices
and prorated for any partial month of employment.  Your base salary may be subject to increase
pursuant to the Company’s policies as in effect from time to time.

 

 

4.   ANNUAL BONUS.  In addition to the base salary set forth
above, during the Term, you will be eligible to participate in the Company’s executive
bonus plan applicable to similarly situated executives of the Company.  The amount of your annual bonus will be based
on the attainment of performance criteria established and evaluated by the
Company in accordance with the terms of such bonus plan as in effect from time
to time, provided that, subject to the terms of such bonus plan, your target (but
not necessarily maximum) annual bonus shall be 83% of your base salary actually
paid for such year.  Exhibit A
attached hereto sets forth the terms of your first annual bonus. In accordance
with the terms of such bonus plan, payment of each bonus shall be made in a
single lump-sum cash payment not later than the last day of the applicable two
and one-half (2 1⁄2) month short-term deferral period with respect to such bonus
payment, within the meaning of Treasury Regulation Section 1.409A-1(b)(4).

 

5.   STOCK OPTION AWARDS.  You and the Company hereby acknowledge that
pursuant to the terms of the Original Employment Letter, as of October 24,
2006, the Company granted you a stock option to purchase 250,000 shares of the
Company’s common stock (the “Initial Stock Option”)
at an exercise price of $10.00 per share. 
The Initial Stock Option was granted to you under the Company’s 1998
Equity Incentive Plan, and, subject to your continued employment with the
Company, the Initial Stock Option shall vest and become exercisable over a four
(4) year period, with twenty-five percent (25%) of the shares subject
thereto vesting on September 5, 2007, and the remaining seventy-five
percent (75%) vesting in equal monthly installments on the fifth day of each month
thereafter.  In addition, the Company
will annually recommend to the Board of Directors of the Company (the “Board”) that the Company grant you a stock option no later
than the September 30 following each of the first three anniversaries of
your commencement of employment with the Company to purchase 100,000 shares of
the Company’s common stock (each, a “Subsequent Stock Option,”
and together with the Initial Stock Option, the “Stock
Options”).  The exercise price
per share of each Subsequent Stock Option shall be equal to the fair market
value of a share of the Company’s common stock on the date of grant, as
determined in accordance with the Company’s incentive award plan under which
such Subsequent Stock Option is granted.  Subject to your continued employment with the
Company, each Subsequent Stock Option shall vest and become exercisable over a
four (4) year period, with 1/48th of
the shares subject thereto vesting in equal monthly installments on each
monthly anniversary of the date of grant. 
Consistent with the foregoing,
the terms and conditions of each Stock Option shall be set forth in a stock
option agreement (each, a “Stock Option Agreement”)
to be entered into by the Company and you which shall evidence the grant of each
such Stock Option.

 

6.   BENEFITS AND VACATION.  During the Term, you will be eligible to
participate in all incentive, savings and retirement plans, practices, policies
and programs maintained or sponsored by the Company from time to time which are
applicable to other similarly situated executives of the Company, subject to
the terms and conditions thereof.  During
the Term, you will also be eligible for standard benefits, such as medical,
vision and dental insurance, sick leave, vacations and holidays to the extent
applicable generally to other similarly situated executives of the Company,
subject to the terms and conditions of the applicable Company plans or
policies.  The benefits described in this
Section 6 will be subject to change from time to time as deemed
appropriate and necessary by the Company.

 

2

 

7.   TERMINATION OF EMPLOYMENT.

 

(a)           In the event that you incur a “separation
from service” (within the meaning of Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation
Section 1.409A-1(h)) (“Separation from Service”) by reason of (i) a
termination of your employment by the Company other than for Cause (as defined
below), death or disability, or (ii) a termination of your employment by
you for Good Reason (as defined below), and provided that you execute a general
release of claims in a form prescribed by the Company (the “Release”) within
twenty-one (21) days (or, if required by applicable law, forty-five (45) days)
after the date of such Separation from Service (the “Separation Date”) and you
do not revoke such Release, and further subject to Section 16(b) below,
then, in addition to any other accrued amounts payable to you through the
Separation Date (including any earned but unpaid bonus), (1) the Company
will, no later than thirty (30) days after the Separation Date, pay you a
lump-sum severance payment (the “Severance Payment”) in an amount equal to the
sum of (x) six (6) months of your annual base salary as in effect
immediately prior to the Separation Date plus (y) a pro rata portion of your
target annual bonus for the fiscal year of the Company in which such Separation
from Service occurs, calculated based on the number of days elapsed in such
fiscal year through the Separation Date plus (z) 50% of your target annual
bonus for the fiscal year of the Company in which such Separation from Service
occurs, and (2) provided that you properly elect COBRA continuation
coverage, the Company will pay the COBRA premium for health care coverage for
you and your spouse and children, as applicable and to the extent eligible (the
“Severance Benefits”), for the six (6) month period immediately following
the Separation Date, but in no event longer than the period of time during
which you would be entitled to continuation coverage under Section 4980B
of the Code absent this provision..

 

(b)           If a Change in Control (as defined in
Exhibit B hereto) occurs during the Term and, within the twelve (12) month
period immediately following the effective date of the Change in Control, you
incur a Separation from Service by reason of (i) a termination of your
employment by the Company other than for Cause, death or disability, or (ii) a
termination of your employment by you for Good Reason, then, subject to Section 16(b) below,
in addition to the amounts payable to you pursuant to paragraph (a) of
this Section 7, each of your then outstanding options to purchase shares
of the Company’s common stock (including, without limitation, the Stock
Options) shall become fully vested and exercisable immediately prior to the
Separation Date.

 

(c)           Notwithstanding the foregoing, your
right to receive the payments and benefits set forth in this Section 7 is
conditioned on and subject to your execution and non-revocation of the
Release.  In no event shall you or your
estate or beneficiaries be entitled to any of the payments or benefits set
forth in this Section 7 upon any termination of your employment by reason
of your total and permanent disability or your death.

 

(d)           For purposes of this letter:

 

(A)  “Cause” shall be deemed to exist upon a good
faith finding by the Company of (i) your material failure to competently
perform your assigned duties for the Company, (ii) your sustained poor
performance of any material aspect of your duties or 

 

3

 

obligations hereunder, (iii) your
dishonesty, gross negligence or other material misconduct, or (iv) your
conviction of, or the entry of a plea of guilty or nolo
contendere by you to, any crime involving moral turpitude or any
felony; and

 

(B)  “Good Reason” shall mean the occurrence of any one or more of
the following events without your prior written consent:  (i) a material diminution by the Company
of your duties and responsibilities hereunder; (ii) a material change in
the geographic location at which you must perform services under this letter,
provided that in no event will a change to a location within a 35 mile radius
of the Company’s Sunnyvale corporate headquarters be deemed material for
purposes of this clause; or (iii) a material diminution by the Company of
your annual base salary as in effect on the date hereof or as the same may be
increased from time to time, provided that in no event will a diminution that
is less than 10% of your annual base salary be deemed material for purposes of this
clause; provided, however, that a termination of your employment by you shall
only constitute a termination for “Good Reason” hereunder if (a) you
provide the Company with written notice setting forth the specific facts or
circumstances constituting Good Reason within thirty (30) days after the
initial existence of such facts or circumstances, (b) the Company has
failed to cure such facts or circumstances within thirty (30) days after
receipt of such written notice, and (c) the Separation Date occurs no
later than seventy-five (75) days after the initial occurrence of the event
constituting Good Reason.

 

8.   CODE SECTION 280G.

 

(a)           In the event it shall be determined
that any payment or distribution to you or for your benefit which is in the
nature of compensation and is contingent on a change in the ownership or
effective control of the Company or the ownership of a substantial portion of
the assets of the Company (within the meaning of Section 280G(b)(2) of
the Code), whether paid or payable pursuant to this letter or otherwise (a “Payment”), would constitute a “parachute
payment” under Section 280G(b)(2) of the Code and would be subject to
the excise tax imposed by Section 4999 of the Code (together with any
interest or penalties imposed with respect to such excise tax, the “Excise Tax”), then the Payments shall be
reduced to the extent necessary so that no portion thereof shall be subject to
the excise tax imposed by Section 4999 of the Code but only if, by reason
of such reduction, the net after-tax benefit received by you shall exceed the
net after-tax benefit received by you if no such reduction was made. The
specific Payments that shall be reduced and the order of such reduction shall
be determined so as to achieve the most favorable economic benefit to you, and
to the extent economically equivalent, the Payments shall be reduced pro rata,
all as determined by the Company in its sole discretion. For purposes of this Section 8(a),
“net after-tax benefit” shall mean (i) the Payments which you receive or
are then entitled to receive from the Company that would constitute “parachute
payments” within the meaning of Section 280G of the Code, less (ii) the
amount of all federal, state and local income taxes payable with respect to the
Payments calculated at the maximum marginal income tax rate for each year in
which the Payments shall be paid to you (based on the rate in effect for such
year as set forth in the Code as in effect at the time of the first payment of
the foregoing), less (iii) the amount of Excise Taxes imposed with respect
to the Payments.

 

(b)           All determinations required to be
made under this Section 8 shall be made by such nationally recognized
accounting firm as may be selected by the Audit Committee of the 

 

4

 

Board as constituted
immediately prior to the change in control transaction (the “Accounting Firm”), provided, that the Accounting Firm’s determination shall be made
based upon “substantial authority” within the meaning of Section 6662 of
the Code.  The Accounting Firm shall
provide its determination, together with detailed supporting calculations and
documentation, to you and the Company within 15 business days following the
date of termination of your employment, if applicable, or such other time as
requested by you (provided that you reasonably believe that any of the Payments
may be subject to the Excise Tax) or the Company.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.

 

9.   RESTRICTIVE COVENANTS.

 

(a)           As a condition of your employment
with the Company, you agree that during the Term and thereafter, you will not
directly or indirectly disclose or appropriate to your own use, or the use of
any third party, any trade secret or confidential information concerning the Company
or its subsidiaries or affiliates (collectively, the “Company Group”) or their businesses,
whether or not developed by you, except as it is required in connection with
your services rendered for the Company. 
You further agree that, upon termination of your employment, you will
not receive or remove from the files or offices of the Company Group any
originals or copies of documents or other materials maintained in the ordinary
course of business of the Company Group, and that you will return any such
documents or materials otherwise in your possession.  You further agree that, upon termination of
your employment, you will maintain in strict confidence the projects in which
any member of the Company Group is involved or contemplating.

 

(b)           You further agree that during the
Term and continuing through the first
anniversary of the date of termination of your employment, you will not
directly or indirectly solicit, induce, or encourage any employee, consultant,
agent, customer, vendor, or other parties doing business with any member of the
Company Group to terminate their employment, agency, or other relationship with
the Company Group or such member or to render services for or transfer their
business from the Company Group or such member and you will not initiate
discussion with any such person for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other individual or
entity.

 

(c)           While employed by the Company, you agree that you will not engage in
any business activity in competition with any member of the Company Group nor
make preparations to do so.

 

(d)           Upon the termination of your relationship with the Company, you agree
that you will promptly return to the Company, and will not take with you or
use, all items of any nature that belong to the Company, and all materials (in
any form, format, or medium) containing or relating to the Company’s business.

 

(e)           In recognition of the facts
that irreparable injury will result to the Company in the event of a breach by
you of your obligations under Sections 9(a), (b), (c) or (d) above,
that monetary damages for such breach would not be readily calculable, and that
the Company would not have an adequate remedy at law therefor, you acknowledge,
consent and 

 

5

 

agree that in the event
of such breach, or the threat thereof, the Company shall be entitled, in
addition to any other legal remedies and damages available, to specific
performance thereof and to temporary and permanent injunctive relief (without
the necessity of posting a bond) to restrain the violation or threatened
violation of such obligations by you.

 

10.   COMPANY RULES AND
REGULATIONS.  As an employee
of the Company, you agree to abide by Company policies, procedures, rules and
regulations as set forth in the Company’s Employee Handbook or as otherwise
promulgated.  In addition, as a condition of your
employment, you acknowledge that you and the Company have entered into that
certain Employee Confidentiality and Inventions Agreement dated as of September 5,
2006, and you hereby agree to abide by
the terms of that certain Employee Confidentiality and Inventions
Agreement dated as of September 5, 2006, by and between you and the
Company.

 

11.   WITHHOLDING.  The Company may withhold from any amounts
payable under this letter such federal, state, local or foreign taxes as shall
be required to be withheld pursuant to any applicable law or regulation.

 

12.   ARBITRATION.  Except as set forth in Section 9(e) above,
any disagreement, dispute, controversy or claim arising out of or relating to
this letter or the interpretation of this letter or any arrangements relating
to this letter or contemplated in this letter or the breach, termination or
invalidity thereof shall be settled by final and binding arbitration
administered by JAMS/Endispute in Santa Clara County, California in accordance
with the then existing JAMS/Endispute Arbitration Rules and Procedures for
Employment Disputes.  Except as provided
herein, the Federal Arbitration Act shall govern the interpretation,
enforcement and all proceedings.  The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the state of California, or federal law, or both, as applicable,
and the arbitrator is without jurisdiction to apply any different substantive
law.  The arbitrator shall have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure. 
Judgment upon the award may be entered in any court having jurisdiction
thereof.  Each party shall pay his or its
own attorneys’ fees and expenses associated with such arbitration to the extent
permitted by applicable law.

 

13.   ENTIRE AGREEMENT.  As of the Effective Date, this letter,
together with any Stock Option Agreement, constitutes the final, complete and
exclusive agreement between you and the Company with respect to the subject
matter hereof and replaces and supersedes any and all other agreements, offers
or promises, whether oral or written, made to you by any member of the Company
Group (including, without limitation, the Original Employment Letter).

 

14.  SEVERABILITY.  Whenever possible, each provision
of this letter will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this letter is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision of this letter, but such invalid, illegal or
unenforceable provision will be reformed, construed and enforced so as to
render it valid, legal, and enforceable consistent with the intent of the
parties insofar as possible.

 

6

 

15.  ACKNOWLEDGEMENT.  You hereby acknowledge (a) that you have
consulted with or have had the opportunity to consult with independent counsel
of your own choice concerning this letter, and have been advised to do so by
the Company, and (b) that you have read and understand this letter, are
fully aware of its legal effect, and have entered into it freely based on your
own judgment.

 

16.  SECTION 409A
OF THE CODE.

 

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

 

(b)           Notwithstanding anything to the
contrary in this letter, no compensation or benefits, including without
limitation any severance payments or benefits payable under Section 7
above, shall be paid to you during the six (6)-month period following your
Separation from Service to the extent that paying such amounts at the time or
times indicated in this letter would result in a prohibited distribution under Section 409A(a)(2)(b)(i) of
the Code.  If the payment of any such
amounts is delayed as a result of the previous sentence, then on the first
business day following the end of such six (6)-month period  (or such earlier date upon which such amount
can be paid under Section 409A of the Code without resulting in a
prohibited distribution, including as a result of your death), the Company
shall pay you a lump-sum amount equal to the cumulative amount that would have
otherwise been payable to you during such six-month period.

 

(c)           To the extent that any reimbursements
or corresponding in-kind benefits provided to you under this letter are deemed
to constitute compensation to you, such amounts will be paid or reimbursed
reasonably promptly, but not later than December 31 of the year following
the year in which the expense was incurred. 
The amount of any such payments or expense reimbursements in one year
will not affect the expenses or in-kind benefits eligible for payment or reimbursement
in any other taxable year, and your right to such payments or reimbursement of
any such expenses will not be subject to liquidation or exchange for any other
benefit.

 

[SIGNATURE PAGE FOLLOWS]

 

7

 

Please confirm your
agreement to the foregoing by signing and dating the enclosed duplicate
original of this letter in the space provided below for your signature and
returning it to Euan Thomson, Ph.D., Chief Executive Officer of the Company.  Please retain one fully-executed original for
your files.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCURAY INCORPORATED,

  
	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/ Euan Thomson

  
	
   

  	
  Name:  Euan Thomson, Ph.D.

  
	
   

  	
  Title:  President & Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and Agreed,

  	
   

  
	
  October 22, 2008.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
       /s/ Wade Hampton

  	
   

  	
   

  
	
   

  	
       Wade Hampton

  	
   

  	
   

  

 

8

 

EXHIBIT A

 

Table 1:  Sales Commission

 

	
  Contract #s

  	
   

  	
  Sales Commission

  	
   

  
	
  1 – 76

  	
   

  	
  $

  	
  1,000

  	
   

  
	
  77 – 91

  	
   

  	
  $

  	
  1,500

  	
   

  
	
  92 – Total

  	
   

  	
  $

  	
  2,500

  	
   

  

 

Table 2:  Total Bonus

 

	
  Period

  	
   

  	
  Contracts

  Quota

  	
   

  	
  Sales

  Commission $

  	
   

  	
  Quota

  Bonus $

  	
   

  	
  Corporate

  Bonus $

  	
   

  	
  Total

  Bonus $

  	
   

  
	
  Q1 Commission

  	
   

  	
  16

  	
   

  	
  $

  	
  16,000

  	
   

  	
  $

  	
  5,000

  	
   

  	
  N/A

  	
   

  	
  $

  	
  21,000

  	
   

  
	
  Q2 Commission

  	
   

  	
  26

  	
   

  	
  $

  	
  26,000

  	
   

  	
  $

  	
  5,000

  	
   

  	
  N/A

  	
   

  	
  $

  	
  31,000

  	
   

  
	
  Q3 Commission

  	
   

  	
  24

  	
   

  	
  $

  	
  24,000

  	
   

  	
  $

  	
  5,000

  	
   

  	
  N/A

  	
   

  	
  $

  	
  29,000

  	
   

  
	
  Q4 Commission

  	
   

  	
  30

  	
   

  	
  $

  	
  45,000

  	
   

  	
  $

  	
  5,250

  	
   

  	
  N/A

  	
   

  	
  $

  	
  50,250

  	
   

  
	
  Corporate/Sales

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  18,750

  	
   

  	
  $

  	
  18,750

  	
   

  
	
  Corporate/Non-Sales

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  $

  	
  37,500

  	
   

  	
  $

  	
  37,500

  	
   

  
	
  FY 2007

  	
   

  	
  96

  	
   

  	
  $

  	
  111,000

  	
   

  	
  $

  	
  20,250

  	
   

  	
  $

  	
  56,250

  	
   

  	
  $

  	
  187,500

  	
   

  

 

Table
1 provides for the sales commissions for each contract that is signed pursuant
to the Company’s standard contract with no contingencies, pursuant to the
Company’s discretion.  For each of the
Company’s fiscal quarters in its fiscal year ending June 30, 2007, if the
Executive satisfies the Contracts Quota, he will receive (A) an aggregate
Sales Commission as set forth in Table 2 and as calculated according to Table 1
and (B) a Quota Bonus as set forth in Table 2.  In addition, at the end of the Company’s
fiscal year ending June 30, 2007, (C) if the Company achieves its
corporate sales targets as determined by the Board, the Executive will receive
an additional Corporate Bonus in the amount of $18,750, and (D) if the
Company achieves its corporate non-sales targets as determined by the Board,
the Executive will receive an additional Corporate Bonus in the amount of $37,500.  All such commissions and bonuses are subject
to the Executive’s continued employment with the Company in accordance with the
Company’s executive bonus plan applicable to the Executive.

 

 

EXHIBIT B

 

For purposes of this letter, “Change in
Control” means and includes each of the following:

 

(a)         A transaction or series of transactions
(other than an offering of the Company’s common stock to the general public
through a registration statement filed with the Securities and Exchange
Commission) whereby any “person” or related “group” of “persons” (as such terms
are used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”))
(other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries or a “person” that, prior
to such transaction, directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company possessing more than 50% of the total combined
voting power of the Company’s securities outstanding immediately after such
acquisition; or

 

(b)         During any period of two consecutive
years, individuals who, at the beginning of such period, constitute the Board
together with any new director(s) (other than a director designated by a
person who shall have entered into an agreement with the Company to effect a
transaction described in clause (a) or clause (c) hereof) whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or

 

(c)         The consummation by the Company
(whether directly involving the Company or indirectly involving the Company
through one or more intermediaries) of (x) a merger, consolidation,
reorganization, or business combination or (y) a sale or other disposition
of all or substantially all of the Company’s assets in any single transaction
or series of related transactions or (z) the acquisition of assets or
stock of another entity, in each case other than a transaction:

 

(i)            Which results in the Company’s
voting securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company’s assets or otherwise succeeds to the
business of the Company (the Company or such person, the “Successor
Entity”)) directly or indirectly, at least a majority of the
combined voting power of the Successor Entity’s outstanding voting securities
immediately after the transaction, and

 

(ii)           After which no person or group
beneficially owns voting securities representing 50% or more of the combined voting
power of the Successor Entity; provided,
however, that no person or group shall be treated for purposes of
this clause (c)(ii) as beneficially owning 50% or more of combined voting
power of the Successor Entity solely as a result of the voting power held in
the Company prior to the consummation of the transaction; or

 

(d)           The Company’s stockholders approve a
liquidation or dissolution of the Company.

 

10

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