Document:

QuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.5  

 
 

ACCURAY INCORPORATED
  2007 INCENTIVE AWARD PLAN    
    

 
 

ARTICLE 1.
  
    PURPOSE    
    

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

 
 

ARTICLE 2.
  
    DEFINITIONS AND CONSTRUCTION    
    

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

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

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

        2.3   "Board" means the Board of Directors of the Company. 

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

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

        (b)   During
any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a
director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 2.4(a) hereof or Section 2.4(c) hereof) whose
election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors
at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or 

        (c)   The
consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger,
consolidation, 

 

reorganization,
or business combination or (y) a sale or other disposition of all or substantially all of the Company's assets in any single transaction or series of related transactions or
(z) the acquisition of assets or stock of another entity, in each case other than a transaction: 

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

        (ii)   After
which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity;  provided, however, that no person or group shall be treated
for purposes of this Section 2.4(c)(ii) as beneficially owning 50% or more of
combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or 

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

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

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

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

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

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

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

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

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

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

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

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

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

        2.17 "Fair Market Value" means, as of any given date, (a) if Stock is traded on an exchange, the closing price of a
share of Stock as reported in the Wall Street Journal (or such other source as the Company may deem reliable for such purposes) for such date, or if no
sale occurred on such date, the 

2

 

first
trading date immediately prior to such date during which a sale occurred; or (b) if Stock is not traded on an exchange but is quoted on a quotation system, the mean between the closing
representative bid and asked prices for the Stock on such date, or if no sale occurred on such date, the first date immediately prior to such date on which sales prices or bid and asked prices, as
applicable, are reported by such quotation system; or (c) if Stock is not publicly traded, the fair market value established by the Committee acting in good faith. 

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

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

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

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

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

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

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

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

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

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

3

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 
 

ARTICLE 3.
  
    SHARES SUBJECT TO THE PLAN    
    

        3.1    Number of Shares.    

        (a)   Subject
to Article 11 hereof and Section 3.1(b) hereof, the aggregate number of shares of Stock which may be issued or transferred pursuant to Awards under
the Plan is 4,500,000. In addition to the foregoing, subject to Article 11 hereof, commencing on July 1, 2008 and on the first day of each fiscal year of the Company thereafter during
the term of the Plan, the aggregate 

4

 

number
of shares of Stock which may be issued or transferred pursuant to Awards under the Plan shall be increased by that number of shares of Stock equal to the least of (i) three percent (3%)
of the Company's outstanding shares on such date, (ii) 1,500,000 shares, or (iii) a lesser amount determined by the Board. 

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

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

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

 
 

ARTICLE 4.
  
    ELIGIBILITY AND PARTICIPATION    
    

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

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

        4.3    Foreign Participants.    Notwithstanding any provision of the Plan to the contrary, in order to comply with the
laws in other countries in which the Company and its Subsidiaries operate or have Eligible Individuals, the Committee, in its sole discretion, shall have the power and authority to: 

5

 

(i) determine
which Subsidiaries shall be covered by the Plan; (ii) determine which Eligible Individuals outside the United States are eligible to participate in the Plan;
(iii) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify
exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to this Plan as appendices);  provided,
however, that no such subplans and/or modifications shall increase the share limitations contained in Sections 3.1 and 3.3 hereof; and
(v) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law or governing statute
or any other applicable law. 

 
 

ARTICLE 5.
  
    STOCK OPTIONS    
    

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

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

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

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

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

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

6

 

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

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

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

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

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

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

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

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

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

 
 

ARTICLE 6.
  
    RESTRICTED STOCK AWARDS    
    

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

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

7

 

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

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

 
 

ARTICLE 7.
  
    STOCK APPRECIATION RIGHTS    
    

        7.1    Grant of Stock Appreciation Rights.    

        (a)   A
Stock Appreciation Right may be granted to any Participant selected by the Committee. A Stock Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose and shall be evidenced by an Award Agreement. 

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

        7.2    Payment and Limitations on Exercise.    

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

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

8

  

 
 

ARTICLE 8.    
    
    OTHER TYPES OF AWARDS    
    

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

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

        8.3    Dividend Equivalents.    

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

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

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

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

        8.6    Restricted Stock Units.    The Committee is authorized to make Awards of Restricted Stock Units to any
Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. At the time of grant, the Committee shall specify the date or dates on
which the Restricted Stock Units shall become fully vested and nonforfeitable, and may 

9

 

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

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

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

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

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

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

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

 
 

ARTICLE 9.    
    
    PERFORMANCE-BASED AWARDS    
    

        9.1    Purpose.    The purpose of this Article 9 is to provide the Committee the ability to qualify Awards
other than Options and SARs and that are granted pursuant to Articles 6 and 8 hereof as Qualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant a Performance-
Based Award to a Covered Employee, the provisions of this Article 9 shall control over any contrary provision contained in Articles 6 or 8 hereof; provided,
however, that the Committee may in its
discretion grant Awards to Covered Employees that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 9. 

        9.2    Applicability.    This Article 9 shall apply only to those Covered Employees selected by the Committee
to receive Performance-Based Awards. The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an 

10

 

Award
for the period. Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant in any
subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other
period. 

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

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

        9.5    Additional Limitations.    Notwithstanding any other provision of the Plan, any Award which is granted to a
Covered Employee and is intended to constitute Qualified Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to
conform to such requirements. 

 
 

ARTICLE 10.    
    
    PROVISIONS APPLICABLE TO AWARDS    
    

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

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

        10.3    Limits on Transfer.    No right or interest of a Participant in any Award may be pledged, encumbered, or
hypothecated to or in favor of any party other than the Company or a Subsidiary, or 

11

 

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

        10.4    Beneficiaries.    Notwithstanding Section 10.3 hereof, a Participant may, in the manner determined by
the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian,
legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the
extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community
property state, a designation of a person other than the Participant's spouse as his or her beneficiary with respect to more than 50% of the Participant's interest in the Award shall not be effective
without the prior written consent of the Participant's spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the
Participant's will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation
is filed with the Committee. 

        10.5    Stock Certificates; Book Entry Procedures.    

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

        (b)   Notwithstanding
any other provision of the Plan, unless otherwise determined by the Committee or required by any applicable law, rule or regulation, the Company shall
not deliver to any Participant certificates evidencing shares of Stock issued in connection with any Award and 

12

 

instead
such shares of Stock shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). 

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

 
 

ARTICLE 11.    
    
    CHANGES IN CAPITAL STRUCTURE    
    

        11.1    Adjustments.    

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

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

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

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

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

13

 

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

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

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

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

 
 

ARTICLE 12.    
    
    ADMINISTRATION    
    

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

14

 

discretion
of the Committee. The governance of the Committee shall be subject to the charter of the Committee as approved by the Board. 

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

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

        (a)   Designate
Participants to receive Awards; 

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

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

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

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

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

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

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

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

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

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

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

15

  

 
 

ARTICLE 13.    
    
    EFFECTIVE AND EXPIRATION DATE    
    

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

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

 
 

ARTICLE 14.    
    
    AMENDMENT, MODIFICATION, AND TERMINATION    
    

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

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

 
 

ARTICLE 15.    
    
    GENERAL PROVISIONS    
    

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

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

        15.3    Withholding.    The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or
require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant's employment tax obligations) required by law to be
withheld with respect to any taxable event concerning a Participant arising as a result of 

16

 

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

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

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

        15.6    Indemnification.    To the extent allowable pursuant to applicable law, each member of the Committee or of the
Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting
from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from
any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the
Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not
be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company's Certificate of Incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless. 

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

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

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

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

        15.11    Limitations Applicable to Section 16 Persons.    Notwithstanding any other provision of the Plan, the
Plan, and any Award granted or awarded to any Participant who is then subject to Section 16 

17

 

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

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

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

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

*
* * * * 

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

*
* * * * 

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

        Executed
on this            day of                        , 2007. 

	 	 	
 Corporate Secretary

18

QuickLinks

ACCURAY INCORPORATED 2007 INCENTIVE AWARD PLAN

ARTICLE 1. PURPOSE

ARTICLE 2. DEFINITIONS AND CONSTRUCTION

ARTICLE 3. SHARES SUBJECT TO THE PLAN

ARTICLE 4. ELIGIBILITY AND PARTICIPATION

ARTICLE 5. STOCK OPTIONS

ARTICLE 6. RESTRICTED STOCK AWARDS

ARTICLE 7. STOCK APPRECIATION RIGHTS

ARTICLE 8. OTHER TYPES OF AWARDS

ARTICLE 9. PERFORMANCE-BASED AWARDS

ARTICLE 10. PROVISIONS APPLICABLE TO AWARDS

ARTICLE 11. CHANGES IN CAPITAL STRUCTURE

ARTICLE 12. ADMINISTRATION

ARTICLE 13. EFFECTIVE AND EXPIRATION DATE

ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION

ARTICLE 15. GENERAL PROVISIONSQuickLinks
 -- Click here to rapidly navigate through this document

Exhibit 10.6  

 
 

ACCURAY INCORPORATED
  
    2007 EMPLOYEE STOCK PURCHASE PLAN    
    

        Accuray Incorporated hereby adopts the Accuray 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 its Designated 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 and its Designated Subsidiaries. 

        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, no 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 Accuray Incorporated, a California corporation, or any successor corporation (including, without
limitation, the surviving corporation in any consolidation, merger or reincorporation effected exclusively to change the domicile of the Company). 

        (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)   "Designated Subsidiary" shall mean any Subsidiary which has been designated by the Administrator from time to time in its
sole discretion as eligible to participate in the Plan. The Administrator may designate, or terminate the designation of, a subsidiary as a Designated Subsidiary without the approval of the
stockholders of the Company. 

        (i)    "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. 

        (j)    "Eligible Employee" shall mean an Employee of the Company or a Designated 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. 

        (k)   "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). 

        (l)    "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. 

        (m)  "Exercise Date" shall mean the last Trading Day of each Purchase Period. 

        (n)   "Fair Market Value" shall mean, as of any date, the value of Common Stock determined as follows: 

        (i)    If
the Common Stock is traded on an exchange, its Fair Market Value shall be the 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, or if no sale occurred on such
date, the first trading date immediately prior to such date during which a sale occurred; 

        (ii)   If
the Common Stock is not traded on an exchange but is quoted on a quotation system, its Fair Market Value shall be the mean between the closing representative bid and
asked prices for the Common Stock on such date, or if no sale occurred on such date, the first date immediately prior to such date on which sales prices or bid and asked prices, as applicable, are
reported by such quotation system; 

        (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"). 

        (o)   "Offering Period" shall mean each period of approximately six (6) months commencing on any June 1 or
December 1 and terminating on the last Trading Day on or before the next occurring November 30 or May 31, as applicable, 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. 

        (p)   "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. 

        (q)   "Plan" shall mean this Accuray Incorporated 2007 Employee Stock Purchase Plan. 

        (r)   "Purchase Period" shall mean the approximately six (6) 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 under the Plan shall commence on 

2

 

the
Effective Date and end on November 30, 2007, and such period may be more or less than six (6) months in duration. 

        (s)   "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. 

        (t)    "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. 

        (u)   "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 Designated 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 Treasury Regulations
thereunder. 

        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 stockholder 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 Designated 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 and shall be enrolled in such first Offering
Period to the extent of ten percent (10%) of his or her Compensation for the pay days during the first Offering Period (or, if less, the maximum amount of contributions permitted to be made by 

3

 

such
participant for such Offering Period by payroll deduction under the terms of this Plan). Participants wishing to purchase shares of Common Stock during the first Offering Period shall do so by
making a lump sum cash payment to the Company not later than ten (10) calendar days before each Exercise Date of such Offering Period, and each such payment may be made in an amount not
exceeding ten percent (10%) of such participant's Compensation for the pay days occurring during such Offering Period and occurring prior to such lump sum payment; provided, however, that such
participant shall not be required to make such lump sum cash payments, or exercise all or any portion of such option to purchase shares of Common Stock by making such lump sum payments. Following the
Effective Date, each such participant may, during the period designated from time to time by the Administrator for such purpose, elect to make such contributions (or a lesser amount of contributions)
for the first Offering Period by payroll deductions in accordance with Section 6 hereof, in lieu of making contributions in such lump sum cash payments under this subsection (a), or may elect
to make no contributions for such Offering Period; provided, however, that, to make contributions by payroll deductions, such participant must complete the form of subscription agreement provided by
the Company for the first Offering Period under this Plan. If (i) during such Offering Period, such a participant elects to make contributions by payroll deduction, or elects to make no
contributions for such Offering Period, or (ii) on or prior to the tenth (10th) calendar day before the last Exercise Date of such Offering Period, such a participant fails to
make any lump sum cash payment, such participant shall be deemed to have elected not to make contributions by lump sum payment with respect to such first Offering Period. 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 applicable, unless sooner terminated by the participant as provided in Section 10 hereof. 

        (e)   During
a leave of absence approved by the Company or a Subsidiary and meeting the requirements of Treasury Regulation Section 1.421-7(h)(2), a
participant may continue to participate 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. If a leave of absence is unapproved or fails to meet the requirements of Treasury Regulation
Section 1.421-7(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 

4

 

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 increase or decrease the rate of his or her payroll
deductions during the Offering Period by completing or filing with the Company 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 in no event shall a participant be permitted to purchase during each Offering Period more than 2,500 shares of the Company's
Common Stock (subject to any adjustment pursuant to Section 19 hereof) and during each Purchase Period more than 2,500 shares of the Company's Common Stock (subject to any adjustment pursuant
to Section 19 hereof) (for the avoidance of doubt, in the event that the Offering Period and Purchase Period are approximately the same length, the participant shall only be entitled to
purchase an aggregate of 2,500 

5

 

shares
during such period); and provided, further, that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13 hereof. The Administrator may, for future Offering Periods,
increase or decrease, in its absolute discretion, the maximum number of shares of the Company's 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. 

        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 stockholders 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. 

        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 

6

 

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 Company's Common Stock
which shall be made available for sale under the Plan shall be 1,000,000 shares. In addition to the foregoing, subject to Section 19 hereof, commencing on July 1, 2008 and on the first
day of each fiscal year of the Company thereafter during the term of the Plan, the number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be
increased by that number of shares of the Company's Common Stock equal to the least of (i) one percent (1%) of the Company's outstanding shares on such date, (ii) 1,000,000 shares, or
(iii) a lesser amount determined by the Board. The Company's fiscal year currently begins on July 1 and ends on June 30 of each year and, accordingly, the number of shares of the
Company's Common Stock which shall be available for sale under the Plan shall be subject to automatic increase under the preceding sentence only on July 1, 2008 and on each
subsequent July 1 through and including July 1, 2016 (provided that the Company's fiscal year remains the same). If any right granted under the Plan shall for any reason terminate
without having been exercised, the Common Stock not purchased under such right shall again become available for issuance under the Plan. The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise. 

        (b)   With
respect to shares of stock subject to an option granted under the Plan, a participant shall not be deemed to be a stockholder of the Company, and the participant
shall not have any of the rights or privileges of a stockholder, 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.    

        (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 

7

 

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. 

        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 

8

 

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 stockholders of the Company, the number of
shares of Common Stock which have been 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. 

9

 

        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 stockholders. 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 stockholder approval of any amendment in such a manner and to such a degree as required. 

        (b)   Without
stockholder 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 stockholder approval or the consent of any Plan participants. 

        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 

10

 

        (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 stockholders, the Plan shall become effective as of the
Effective Date. The Plan shall be deemed to be approved by the Company's stockholders if it receives the affirmative vote of the holders of a majority of the shares of stock of the Company in
accordance with applicable law and the applicable provisions of the Company's bylaws. Subject to approval by the stockholders 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 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 California without regard to otherwise governing principles of conflicts of law. 

11

 
*
* * * * 

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

*
* * * * 

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

Executed
on this      day of                        , 2007. 

	

 	
 	

 	

 Corporate Secretary

12

QuickLinks

ACCURAY INCORPORATED 2007 EMPLOYEE STOCK PURCHASE PLAN

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]