Document:

exv10w16

 

Exhibit 10.16(a)

TOMOTHERAPY INCORPORATED

INCENTIVE STOCK OPTION PLAN

As Amended and Restated May 23, 2001

     1. Purpose. The purpose of the TomoTherapy Incorporated Incentive Stock Option Plan
(the “Plan”) is to encourage certain employees of TomoTherapy Incorporated (the “Corporation”) to
acquire or increase their stock ownership in the Corporation, to provide an incentive to such
employees to promote the financial success of the Corporation, and to enable the Corporation to
attract and retain personnel necessary for continued growth and profitability.

     2. Effective Date and Term of Plan. The Plan shall be effective as of the date adopted
by the Board of Directors and shall continue for a period of ten years thereafter unless sooner
terminated as provided in Paragraph 18.

     3. Approval of Shareholders. The Plan is subject to the approval of holders of a
majority of all of the outstanding voting shares of the Corporation. If it is not so approved on or
before one year after the date of adoption of the Plan by the Board of Directors, the Plan shall
not come into effect and any options granted pursuant to the Plan shall be deemed cancelled. No
option may be exercised prior to approval of the Plan by the shareholders.

     4. Stock Subject to Plan. Only Common Stock, with $.01 par value per share, of the
Corporation (“Common Stock”) may be issued pursuant to options granted under this Plan. The maximum
number of shares of Common Stock that may be issued pursuant to the exercise of options granted
under the Plan (“Options”) is Eleven Thousand Nine Hundred Sixty-seven (11,967) shares, subject to
any adjustments provided in Paragraph 17. If any Options expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject thereto shall again be available for
further grants under the Plan.

     5. Administration. The Plan shall be administered by the committee described
in Paragraph 6 (the “Committee”). Subject to the express provisions of the Plan, the Committee
shall have complete authority in its discretion, to determine those employees (“Participants”) to
whom Options shall be granted, the option price, the option periods and the number of shares to be
subject to each Option. Subject to the express provisions of the Plan, the Committee shall also
have the authority in its discretion to prescribe the time or times at which Options may be
exercised, the limitations upon the exercise of Options (including limitations effective upon the
death, disability or termination of employment of any Participant) and the restrictions, if any, to
be imposed upon the transferability of shares acquired upon exercise of Options. In making such
determinations, the Committee may take into account the nature of the services rendered by the
respective Participants, their present and potential contributions to the success of the
Corporation and such other factors as the Committee in its discretion shall deem relevant. Subject
to the express provisions of the Plan,

 

 

the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the terms and provisions of the
respective option agreements (which need not be identical), to determine whether the shares
delivered upon exercise of Options will be treasury shares or will be authorized but previously
unissued shares and to make all other determinations necessary or advisable for the administration
of the Plan. The Committee’s determinations on the matters referred to in this paragraph shall be
conclusive.

     6. Committee. The Committee shall consist of not less than two members of the Board of
Directors who are not eligible, and have not at any time within one year prior to appointment to
the Committee been eligible, to receive options under the Plan. The Committee shall be appointed
from time to time by the Board of Directors, which may from time to time appoint members of the
Committee in substitution for members previously appointed and may fill vacancies, however caused,
in the Committee. A majority of its members shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. Any decision or determination reduced to
writing and signed by all of the members shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may hold meetings by use of
conference telephone or similar communications equipment by which all persons participating in the
meeting can hear each other.

     7. Eligibility. An Option may be granted under the Plan to any employee of the
Corporation, and of its present and future subsidiaries, as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (“Subsidiaries”). The foregoing notwithstanding, members
of the Committee shall not, while serving as members of the Committee, be eligible to receive
Options.

     8. Option Price. The option price per share will be determined by the Committee at the
time each Option is granted, but shall not be less than 100% of the fair market value, as
determined by the Committee, of a share of Common Stock on the date of grant. If such Option is
granted to a person who owns, directly or indirectly, stock possessing more than 10%of the total
combined voting power of all classes of stock of the Corporation on the date of the grant, the
option price per share shall not be less than 110% of its fair market value.

     9. Option Periods. The term of each Option will be for such period not exceeding ten
years from the date of grant, as the Committee shall determine; provided, however, that if such
Option is granted to a person who owns, directly or indirectly, stock possessing more than 10% of
the total combined voting power of all classes of stock of the Corporation on the date of the
grant, the term of such Option shall not exceed five years from the date of grant. An Option shall
be considered granted on the date the Committee acts to grant the Option or such later date as the
Committee shall specify. Each Option shall be subject to earlier termination as described under
Paragraphs 14 and 18.

     10. Exercise of Options. Each Option may be exercised at any time during the option
period for such Option (subject to the restrictions in this paragraph, in Paragraph 14 and

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in the agreements referred to in Paragraph 15) by written notice delivered to an officer of the
Corporation, stating the number of shares with respect to which the Option is being exercised. No
partial exercise of such Option may be for less than one full share. In no event shall the Company
be required to transfer fractional Shares to the Participant.

     11. Payment for Shares. Within five (5) business days following the date of exercise,
the Participant shall make full payment of the option price (i) in cash; (ii) with the consent of
the Committee, by tendering previously acquired shares of Common Stock (valued at their fair market
value, as determined by the Committee, as of the date of exercise); or (iii) any combination of (i) and (ii). Shares of Common Stock tendered shall be duly endorsed in
blank or accompanied by stock powers duly endorsed in blank. Upon receipt of the payment of the
entire option price for the shares so purchased, certificates for such shares shall be delivered to
the Participant. Such certificates shall bear a legend on the reverse side reflecting the transfer
restrictions described in Paragraph 12.

     12. Transfer Restrictions. Shares of common stock purchased under the Plan are
governed by, and may not be sold or otherwise disposed of except in compliance with (i) the
Corporation’s Bylaws and (ii) the registration requirements of the Securities Act of 1933 and any
applicable state securities laws (unless such transaction is, in the opinion of counsel for the
Corporation, exempt from registration under such Act and laws). The transferability of such shares
shall also be subject to the restrictions contained in a shareholder agreement that, among other
restrictions, will grant the Company the right to repurchase the shares under certain
circumstances, including termination of employment. The Participant shall execute such a document
in the form required by the Company on the dates shares are issued to Participant and the
Participant agrees to execute such shareholder agreement and be bound by its terms.

     13. Maximum Per Participant. The aggregate fair market value, as determined by the
Committee, of the stock for which options held by a Participant are exercisable for the first time
under the Plan or other options granted to the Participant under any plan of the Corporation or any
Subsidiary during any calendar year shall not exceed $100,000. For purposes of this paragraph, the
fair market value of stock subject to an Option or other Incentive Stock Option shall be determined
as of the date the Option or other Incentive Stock Option, as the case may be, is granted.

     14. Termination of Employment. Except as expressly provided in this Paragraph 14, no
Option may be exercised more than three (3) months after a termination of a Participant’s
employment with the Corporation. If termination of employment results from the deliberate, willful
or gross misconduct of a Participant or the Participant’s unreasonable neglect of or refusal to
perform Participant’s duties or responsibilities, then the Option may not be exercised and all of
the Participant’s rights in the Option shall be forfeited upon termination. If termination of
employment results from the disability of a Participant within the meaning of Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended, any Option may be exercised at any time within
twelve (12) months after such termination of employment, but in no event beyond the option period.
If termination of employment results from the death of a

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Participant, the personal representative of the Participant’s estate, or a person who by bequest,
inheritance, or otherwise by reason of the Participant’s death, acquired the right to exercise the
Option, may exercise any Option at any time within three (3) years after the death of such
Participant, but in no event beyond the option period. The Committee may impose additional
restrictions upon the exercise of Options after termination of employment, including prohibition of
such exercise.

     15. Agreements. Options granted pursuant to the Plan shall be evidenced by stock
option agreements in such form as the Committee shall from time to time adopt.

     16. Nontransferability of Options. Options under the Plan are not transferable by a
Participant other than by will or the laws of descent or distribution, and may be exercised during
the lifetime of a Participant only by such Participant.

     17. Adjustment of Number of Shares. In the event of any change in the outstanding
Common Stock of the Corporation by reason of stock dividends, recapitalizations, reorganizations,
mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the Committee
shall, consistent with such change, appropriately adjust the number and kind of shares which
thereafter may be optioned and sold under the Plan, the number and kind of shares under option in
outstanding stock option agreements and the purchase price per share thereof. The determination of
the Committee as to any such adjustment shall be final and conclusive. No adjustment or
substitution provided for in this paragraph shall require the Corporation to sell a fractional
share and the total substitution or adjustment with respect to each stock option agreement shall be
limited accordingly.

     18. Amendment, Suspension or Termination. The Board of Directors, without further
approval of the shareholders, may from time to time amend, suspend or terminate the Plan in such
respects as the Board may deem advisable, provided, however, that no amendment shall become
effective without prior approval of the shareholders which would (i) increase the aggregate number
of shares which may be issued pursuant to Options granted under the Plan, except as permitted under
Paragraph 17; (ii) permit the granting of options to anyone other than an employee of the
Corporation or a Subsidiary or to a member of the Committee; (iii) decrease the minimum option
prices; (iv) increase the maximum option periods; (v) increase the maximum per Participant set in
Paragraph 13; or (vi) extend the term of the Plan. No amendment shall, without a Participant’s
consent, alter or impair any of the rights or obligations under any Option theretofore granted to
the Participant.

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     The undersigned officer of TomoTherapy Incorporated certifies that the foregoing TomoTherapy
Incorporated Incentive Stock Option Plan, was approved and adopted by Unanimous Written Consent of
the Directors and Shareholders dated as of June 8, 1999.

	 	 	 	 	 
	 

	 	/s/  Frederick A. Robertson, M.D.
	 	 
	 

	 	 

Frederick A. Robertson, M.D., Chief Executive Officer
	 	 

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Exhibit 10.19

TOMOTHERAPY INCORPORATED

2007 EQUITY INCENTIVE PLAN

ARTICLE 1.

PURPOSE

     The purpose of the TomoTherapy Incorporated 2007 Equity Incentive Plan (the “Plan”) is to
promote the success and enhance the value of TomoTherapy Incorporated by linking the personal
interests of the members of the Board, Employees, and Consultants to those of Company shareholders
and by providing such individuals with an incentive for outstanding performance to generate
superior returns to Company shareholders. 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 operations are 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 shareholders 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

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	 	(d)	 	The Company’s shareholders 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 TomoTherapy Incorporated, a Wisconsin corporation, or any successor
corporation (including, without limitation, the surviving corporation in any consolidation, merger
or reincorporation effected exclusively to change the domicile of the Company).

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

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

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

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

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

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

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

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

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

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

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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 shareholders’ equity, return on assets,
return on capital, shareholder 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.

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     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.

     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 TomoTherapy Incorporated 2007 Equity Incentive 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.

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     2.37 “Stock” means the common stock of the Company, $0.01 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 1,693,006.
	 
	 	(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

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	 	 	 	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.

ARTICLE 4.

ELIGIBILITY AND PARTICIPATION

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

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

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

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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)	 	Forfeiture if Termination for Cause. If a Participant’s
employment is terminated for “Cause”, as defined below, then none of the
Participant’s Options may be exercised, all of the Participant’s rights in the
Options shall be forfeited, and all of the shares reserved for issuance upon
exercise of the Participant’s Options shall revert to the Plan. For purposes
of this Plan, “Cause” shall mean any of the following: (i) any act, failure to
act, conduct, pattern of conduct, or condition injurious or potentially
injurious to the business or reputation of the Company; (ii) any conviction for
a misdemeanor or felony the circumstances of which the Committee determines is
substantially related to the circumstances of the Participant’s job; (iii) the
willful and continued failure to perform substantially the Participant’s duties
for the Company, which failure remains uncured fourteen (14) days after written
notice from the Company of such failure; or (iv) theft or fraud by the
Participant with respect to the business of the Company.
	 
	 	(d)	 	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

8

 

	 	 	 	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.
	 
	 	(e)	 	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.

	 	(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

9

 

	 	 	 	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 (or the Company’s parent or subsidiary corporation,
within the meaning of Section 422(b)(6) of the Code) 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.

10

 

     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.

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

ARTICLE 8.

OTHER TYPES OF AWARDS

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

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

     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

12

 

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
shareholder with respect to such Deferred Stock until such time as the Deferred Stock Award has
vested and the Stock underlying the Deferred Stock Award has been issued.

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

     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

13

 

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
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.

14

 

     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.

15

 

ARTICLE 10.

PROVISIONS APPLICABLE TO AWARDS

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

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

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

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

16

 

shall be made to the person entitled thereto pursuant to the Participant’s will or the laws of
descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or
revoked by a Participant at any time provided the change or revocation is filed with the Committee.

     10.5 Stock Certificates; Book Entry Procedures.

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

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

17

 

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
shareholders, 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

18

 

	 	 	 	(B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion;
	 
	 	(ii)	 	To provide that such Award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or
shall be substituted for by similar options, rights or awards covering
the stock of the successor or survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices;
	 
	 	(iii)	 	To make adjustments in the number and type of
            shares of Stock (or other securities or property) subject to outstanding
Awards, and in the number and kind of outstanding Restricted Stock or
Deferred Stock and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding
options, rights and awards and options, rights and awards which may be
granted in the future;
	 
	 	(iv)	 	To provide that such Award shall be exercisable
or payable or fully vested with respect to all shares covered thereby,
notwithstanding anything to the contrary in the Plan or the applicable
Award Agreement; and
	 
	 	(v)	 	To provide that the Award cannot vest, be
exercised or become payable after such event.

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

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

19

 

under the Plan, no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number of shares of Stock subject to an Award or the grant or
exercise price of any Award.

ARTICLE 12.

ADMINISTRATION

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

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

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

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

20

 

	 	(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

21

 

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

ARTICLE 13.

EFFECTIVE AND EXPIRATION DATE

     13.1 Effective Date. The Plan is effective as of the date the Plan is approved by the
Company’s shareholders (the “Effective Date”). The Plan will be deemed to be approved by the
shareholders 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. The Plan shall not be effective unless it is approved by the Company’s
shareholders within a period commencing twelve (12) months prior to and ending twelve (12) months
after the date the Plan is approved by the Board. If the Plan is not approved within this period,
any options granted pursuant to the Plan shall be deemed cancelled. No option may be exercised
prior to approval of the Plan by the Company’s shareholders.

     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 earlier of (i) the date the Plan is approved by the Board
or (ii) the Effective Date. Any Awards that are outstanding on the date the Plan expires 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 shareholder
approval of any Plan amendment in such a manner and to such a degree as required, and (b)
shareholder 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, (iii) permits the Committee to extend the exercise period for an Option
beyond ten years from the date of grant, or (iv) changes the definition of “Eligible Individual” or
otherwise changes the classes of Employees eligible to participate in the Plan. Notwithstanding any
provision in this Plan to the contrary, absent approval of the shareholders 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.

22

 

     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 shareholders Rights. Except as otherwise provided herein, a Participant shall have
none of the rights of a shareholder with respect to shares of Stock covered by any Award until the
Participant becomes the record owner of such shares of Stock.

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

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

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

23

 

     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 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

24

 

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 Wisconsin.

     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
TomoTherapy Incorporated on                                        , 2007.

* * * * *

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

   Executed on this                    day of                                        , 2007.

	 	 	 	 	 
	 	 

Corporate Secretary

 	 
	 	 	 
	 	 	 
	 	 	 

25

 

	 	 	 	 	 

Attachment 1

TOMOTHERAPY INCORPORATED

2007 EQUITY INCENTIVE PLAN

STOCK OPTION GRANT NOTICE AND

STOCK OPTION AGREEMENT

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

	 	 	 	 	 
	Participant:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Grant Date:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Exercise Price per Share:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	Total Exercise Price:
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	Total Number of Shares Subject
to the Option:
	 	shares	 	 
	 
	 	 	 
	 
	 	 	 	 
	Expiration Date:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Type of Option:
	 	Incentive Stock Option	 	Non-Qualified Stock
	Option
	 	 	 	 
	 
	 	 	 	 
	Vesting Schedule:
	 	 	 	 
	      VESTING SCHEDULE FOR GRANTS:
	 	 

     The Option shall vest and become exercisable with respect to twenty-five percent (25%)
of the shares of Stock subject thereto on each anniversary of the Grant Date beginning with
the first anniversary of the Grant Date.

26

 

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

	 	 	 	 	 	 	 
	 

	 	TOMOTHERAPY INCORPORATED
	 	 	 	PARTICIPANT
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Print Name:

	 	 	 	Print Name:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Address:

	 	 	 	Address:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

27

 

EXHIBIT A

TO STOCK OPTION GRANT NOTICE

TOMOTHERAPY INCORPORATED STOCK OPTION AGREEMENT

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

ARTICLE I.

GENERAL

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

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

28

 

	 	 	 	questions relating to Termination of Directorship with respect to
Independent Directors.
	 
	 	(c)	 	“Termination of Employment” shall mean the time when the
employee-employer relationship between the Participant and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding: (a) terminations where there is a
simultaneous reemployment or continuing employment of the Participant by the
Company or any Subsidiary, and (b) terminations where there is a simultaneous
establishment of a consulting relationship or continuing consulting
relationship between the Participant and the Company or any Subsidiary. The
Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Employment, including, but not
by way of limitation, the question of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, if this
Option is an Incentive Stock Option, unless otherwise determined by the
Committee in its discretion, a leave of absence, change in status from an
employee to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that, such leave of absence, change in status or other change interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section.
	 
	 	(d)	 	“Termination of Services” shall mean the Participant’s
Termination of Consultancy, Termination of Directorship or Termination of
Employment, as applicable.

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

ARTICLE II.

GRANT OF OPTION

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

29

 

Option in the Grant Notice, the Option shall be an Incentive Stock Option to the maximum extent
permitted by law.

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

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

ARTICLE III.

PERIOD OF EXERCISABILITY

     3.1 Commencement of Exercisability.

	 	(a)	 	Subject to Sections 3.2, 3.3, 5.11 and 5.14, the Option shall
become vested and exercisable in such amounts and at such times as are set
forth in the Grant Notice.
	 
	 	(b)	 	No portion of the Option which has not become vested and
exercisable at the date of the Participant’s Termination of Employment,
Termination of Directorship or Termination of Consultancy shall thereafter
become vested and exercisable, except as may be otherwise provided by the
Committee or as set forth in a written agreement between the Company and the
Participant.

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

30

 

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

	 	(a)	 	The expiration of ten years from the Grant Date;
	 
	 	(b)	 	If this Option is designated as an Incentive Stock Option and
the Participant owned (within the meaning of Section 424(d) of the Code), at
the time the Option was granted, more than 10% of the total combined voting
power of all classes of stock of the Company or any “subsidiary corporation” of
the Company or any “parent corporation” of the Company (each within the meaning
of Section 424 of the Code), the expiration of five years from the Grant Date;
	 
	 	(c)	 	The expiration of ninety (90) days from the date of the
Participant’s Termination of Services, unless such termination occurs by reason
of the Participant’s death or Disability; or
	 
	 	(d)	 	The expiration of one year from the date of the Participant’s
Termination of Services by reason of the Participant’s death or Disability.

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

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

ARTICLE IV.

EXERCISE OF OPTION

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

31

 

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

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

	 	(a)	 	An Exercise Notice in a form specified by the Committee,
stating that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Committee;
	 
	 	(b)	 	The receipt by the Company of full payment for the shares of
Stock with respect to which the Option or portion thereof is exercised,
including payment of any applicable withholding tax, which may be in one or
more of the forms of consideration permitted under Section 4.4;
	 
	 	(c)	 	Any other written representations as may be required in the
Committee’s reasonable discretion to evidence compliance with the Securities
Act or any other applicable law rule, or regulation; and
	 
	 	(d)	 	In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Participant,
appropriate proof of the right of such person or persons to exercise the
Option.

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

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

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

32

 

	 	(d)	 	With the consent of the Committee, surrender of other shares of
Stock which have a fair market value on the date of surrender equal to the
aggregate exercise price of the shares of Stock with respect to which the
Option or portion thereof is being exercised;
	 
	 	(e)	 	With the consent of the Committee, surrendered shares of Stock
issuable or transferable upon the exercise of the Option having a fair market
value on the date of exercise equal to the aggregate exercise price of the
shares of Stock with respect to which the Option or portion thereof is being
exercised; or
	 
	 	(f)	 	With the consent of the Committee, property of any kind which
constitutes good and valuable consideration.

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

	 	(a)	 	The admission of such shares of Stock to listing on all stock
exchanges on which such Stock is then listed;
	 
	 	(b)	 	The completion of any registration or other qualification of
such shares of Stock under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable;
	 
	 	(c)	 	The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
	 
	 	(d)	 	The receipt by the Company of full payment for such shares of
Stock, including payment of any applicable withholding tax, which may be in one
or more of the forms of consideration permitted under Section 4.4; and
	 
	 	(e)	 	The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

     4.6 Rights as shareholder. The holder of the Option shall not be, nor have any of the
rights or privileges of, a shareholder of the Company in respect of any shares of Stock purchasable
upon the exercise of any part of the Option unless and until such shares of Stock shall have been
issued by the Company to such holder (as evidenced by the appropriate entry on

33

 

the books of the Company or of a duly authorized transfer agent of the Company). No adjustment will
be made for a dividend or other right for which the record date is prior to the date the shares of
Stock are issued, except as provided in Section 11.1 of the Plan.

ARTICLE V.

OTHER PROVISIONS

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

     5.2 Option Not Transferable.

	 	(a)	 	Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution, unless and until the shares of Stock underlying the Option
have been issued, and all restrictions applicable to such shares of Stock have
lapsed. Neither the Option nor any interest or right therein shall be liable
for the debts, contracts or engagements of Participant or his or her successors
in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence.
	 
	 	(b)	 	Notwithstanding any other provision in this Agreement, with the
consent of the Committee, the Participant may transfer the Option (or any
portion thereof) to any one or more Permitted Transferees (as defined below),
subject to the following terms and conditions: (i) any portion of the Option
transferred to a Permitted Transferee shall not be assignable or transferable
by the Permitted Transferee other than by will or the laws of descent and
distribution; (ii) any portion of the Option which is transferred to a
Permitted Transferee shall continue to be subject to all the terms and
conditions of the Option as applicable to the Participant (other than the
ability to further transfer the Option); and (iii) the Participant and the
Permitted Transferee shall execute any and all documents requested by the
Committee, including, without limitation documents to (A) confirm the status of
the transferee as a Permitted Transferee,

34

 

	 	 	 	(B)satisfy any requirements for an exemption for the transfer under
applicable federal and state securities laws and (C) evidence the transfer.
For purposes of this Section 5.2(b), “Permitted Transferee” shall mean, with
respect to a Participant, any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or sister-in-law, including adoptive relationships, any person sharing the
Participant’s household (other than a tenant or employee), a trust in which
these persons (or the Participant) control the management of assets,
charitable institutions, or trusts or other entities whose beneficiaries or
beneficial owners are these persons (or the Participant) and/or charitable
institutions, and any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests, or any
other transferee specifically approved by the Committee after taking into
account any state or federal tax or securities laws applicable to
transferable Options. Notwithstanding the foregoing, (i) in no event shall
the Option be transferable by the Participant to a third party (other than
the Company) for consideration, and (ii) no transfer of an Incentive Stock
Option will be permitted to the extent that such transfer would cause the
Incentive Stock Option to fail to qualify as an “incentive stock option”
under Section 422 of the Code.

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

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

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

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

35

 

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

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

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

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

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

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

     5.13 Section 409A. This Option is not intended to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of the Code (“Section 409A”). However,
notwithstanding any other provision of the Plan, this Agreement or the Grant Notice, if at any

36

 

time the Committee determines that the Option (or any portion thereof) may be subject to Section
409A, the Committee shall have the right, in its sole discretion, to adopt such amendments to the
Plan, this Agreement or the Grant Notice or adopt other policies and procedures (including
amendments, policies and procedures with retroactive effect), or take any other actions, as the
Committee determines are necessary or appropriate either for the Option to be exempt from the
application of Section 409A or to comply with the requirements of Section 409A.

37

 

Attachment 2

TOMOTHERAPY INCORPORATED

2007 INCENTIVE AWARD PLAN

RESTRICTED STOCK AWARD GRANT NOTICE AND

RESTRICTED STOCK AWARD AGREEMENT

     TomoTherapy Incorporated, a Wisconsin corporation (the “Company”), pursuant to its 2007 Equity
Incentive Plan (the “Plan”), hereby grants to the individual listed below (“Participant”), the
number of shares of the Company’s common stock, par value $  per share, set forth below (the
"Shares”). This Restricted Stock Award is subject to all of the terms and conditions as set forth
herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Restricted
Stock Agreement”) (including without limitation the Restrictions on the Shares set forth in the
Restricted Stock Agreement) and the Plan, each of which are incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings
in this Grant Notice and the Restricted Stock Agreement.

	 	 	 	 	 
	Participant:
	 	 	 	 
	 

	 	 
  

	 
	 	 	 	 
	Grant Date:
	 	 	 	 
	 

	 	 
 

	 
	 	 	 	 
	Total Number of Shares of

	 	shares
	Restricted Stock:
	 	 	 	 
	 

	 	 
 

	 
	 	 	 	 
	Purchase Price:

	 	$	 	 
	 
	 	 	 	 
	 

	 	 
 

	Vesting Schedule:

	 	[To be specified in individual Grant Notices.]

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

38

 

	 	 	 	 	 	 	 	 	 	 	 
	TOMOTHERAPY INCORPORATED:	 	PARTICIPANT:
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	Print Name:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Address:

	 	 	 	Address:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

39

 

EXHIBIT A

TO RESTRICTED STOCK AWARD GRANT NOTICE

TOMOTHERAPY INCORPORATED RESTRICTED STOCK AWARD AGREEMENT

     Pursuant to the Restricted Stock Award Grant Notice (the “Grant Notice”) to which this
Restricted Stock Award Agreement (the “Agreement”) is attached, TomoTherapy Incorporated, a
Wisconsin corporation (the “Company”), has granted to Participant the right to purchase the number
of shares of Restricted Stock under the Company’s 2007 Equity Incentive Plan (as amended from time
to time, the “Plan”) as set forth in the Grant Notice.

ARTICLE I.

GENERAL

     1.1 Definitions. All capitalized terms used in this Agreement without definition shall have
the meanings ascribed in the Plan and the Grant Notice.

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

ARTICLE II.

AWARD OF RESTRICTED STOCK

     2.1 Award of Restricted Stock.

	 	(a)	 	Award. In consideration of the Participant’s agreement to
remain in the service or employ of the Company or one of its Subsidiaries, and
for other good and valuable consideration, the Company issues to the
Participant the Award described in this Agreement (the “Award”). The number of
shares of Restricted Stock (the “Shares”) subject to the Award is set forth in
the Grant Notice. The Participant is an Employee, Director or other Service
Provider.
	 
	 	(b)	 	Purchase Price; Book Entry Form. The purchase price of the
Shares is set forth on the Grant Notice. At the sole discretion of the
Committee, the Shares will be issued in either (i) uncertificated form, with
the Shares recorded in the name of the Participant in the books and records of
the Company’s transfer agent with appropriate notations to the extent that the

40

 

	 	 	 	Shares remain subject to the Restrictions (as defined below); or (ii)
certificate form pursuant to the terms of Sections 2.1(c) and (d).
	 
	 	(c)	 	Legend. Certificates representing Shares issued pursuant to
this Agreement shall, until all restrictions on transfer imposed pursuant to
this Agreement lapse or shall have been removed and new certificates are
issued, bear the following legend (or such other legend as shall be determined
by the Committee):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN VESTING REQUIREMENTS AND MAY BE SUBJECT TO
FORFEITURE UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK AWARD
AGREEMENT, DATED [            , 200 ], BY AND BETWEEN
TOMOTHERAPY INCORPORATED AND THE REGISTERED OWNER OF SUCH SHARES, AND
SUCH SHARES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER
ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH
AGREEMENT.”

	 	(d)	 	Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint may retain physical custody of the
certificates representing the Shares until all of the restrictions on transfer
imposed pursuant to this Agreement lapse or shall have been removed. In such
event the Participant shall not retain physical custody of any certificates
representing unvested Shares issued to the Participant.

     2.2 Restrictions.

	 	(a)	 	Repurchase of Shares Subject to Restrictions. In the event
that the Participant ceases to be an Employee, Director or other Service
Provider for any reason, the Company shall have the right to repurchase from
the Participant any or all Shares then subject to the Restrictions at a cash
price per Share equal to the price paid by the Participant for such Shares. For
purposes of this Agreement, “Restrictions” shall mean the restrictions on sale
or other transfer set forth in Section 3.1 and the exposure to repurchase set
forth in this Section 2.2(a).
	 
	 	(b)	 	Vesting and Lapse of Restrictions. Subject to Section
2.2(a), the Award shall vest and the Restrictions shall lapse in accordance
with the vesting schedule set forth on the Grant Notice.
	 
	 	(c)	 	Tax Withholding; Conditions to Issuance of Certificates.
Notwithstanding any other provision of this Agreement (including without
limitation Section 2.1(b)):

41

 

	 	(i)	 	No Shares shall be recorded in the name of the
Participant in the books and records of the Company’s transfer agent
and no new certificate shall be delivered to the Participant or his
legal representative unless and until the Participant or his legal
representative shall have paid to the Company the full amount of all
federal and state withholding or other taxes applicable to the taxable
income of Participant resulting from the grant of Shares or the lapse
or removal of the Restrictions.
	 
	 	(ii)	 	The Company shall not be required to record any
Shares in the name of the Participant in the books and records of the
Company’s transfer agent or issue or deliver any certificate or
certificates for any Shares prior to the fulfillment of all of the
following conditions: (A) the admission of the Shares to listing on all
stock exchanges on which the Company’s common stock is then listed, (B)
the completion of any registration or other qualification of the Shares
under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or other governmental regulatory
body, which the Committee shall, in its sole and absolute discretion,
deem necessary and advisable, (C) the obtaining of any approval or
other clearance from any state or federal governmental agency that the
Committee shall, in its absolute discretion, determine to be necessary
or advisable and (D) the lapse of any such reasonable period of time
following the date the Restrictions lapse as the Committee may from
time to time establish for reasons of administrative convenience.

ARTICLE III.

OTHER PROVISIONS

     3.1 Restricted Stock Not Transferable. No Shares that are subject to the Restrictions or
any interest or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Participant or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect; provided, however, that this Section
3.1 notwithstanding, with the consent of the Committee, the Shares may be transferred to certain
persons or entities related to Participant, including but not limited to members of Participant’s
family, charitable institutions or trusts or other entities whose beneficiaries or beneficial
owners are members of Participant’s family and/or charitable institutions, or to such other persons
or entities as may be expressly approved by the Committee, pursuant to any such conditions and
procedures the Committee may require. Notwithstanding the

42

 

foregoing, in no event shall the Award be transferable by the Participant to a third party (other
than the Company) for consideration.

     3.2 Rights as shareholder. Except as otherwise provided herein, upon the Grant Date the
Participant shall have all the rights of a shareholder with respect to the Shares, subject to the
Restrictions herein, including the right to vote the Shares and the right to receive any cash or
stock dividends paid to or made with respect to the Shares.

     3.3 Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer
upon the Participant any right to continue to serve as an employee or other service provider of the
Company or any of its Subsidiaries.

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

     3.5 Conformity to Securities Laws. The Participant acknowledges that the Plan and this
Agreement are intended to conform to the extent necessary with all provisions of the Securities Act
of 1933, as amended, and the Exchange Act, and any and all regulations and rules promulgated
thereunder by the Securities and Exchange Commission, including without limitation Rule 16b-3 under
the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Awards are granted, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

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

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

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

43

 

EXHIBIT B

TO RESTRICTED STOCK AWARD GRANT NOTICE

CONSENT OF SPOUSE

     I,                    , spouse of                    , have read and approve the
foregoing Agreement. In consideration of issuing to my spouse the shares of the common stock of
TomoTherapy Incorporated set forth in the Agreement, I hereby appoint my spouse as my
attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound
by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares
of the common stock of TomoTherapy Incorporated issued pursuant thereto under the community
property laws or similar laws relating to marital property in effect in the state of our residence
as of the date of the signing of the foregoing Agreement.

Dated:                    ,                                                
                                                                                   
                                  

                                                            Signature of Spouse

                                                                               
                                                                                 
                                        

44

 

APPENDIX B

TOMOTHERAPY INCORPORATED

2007 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT GRANT NOTICE

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

Participant:

Grant Date:

Number of RSUs:

     Vesting Schedule: Subject to the Participant’s continued service as an Employee, Consultant
or Director through the applicable vesting date, [                    ] percent (           %) of the
RSUs shall vest on the [          ] anniversary of the Grant Date and an additional [                    
] percent (           %) of the RSUs shall vest on each of the [          ,          and           
] anniversaries of the Grant Date (each such date, a “Vesting Date”).

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

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

45

 

	 	 	 	 	 	 	 	 	 	 	 
	TOMOTHERAPY INCORPORATED:	 	PARTICIPANT:
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Print Name:

	 	 	 	Print Name:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	Address:	 	 	 	 	 	 
	Address

	 	 
	 	 	 	 	 	 	 	 
	 

	 	 	 		 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

46

 

APPENDIX A

TO RESTRICTED STOCK UNIT GRANT NOTICE

RESTRICTED STOCK UNIT AGREEMENT

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

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

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

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

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

     6. Rights as Shareholder. Neither the Participant nor any person claiming under or through
the Participant will have any of the rights or privileges of a shareholder of the Company in
respect of any shares of Stock that may become deliverable hereunder unless and until

47

 

certificates representing such shares of Stock shall have been issued, recorded on the records of
the Company or its transfer agents or registrars, and delivered to the Participant or any person
claiming under or through the Participant.

     7. Non-Transferability. Unless transferred to a Permitted Transferee (as defined below),
RSUs may not be sold, pledged, assigned or transferred in any manner other than by will or the laws
of descent and distribution. For purposes of this Section 7, “Permitted Transferee” shall mean,
with respect to a Participant, certain persons or entities related to the Participant, including
but not limited to members of the Participant’s family, charitable institutions or trusts or other
entities whose beneficiaries or beneficial owners are members of Participant’s family and/or
charitable institutions, or to such other persons or entities as may be expressly approved by the
Committee, pursuant to any such conditions and procedures the Committee may require. Neither the
RSUs nor any interest or right therein shall be liable for the debts, contracts or engagements of
the Participant or his successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.

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

48

 

discretion, whether cash shall be given in lieu of fractional shares or whether such
fractional shares shall be eliminated by rounding up or down as appropriate.

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

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

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

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

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

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

     15. Code Section 409A. The RSUs are not intended to constitute or provide for “nonqualified
deferred compensation” within the meaning of Section 409A of the Code (“Section 409A”). However,
notwithstanding any other provision of the Plan, this Agreement or the Grant Notice, if at any time
the Committee determines that the RSUs (or any portion thereof) may be subject to Section 409A, the
Committee shall have the right, in its sole discretion, to adopt such amendments to the Plan, this
Agreement or the Grant Notice or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take

49

 

any other actions, as the Committee determines are necessary or appropriate either for the RSUs to
be exempt from the application of Section 409A or to comply with the requirements of Section 409A.
Nothing herein shall, or shall be construed so as to, limit the generality of Section 15.14 of the
Plan.

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

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

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

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

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

50

 

EXHIBIT B

TO RESTRICTED STOCK UNIT GRANT NOTICE

CONSENT OF SPOUSE

     I,                       , spouse of                      , have read and approve the
foregoing Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement (the “Agreement”).
In consideration of issuing to my spouse the Restricted Stock Units of TomoTherapy Incorporated set
forth in the Grant Notice and the Agreement, I hereby appoint my spouse as my attorney-in-fact in
respect to the exercise of any rights under the Grant Notice and the Agreement and agree to be
bound by the provisions thereof insofar as I may have any rights therein or in or to any shares of
the common stock of TomoTherapy Incorporated issued pursuant thereto under the community property
laws or similar laws relating to marital property in effect in the state of our residence as of the
date of the signing of the Grant Notice and the Agreement.

Dated:                    ,                                                
                                                                                   
                                                  

                                                                           Signature of Spouse

51

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