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Exhibit 10.4  

 
 

ACCURAY INCORPORATED
  
    1998 EQUITY INCENTIVE PLAN    
    

        1.    Purposes of the Plan.    The purposes of this Equity Incentive Plan are to attract
and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, non-Employee members of the Board and Consultants of the
Company and its Parent and Subsidiaries and to promote the success of the Company's business. Options granted under the Plan may be incentive stock options (as defined under Section 422
of the Code) or non-statutory stock options, as determined by the Administrator at the time of grant of an option and subject to the applicable provisions of Section 422 of the
Code, as amended, and the regulations promulgated thereunder. Stock purchase rights, stock grants and SARs may also be granted under the Plan. 

        2.    Certain Definitions.    As used herein, the following definitions shall apply: 

        (a)   "Administrator"
means the Board or any of its Committees appointed pursuant to Section 4 of the Plan. 

        (b)   "Award"
means any award granted to a Participant under the Plan. 

        (c)   "Board"
means the Board of Directors of the Company. 

        (d)   "Code"
means the Internal Revenue Code of 1986, as amended. 

        (e)   "Committee"
means the Committee appointed by the Board of Directors in accordance with paragraph (a) of Section 4 of
the Plan. 

        (f)    "Common
Stock" means the Common Stock of the Company. 

        (g)   "Company"
means Accuray Incorporated, a California corporation. 

        (h)   "Consultant"
means any person, including an advisor, who is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether compensated for such services or not. 

        (i)    "Continuous
Status as an Employee" means the absence of any interruption or termination of the employment relationship by the Company or any
Parent or Subsidiary. Continuous Status as an Employee shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Board, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) transfers between locations of the Company or between the Company, its Parent, its Subsidiaries or
its successor. 

        (j)    "Employee"
means any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company. 

        (k)   "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

        (l)    "Fair
Market Value" means, as of any date, the value of Common Stock determined as follows: 

        (i)    If
the Common Stock is listed on any established stock exchange or a national market system including without limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange for the last market trading day prior to 

 

the
time of determination as reported in the Wall Street Journal or such other source as the Administrator deems reliable or; 

        (ii)   If
the Common Stock is quoted on Nasdaq (but not on the National Market System thereof) or regularly quoted by a recognized securities dealer but selling prices
are not reported, its Fair Market Value shall be the mean between the high and low asked prices for the Common Stock or; 

        (iii)  In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

        (m)  "Incentive
Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of
the Code. 

        (n)   "Nonstatutory
Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

        (o)   "Option"
means a stock option granted pursuant to the Plan. 

        (p)   "Optioned
Stock" means the Common Stock subject to an Option. 

        (q)   "Optionee"
means an Employee or Consultant who receives an Option. 

        (r)   "Parent"
means a "parent corporation", whether now or hereafter existing, as defined in Section 424(e) of the Code. 

        (s)   "Participant"
means an Employee or Consultant who receives an Award under the Plan. 

        (t)    "Plan"
means this 1998 Equity Incentive Plan. 

        (u)   "Restricted
Stock" means shares of Common Stock acquired pursuant to a grant of stock or stock purchase rights under
Section 11 below. 

        (v)   "SAR"
means a stock appreciation right, which is the right to receive an amount equal to the appreciation, if any, in the Fair Market Value
of a Share from the date of the grant of the right to the date of its payment, as adjusted in accordance with Section 13 of the Plan. 

        (w)  "Share"
means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan. 

        (x)   "Subsidiary"
means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. 

        3.    Stock Subject to the Plan.    Subject to the provisions of Section 14 of the Plan,
the shares of stock subject to Options, Stock Purchase Rights, Stock Grants or other awards under the Plan (collectively, the "Awards") shall be Common Stock, initially shares of the Corporation's
Common Stock, no par value per share. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares which may be granted or issued upon exercise of such Awards is  14,100,000. If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which
were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares which are delivered by the Holder or withheld by the Corporation upon the
exercise of an Option or Stock Purchase Right under the Plan, in payment of the exercise price thereof or tax withholding thereon, may again be optioned, granted or awarded hereunder, subject to the
limitations of this Section 3. If Shares of Restricted Stock are repurchased by the Corporation at their original purchase price, such Shares shall become available for future grant under the
Plan. 

        If
an Option or SAR should expire or become unexercisable for any reason without having been exercised in full, or if shares of Restricted Stock are forfeited, the unused Shares which
were subject 

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thereto
shall, unless the Plan shall have been terminated, become available for future grant under the Plan. 

        4.    Administration of the Plan.    

        (a)   Procedure.

        (i)    Administration
With Respect to Directors and Officers.    With respect to grants of Awards to Employees who are also officers or
directors of the Company, the Plan shall be administered by (A) the Board, if the Board may administer the Plan in compliance with Rule 16b-3 promulgated under the
Exchange Act or any successor thereto ("Rule 16b-3") with respect to a plan intended to qualify thereunder as a discretionary plan, or (B) a Committee designated by the Board
to administer the Plan, which Committee shall be constituted in such a manner as to permit the Plan to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as a
discretionary plan. 

        (ii)   Multiple
Administrative Bodies.    If permitted by Rule 16b-3, the Plan may be administered by different
bodies with respect to directors, non-director officers and Employees who are neither directors nor officers. 

        (iii)  Administration
With Respect to Consultants and Other Employees.    With respect to grants of Awards to Employees who are neither
directors nor officers of the Company or to Consultants, the Plan shall be administered by (A) the Board, if the Board may administer the Plan in compliance with Rule 16b-3,
or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate law and applicable securities laws and of the Code (the "Applicable Laws"). Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused, and remove all members of the Committee and thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws. 

        (b)   Powers
of the Administrator.    Subject to the provisions of the Plan and in the case of a Committee, the specific duties
delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 

        (i)    to
determine the Fair Market Value of the Common Stock, in accordance with Section 2(l) of the Plan; 

        (ii)   to
select the officers, Consultants and Employees to whom Awards may from time to time be granted hereunder; 

        (iii)  to
determine whether and to what extent Options, stock grants, stock purchase rights or SARs, or any combination thereof, are granted hereunder; 

        (iv)  to
determine the number of shares of Common Stock to be covered by each such Award granted hereunder; 

        (v)   to
approve forms of agreement for use under the Plan; 

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        (vi)  to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the share price and
any restriction or limitation or waiver of forfeiture restrictions regarding any Option or other Award and/or the shares of Common Stock relating thereto, based in each case on such factors as the
Administrator shall determine, in its sole discretion); 

        (vii) to
determine whether and under what circumstances an Option or SAR may be settled in cash under subsection 9(f) instead of Common Stock; 

        (viii) to
determine whether, to what extent and under what circumstances Common Stock and other amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the participant (including providing for and determining the amount, if any, of any deemed earnings on any deferred amount during any deferral period); 

        (ix)  to
reduce the exercise price of any Option or SAR to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option or SAR shall
have declined since the date the Option or SAR was granted; and 

        (x)   to
determine the terms and restrictions applicable to stock grants, stock purchase rights and the Restricted Stock granted by such stock grant or purchased by exercising
such stock purchase rights. 

        (c)   Effect
of Committee's Decision.    All decisions, determinations and interpretations of the Administrator shall be final and
binding on all Participants and any other holders of any Awards granted hereunder. 

        5.    Eligibility.    

        (a)   Nonstatutory
Stock Options and SARs may be granted to Employees, non-Employee Members of the Board and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or SAR may, if he is otherwise eligible, be granted additional Options or SARs. 

        (b)   Each
Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designations, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any optionee
during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock Options. 

        (c)   For
purposes of Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is granted. 

        (d)   The
Plan shall not confer upon any Participant any right with respect to continuation of employment or consulting relationship with the Company, nor shall it interfere
in any way with his right or the Company's right to terminate his employment or consulting relationship at any time, with or without cause. 

        6.    Vesting.    Options or SARs granted under the Plan shall vest in annual increments
of at least 20% over not more than five years from the date of each option grant, provided that the Plan Administrator may provide in any Agreement issued pursuant to the Plan that an option may
become fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Plan Administrator. 

        7.    Term of Plan.    The Plan shall become effective upon the earlier to occur of its
adoption by the Board of Directors or its approval by the shareholders of the Company as described in Section 19 

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of
the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan. 

        8.    Terms of Options and SARs.    The term of each Option or SAR shall be the term
stated in the written agreement evidencing such Option or SAR; provided, however, that in the case of an Incentive Stock Option, the term shall be no more than ten (10) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement. However, in the case of an Option granted to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant thereof
or such shorter term as may be provided in the written agreement evidencing such Option. 

        9.    Option Exercise Price and Consideration.    

        (a)   The
per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Board, but shall be subject to
the following: 

        (i)    In
the case of an Incentive Stock Option 

        (A)  granted
to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

        (B)  granted
to any Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 

        (ii)   In
the case of a Nonstatutory Stock Option 

        (A)  granted
to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant. 

        (B)  granted
to any person, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. 

        (b)   The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in
the case of an Incentive Stock Option, shall be determined at the time of grant) and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares
which (x) in the case of Shares acquired upon exercise of an Option either have been owned by the Optionee for more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised,
(5) authorization from the Company to retain from the total number of Shares as to which the Option is exercised that number of Shares having a Fair Market Value on the date of exercise equal
to the exercise price for the total number of Shares as to which the option is exercised, (6) delivery of a properly executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds required to pay the exercise price, (7) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more than twelve months after the date of delivery of the subscription agreement, (8) any combination of the foregoing
methods of payment, or (9) such other consideration and method of payment for the issuance of Shares to the extent permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 

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        10.    Exercise of Options or SARs.    

        (a)   Procedure
for Exercise; Rights as a Shareholder.    Any Option or SAR granted hereunder shall be exercisable at such times and
under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Participant, and as shall be permissible under the terms of
the Plan. 

        An
Option or SAR may not be exercised for a fraction of a Share. 

        An
Option or SAR shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option or SAR by the person
entitled to exercise such Option or SAR and, if an Option is to be exercised, full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment
may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 13
of the Plan. 

        Exercise
of an Option or SAR in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the
Option or SAR, by the number of Shares as to which the Option or SAR is exercised. 

        (b)   Termination
of Employment.    In the event of termination of a Participant's consulting relationship or Continuous Status as an
Employee with the Company (as the case may be), such Participant may, but only within ninety (90) days (or such other period of time as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of grant of the Option and not exceeding ninety (90) days) after the date of such termination (but in no
event later than the expiration date of the term of such Option or SAR as set forth in the written agreement evidencing such Option or SAR), exercise his Option or SAR to the extent that such
Participant was entitled to exercise it at the date of such termination. To the extent that such Participant was not entitled to exercise the Option or SAR at the date of such termination, or if such
Participant does not exercise such Option or SAR to the extent so entitled within the time specified herein, the Option or SAR shall terminate. 

        (c)   Disability
of Optionee.    Notwithstanding the provisions of Section 9(b) above, in the event of termination of a
Participant's consulting relationship or Continuous Status as an Employee as a result of his total and permanent disability (as defined in Section 22(e)(3) of the Code), such Participant
may, but only within twelve (12) months from the date of such termination (but in no event later than the expiration date of the term of such Option or SAR as set forth in the written
agreement evidencing such Option or SAR), exercise the Option or SAR to the extent otherwise entitled to exercise it at the date of such termination. To the extent that such Participant was not
entitled to exercise the Option or SAR at the date of termination, or if such Participant does not exercise such Option or SAR to the extent so entitled within the time specified herein, the Option or
SAR shall terminate. 

        (d)   Death
of Optionee.    In the event of the death of a Participant, the Option or SAR may be exercised, at any time within twelve
(12) months following the date of death (but in no event later than the expiration date of the term of such Option or SAR as set forth in the written agreement evidencing such Option or
SAR), by the Participant's estate or by a person who acquired the right to exercise the Option or SAR by bequest or inheritance, but only to the extent the Participant was entitled to exercise the
Option or SAR at the date of death. To the extent that 

6

 

such
Participant was not entitled to exercise the Option or SAR at the date of death, or if such Participant's estate or any person who acquired the right to exercise the Option or SAR by bequest or
inheritance does not exercise such Option or SAR to the extent so entitled within the time specified herein, the Option or SAR shall terminate. 

        (e)   Rule 16b-3.    Options
or SARs granted to persons subject to Section 16(b) of the Exchange Act
must comply with Rule 16b-3 and shall contain such additional conditions
or restrictions as may be required thereunder to qualify for the maximum exception from Section 16 of the Exchange Act with respect to Plan transactions. 

        (f)    Buyout
Provisions.    The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option or SAR
previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Participant at the time that such offer is made. 

        (g)   Payout
Provisions.    At the discretion of the Company, the payment to a Participant upon exercise of a SAR, may be in cash, in
Shares of equivalent value, or in some combination thereof, subject to the availability of Shares to the Company under the Plan. 

        11.    Non-Transferability of Options or SARs.    The Option or SAR may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. The terms of the Option or SAR shall be binding upon the executors, administrators, heirs, successors and assigns of the Participant. 

        12.    Stock Grants and Stock Purchase Rights.    

        (a)   Awards
and Rights to Purchase.    Stock grants and stock purchase rights may be issued either alone, in addition to, or in tandem
with other Awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will make a stock grant or offer stock purchase rights under the Plan,
it shall advise the offeree in writing of the terms, conditions and restrictions related to the grant or offer, including the number of Shares that such person shall be granted or entitled to purchase
and, in the case of a right to purchase (i) the price to be paid [which price shall not be less than 50% of the Fair Market Value of the Shares as of the date of the
offer], and (ii) the time within which such person must accept such offer, [which shall in no event exceed thirty (30) days from the date upon which the
Administrator made the determination to grant the stock purchase right]. The offer shall be accepted by execution of a Restricted Stock purchase agreement, as the case may be, in the form
determined by the Administrator. 

        (b)   Other
Provisions.    The Restricted Stock grant agreement and purchase agreement shall contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock grant agreements or purchase agreements need
not be the same with respect to each purchaser. 

        (c)   Rights
as a Shareholder.    Once the stock grant is completed or a stock purchase right is exercised, the grantee or purchaser
shall have the rights equivalent to those of a shareholder, and shall be a shareholder when his or her grant or purchase is entered upon the records of the 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 stock grant is completed or the stock purchase right is exercised, except as provided in Section 13 of the Plan. 

        13.    Stock Withholding to Satisfy Withholding Tax Obligations.    At the discretion of
the Administrator, Participants may satisfy withholding obligations as provided in this paragraph. When a Participant incurs tax liability in connection with an Option, stock grant, stock purchase
right or SAR, 

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which
tax liability is subject to tax withholding under applicable tax laws, and the Participant is obligated to pay the Company an amount required to be withheld under applicable tax laws, the
Participant may satisfy the withholding tax obligation by electing to have the Company withhold from the Shares to be issued upon exercise of the Option or SAR, or the Shares to be issued in
connection with the stock grant or stock purchase right, if any, that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld is to be determined (the "Tax Date"). 

        In
the event that the Company elects to make a payment to the Participant in cash upon the exercise of a SAR, the Participant may satisfy the withholding tax obligation by electing to
have the Company withhold from such payment the amount required to satisfy such withholding tax obligation. 

        All
elections by a Participant to have Shares or cash withheld for this purpose, as the case may be, shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions: 

        (a)   the
election must be made on or prior to the applicable Tax Date; 

        (b)   once
made, the election shall be irrevocable as to the particular Shares of the Option, stock purchase right or SAR, as to which the election is made; 

        (c)   all
elections shall be subject to the consent or disapproval of the Administrator; 

        (d)   if
the Participant is subject to Rule 16b-3, the election must comply with the applicable provisions of Rule 16b-3 and shall
be subject to such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions. 

        In
the event the election to have Shares or cash withheld is made by a Participant and the Tax Date is deferred under Section 83 of the Code because no election is filed under
Section 83(b) of the Code, the Participant shall receive the full number of Shares or full amount of cash, as the case may be, with respect to which the Option, stock grant, stock purchase
right or SAR is exercised but such Participant shall be unconditionally obligated to tender back to the Company the proper number of Shares, or the proper amount of cash, as the case may be, on the
Tax Date. 

        14.    Adjustments Upon Changes in Capitalization or Merger.    Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option or SAR, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or SARs have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or SAR, as well as the price per
share of Common Stock covered by each such outstanding Option or SAR, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option or SAR. 

        In
the event of the proposed dissolution or liquidation of the Company, the Board shall notify the Participant at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option or SAR will terminate immediately prior to the consummation of such 

8

 

proposed
action. In the event of a merger or consolidation of the Company with or into another corporation or the sale of all or substantially all of the Company's assets (hereinafter, a "merger"),
the Option or SAR shall be assumed or an equivalent option or stock appreciation right shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation. In
the event that such successor corporation does not agree to assume the Option or SAR, or to substitute an equivalent option or stock appreciation right, the Board shall, in lieu of such assumption or
substitution, provide for the Participant to have the right to exercise all Options or SARs previously granted to such Participant, including Options or SARs which would not otherwise be exercisable.
If the Board makes an Option or SAR fully exercisable in lieu of assumption or substitution in the event of a merger, the Board shall notify the Participant that the Option or SAR shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and the Option or SAR will terminate upon the expiration of such period. For the purposes of this paragraph, the
Option or SAR shall be considered assumed if, following the merger, the Option or SAR, confers the right to purchase, or receive the appreciation in Fair Market Value, as the case may be, for each
Share of stock subject to the Option or SAR immediately prior to the merger, the consideration (whether stock, cash, or other securities or property) received in the merger by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the
outstanding Shares); provided, however, that if such consideration received in the merger was not solely common stock of the successor corporation or its Parent, the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to be received upon the exercise of the Option or SAR, for each Share of stock subject to the Option or SAR, to be solely
common stock of the successor corporation or its Parent equal in Fair Market Value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 

        15.    Time of Granting Options.    The date of grant of an Option or SAR shall, for all
purposes, be the date on which the Administrator makes the determination granting such Option or SAR, or such other date as is determined by the Board. Notice of the determination shall be given to
each Employee or Consultant to whom an Option or SAR is so granted within a reasonable time after the date of such grant. 

        16.    Amendment and Termination of the Plan.    

        (a)   Amendment
and Termination.    The Board may at any time amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which would impair the rights of any Participant under any grant theretofore made, without his or her consent. In addition, to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act or with Section 422 of the Code (or any other applicable law or regulation, including
the requirements of the NASD or an established stock exchange), the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. 

        (b)   Effect
of Amendment or Termination.    Any such amendment or termination of the Plan shall not affect Options or SARs already
granted and such Options or SARs shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Board, which
agreement must be in writing and signed by the Participant and the Company. 

        17.    Conditions Upon Issuance of Shares.    Shares shall not be issued pursuant to the
exercise of an Option or SAR unless the exercise of such Option or SAR and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

9

 

        As
a condition to the exercise of an Option or SAR, the Company may require the person exercising such Option or SAR to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by
any of the aforementioned relevant provisions of law. 

        18.    Reservation of Shares.    The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 

        The
inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have
been obtained. 

        19.    Agreements.    Options, stock grants, stock purchase rights and SARs shall be
evidenced by written agreements in such form as the Administrator shall approve from time to time. 

        20.    Shareholder Approval.    Continuance of the Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under
applicable state and federal law. 

        21.    Information to Participants.    The Company shall provide to each Participant,
during the period for which such Participant has one or more Options or SARs outstanding, copies of all annual reports and other information which are provided to all shareholders of the Company.
Further, the Company shall provide to each such Participant, at least annually, financial statements prepared by management of the Company. The Company shall not be required to provide such
information or financial statement if the issuance of Options or SARs under the Plan is limited to key employees whose duties in connection with the Company assure their access to equivalent
information. 

10

OPTION #                                      

THE
SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933. 

ACCURAY
INCORPORATED

1998 EQUITY INCENTIVE PLAN

INCENTIVE STOCK OPTION AGREEMENT 

        The
Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement, including the Right of First Refusal set forth in paragraph 11
and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under this Option Agreement. 

	Date:	 	
	 	
 Print name:

        The
undersigned, being the spouse of the above-named Optionee, does hereby acknowledge that the undersigned has read and is familiar with the provisions of the above Option Agreement,
including, without limitation, the provisions of paragraph 11 providing a right of first refusal in favor of the Company upon certain changes in record ownership, and the undersigned hereby
agrees thereto and joins therein to the extent, if any, that the agreement and joinder of the undersigned may be necessary. 

	Date:	 	
	 	
 Print name:

        Accuray
Incorporated granted to the individual named in the attached Notice of Grant of Stock Options and Option Agreement an option to
purchase certain shares of Common Stock of the Company, in the manner and subject to the provisions of this Option Agreement. 

        1.    Definitions:    

        (a)   "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

        (b)   "Company"
shall mean Accuray Incorporated, a California corporation, and any successor corporation thereto. 

        (c)   "Date
of Option Grant" shall be as defined in the Notice of Grant of Stock Options and Option Agreement attached. 

        (d)   "Exercise
Price" shall mean the per share price as adjusted from time to time pursuant to paragraph 9 below and as defined in the Notice
of Grant of Stock Options and Option Agreement attached. 

        (e)   "Number
of Option Shares" shall mean the number of shares of Common Stock of the Company as adjusted from time to time pursuant to paragraph 9 below defined in
the Notice of Grant of Stock Options and Option Agreement attached. 

        (f)    "Option"
shall mean the option to purchase shares of Common Stock of the Company granted hereunder. 

 

        (g)   "Option
Termination Date" shall mean the date ten (10) years after the Date of Option Grant. 

        (h)   "Optionee"
shall mean the grantee of the option as defined in the Notice of Grant of Stock Options and Option Agreement
attached. 

        (i)    "Plan"
shall mean the Accuray Incorporated 1998 Equity Incentive Plan. 

        (j)    "Vesting
Schedule." Except as provided in paragraphs 7 and 8 below, the "Vesting Schedule" shall be as defined in the Notice of
Grant of Stock Options and Option Agreement attached. 

        2.    Status of the Option.    This Option is intended to be an incentive stock option,
but the Company does not represent or warrant that this Option qualifies as such. The Optionee should consult with the Optionee's own tax advisors regarding the tax effects of this Option and the
requirements necessary to obtain favorable income tax treatment of Section 422 of the Code, including, but not limited to, holding period requirements. 

        3.    Administration.    All questions of interpretation concerning this Option Agreement
shall be determined by the Board of Directors of the Company (the "Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board, in accordance
with the terms of the Plan. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board granted in the Plan, including, without limitation, the power to terminate or amend the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law. All determinations by the Board shall be final and binding upon all persons having an interest in the Option. 

        4.    Exercise of the Option.    

        (a)   Right
to Exercise.    The Option shall become exercisable in accordance with the Vesting Schedule set forth in Section 1
above. In no event shall the Option be exercisable for more shares than the Number of Option Shares. 

        (b)   Method
of Exercise.    The Option may be exercised by written notice to the Company which must state the election to exercise the
Option, the number of shares for which the Option is being exercised and such other representations and agreements as to the Optionee's investment intent with respect to such shares relating to
compliance with applicable federal or state securities laws and other administrative matters as reasonably may be required pursuant to the provisions of this Option Agreement and the exercise form
used by the Company. The written notice must be signed by the Optionee and is not effective until it is delivered in person or by certified or registered mail, return receipt requested, to the
President of the Company prior to the termination of the Option as set forth in paragraph 6 below, accompanied by full payment of the exercise price for the number of shares being purchased. 

        (c)   Form
of Payment of Exercise Price.    Such payment shall be made in cash, by check, cash equivalent, or pursuant to a "cashless
exercise" in which the appropriate number of shares being purchased are retained by the Company in satisfaction of such payment obligations. 

        (d)   Withholding.    At
the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company,
the Optionee hereby authorizes payroll withholding and otherwise agrees to make adequate provision for foreign, federal and state tax withholding obligations of the Company, if any, which arise in
connection with the Option. The Optionee is cautioned that the Option is not exercisable unless the Company's withholding obligations are satisfied. Accordingly, the Optionee may not be able to
exercise the Option when desired even though the Option is vested and the Company shall have no obligation to issue a certificate for such shares. 

2

 

        (e)   Certificate
Registration.    The certificate or certificates for the shares as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the Optionee and promptly delivered to such shareholder following satisfaction of the various requirements hereunder. 

        (f)    Restrictions
on Grant of the Option and Issuance of Shares.    The issuance of the shares upon exercise of the Option shall be
subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised if the issuance of shares upon such exercise
would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations. In addition, the Option may not be exercised unless (i) a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the
Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The Optionee is cautioned that the Option may not be exercisable unless the foregoing conditions are satisfied. Accordingly, the Optionee may not be
able to exercise the Option
when desired even though the Option is vested. Questions concerning this restriction should be directed to the President of the Company. As a condition to the exercise of the Option, the Company may
require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company. 

        (g)   Fractional
Shares.    The Company at its discretion shall determine whether to issue fractional shares upon the exercise of the
Option or to pay to the Optionee cash equal to the fair market value of such fractional shares. 

        5.    Non-Transferability of the Option.    The Option may be exercised
during the lifetime of the Optionee only by the Optionee or the Optionee's guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of
descent and distribution. Following the death of the Optionee, the Option, to the extent unexercised and exercisable by the Optionee on the date of death, may be exercised by the Optionee's legal
representative or by any person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution. 

        6.    Termination of the Option.    The Option shall terminate and may no longer be
exercised on the first to occur of (a) the Option Termination Date as defined above, (b) the last date for exercising the Option following termination of employment as described in
paragraph 7 below, or (c) upon an "Ownership Change" to the extent provided in paragraph 8 below. 

        7.    Termination of Employment.    

        (a)   Termination
of the Option. 

        (i)    Termination
for Cause.    If the Optionee ceases to be an employee of the Company by reason of "termination for cause," as defined
below, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee, shall terminate on the date on which the Optionee's employment
terminated. For the purposes of this paragraph 7(a)(i), "termination for cause" shall mean an involuntary termination by the Company or a voluntary termination by the Optionee as a
result of or in connection with the following events: 

        (1)   the
Optionee's intentional, persistent failure, dereliction, or refusal to perform such duties as are reasonably assigned to him or her by the officers and directors of
the Company from time to time; or 

3

 

        (2)   the
Optionee's fraud, dishonesty, or other deliberate injury to the Company in the performance of his or her duties; or 

        (3)   the
Optionee's conviction of a crime which constitutes a felony involving moral turpitude, fraud or deceit in the jurisdiction in which the Optionee is employed,
regardless of whether such crime involves the Company; or 

        (4)   the
Optionee's material breach of his or her employment agreement or willful, improper disclosure of confidential information relating to the Company. 

        (ii)   Death
or Disability.    If the Optionee ceases to be an employee of the Company by reason of the death or disability of the
Optionee within the meaning of Section 422(c) of the Code, the Option, to the extent unexercised by the Optionee may be exercised by the Optionee (or the Optionee's legal representative)
at any time prior to the expiration of one (1) year from the date on which the Optionee's employment terminated, but in any event no later than the Option Termination Date. 

        (iii)  Other
Termination.    If the Optionee ceases to be an employee of the Company for any reason, except death or disability within
the meaning of Section 422(c) of the Code or "termination for cause," as defined in paragraph 7(a)(i) above, the Option, to the extent unexercised and exercisable by the Optionee on the
date on which the Optionee ceased to be an employee, may be exercised by the Optionee within three (3) months after the date on which the Optionee's employment terminated, but in any event no
later than the Option Termination Date. 

        Except
as provided in this paragraph 7(a), the Option shall terminate and may not be exercised after the Optionee ceases to be an employee of the Company. 

        (b)   Extension
if Exercise Prevented by Law.    Notwithstanding the foregoing, if the exercise of the Option within the applicable time
periods set forth above is prevented by the provisions of paragraph 4(f) above, the Option shall remain exercisable until three (3) months after the date the Optionee is notified by the
Company that the Option is exercisable, but in any event no later than the Option Termination Date. 

        8.    Ownership Change.    

        (a)   In
the event of (i) the acquisition of the Company, including a merger or consolidation of the Company with or into another corporation where the existing
shareholders do not retain a majority of the beneficial interest in the voting stock of the Company, (ii) the direct or indirect sale or exchange by
the shareholders of the Company of all or substantially all of the stock of the Company where shareholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a
majority of the beneficial interest in the voting stock of the Company after such sale or exchange; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the
Company (other than a sale, exchange, or transfer to one or more parent or subsidiary corporations of the Company), the successor entity may either assume the Option or substitute it with an
equivalent option, or the Board shall provide for the Optionee to have the right to exercise all Options previously granted including Options that would otherwise not be exercisable, in accordance
with the provisions of the Plan. 

        (b)   In
the event of a proposed liquidation or dissolution of the Company, the Board shall notify the Optionee at least fifteen days prior to the proposed action. 

        In
the event of an Ownership Change, the Option shall terminate and cease to be outstanding effective as of the date of the Ownership Change to the extent that the Option is neither
assumed or substituted for in connection with the Ownership Change nor exercised as of the date of the Ownership Change. 

4

 

        9.    Effect of Change in Stock Subject to the Option.    Appropriate adjustments shall
be made in the number, exercise price and class of shares of stock subject to the Option in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to the Option are exchanged
for, converted into, or otherwise become shares of another corporation (the "New Shares"), the Company may unilaterally amend the Option to provide that the Option is exercisable for
New Shares. In the event of any such amendment, the number of shares and the exercise price shall be adjusted in a fair and equitable manner. 

        10.    Rights as a Shareholder or Employee.    The Optionee shall have no rights as a
shareholder with respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. No adjustment shall
be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued, except as provided in paragraph 9 above.
Nothing in the Option shall confer upon the Optionee any right to continue in the employ of the Company or interfere in any way with any right of the Company to terminate the Optionee's employment at
any time. 

        11.    Right of First Refusal.    

        (a)   Right
of First Refusal.    In the event the Optionee proposes to sell, pledge, or otherwise transfer any shares acquired upon the
exercise of the Option (the "Transfer Shares") to any person or entity, the
Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set forth in this paragraph 11 (the "Right of First Refusal"). 

        (b)   Notice
of Proposed Transfer.    Prior to any proposed transfer of the Transfer Shares, the Optionee shall give a written notice
(the "Transfer Notice") to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the "Proposed
Transferee") and, if the transfer is voluntary, the proposed transfer price and containing such information necessary to show the bona fide nature of the proposed transfer. In the event of a
bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the fair market value of the Transfer Shares as determined by the Company in good faith. In the event
the Optionee proposes to transfer any shares acquired upon the exercise of the Option to more than one (1) Proposed Transferee, the Optionee shall provide a separate Transfer Notice for the
proposed transfer to each Proposed Transferee. The Transfer Notice shall be signed by both the Optionee and the Proposed Transferee and must constitute a binding commitment of the Optionee and the
Proposed Transferee for the transfer of the Transfer Shares to the Proposed Transferee subject only to the Right of First Refusal. 

        (c)   Bona Fide
Transfer.    In the event that the Company shall determine that the information provided by the Optionee in the
Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Optionee written notice of the Optionee's failure to comply with
the procedure described in this paragraph 11 and the Optionee shall have no right to transfer the Transfer Shares without first complying with the procedure described in this
paragraph 11. The Optionee shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide. 

        (d)   Exercise
of the Right of First Refusal.    In the event the proposed transfer is deemed to be bona fide, the Company shall
have the right to purchase all or a portion of the Transfer Shares at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Optionee of a notice of exercise of the
Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The Company's exercise or failure to exercise the Right of First Refusal with
respect to any proposed transfer described in a Transfer Notice shall not affect the Company's ability to exercise the Right of First Refusal with respect to any proposed transfer described in any
other Transfer Notice, whether or not such other Transfer Notice is 

5

 

issued
by the Optionee or issued by a person other than the Optionee with respect to a proposed transfer to the same Proposed Transferee. If the Company exercises the Right of First Refusal, the
Company and the Optionee shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date of the
Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the
Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as
reasonably determined by the Company. For purposes of the foregoing, cancellation of any indebtedness of the Optionee shall be treated as payment to the Optionee in cash to the extent of the unpaid
principal and any accrued interest canceled. 

        (e)   Failure
to Exercise the Right of First Refusal.    If the Company fails to exercise the Right of First Refusal in full within the
period specified in paragraph 11(d) above, the Optionee may conclude a transfer to the Proposed Transferee of the Transfer Shares on the terms and conditions described in the Transfer Notice,
provided such transfer occurs not later than one hundred twenty (120) days following delivery to the Company of the Transfer Notice. The Company shall have the right to demand further
assurances from the Optionee and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed
transfer as bona fide. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall
again be subject to the Right of First Refusal and shall require compliance by the Optionee with the procedure described in this paragraph 11. 

        (f)    Transferees
of the Transfer Shares.    All transferees of the Transfer Shares or any interest therein, other than the Company,
shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interests
subject to the provisions of this paragraph 11 providing for the Right of First Refusal with respect to any subsequent transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 11 are met. 

        (g)   Assignment
of the Right of First Refusal.    The Company shall have the right to assign the Right of First Refusal at any time,
whether or not the Optionee has attempted a transfer, to one (1) or more persons as may be selected by the Company. 

        12.    Stock Dividends Subject to Option Agreement.    If, from time to time, there is
any stock dividend, stock split, or other change in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement,
then in such event any and all new substituted or additional securities to which the Optionee is entitled by reason of the Optionee's ownership of the shares acquired upon exercise of the Option shall
be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately before such event. 

        13.    Notice of Sales Upon Disqualifying Disposition.    The Optionee shall dispose of
the shares acquired pursuant to the Option only in accordance with the provisions of this Option Agreement. In addition, the Optionee shall promptly notify the President of the Company if the Optionee
disposes of any of the shares acquired pursuant to the Option within one (1) year from the date the Optionee exercises all or part of the Option or within two (2) years of the date of
grant of the Option. Until such time as the Optionee disposes of such shares in a manner consistent with the provisions of this Option Agreement, the Optionee shall hold all shares acquired pursuant
to the Option in the 

6

 

Optionee's
name (and not in the name of any nominee) for the one-year period immediately after exercise of the Option and the two-year period immediately after grant of
the Option. At any time during the one-year or two-year periods set forth above, the Company may place a legend or legends on any certificate or certificates representing
shares acquired pursuant to the Option requesting the transfer agent for the Company's stock to notify the Company of any such transfers. The obligation of the Optionee to notify the company of any
such transfer shall continue notwithstanding that a legend has been placed on the certificate or certificates pursuant to the preceding sentence. 

        14.    Legends.    The Company may at any time place legends referencing the Right of
First Refusal set forth in paragraph 11 above and any applicable federal or state securities law restrictions on all certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of
the Optionee in order to effectuate the provisions of this paragraph 14. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to,
the following: 

        (a)   "THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT." 

        (b)   Any
legend required to be placed thereon by applicable law. 

        (c)   "THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN
THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION." 

        15.    Initial Public Offerings.    The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to
acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided,
however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering. The
foregoing limitation shall not apply to shares registered in the initial public offering under the Securities Act. The Optionee shall be subject to this paragraph provided and only if the officers and
directors of the Company are also subject to similar arrangements. 

        16.    Binding Effect.    This Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. 

        17.    Termination or Amendment.    The Board, including any duly appointed committee of
the Board, may terminate or amend the Plan at any time; provided, however, that no such action shall 

7

 

deprive
any person, without such person's consent, of any rights previously granted pursuant to this Option Agreement. 

        18.    Incorporation of Terms of Plan; Integrated Agreement.    The terms of the Plan are
incorporated herein by reference. This Option Agreement constitutes the entire understanding and agreement of the Optionee and the Company with respect to the subject matter contained herein, and
there are no
agreements, understandings, restrictions, representations, or warranties among the Optionee and the Company other than those as set forth or provided for herein. To the extent contemplated herein, the
provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. 

        19.    Applicable Law.    This Option Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its choice of law provisions. 

8

OPTION #                                      

THE
SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933. 

ACCURAY
INCORPORATED

1998 EQUITY INCENTIVE PLAN 

 
 

NONQUALIFIED STOCK OPTION AGREEMENT    
    

        The Optionee represents that the Optionee is familiar with the terms and provisions of this Option Agreement, including the Right of First Refusal set forth in
paragraph 11 and hereby accepts the Option subject to all of the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board upon any questions arising under this Option Agreement. 

	Date:	 	
	 	
 Print name:

        The
undersigned, being the spouse of the above-named Optionee, does hereby acknowledge that the undersigned has read and is familiar with the provisions of the above Option Agreement,
including, without limitation, the provisions of paragraph 11 providing a right of first refusal in favor of the
Company upon certain changes in record ownership, and the undersigned hereby agrees thereto and joins therein to the extent, if any, that the agreement and joinder of the undersigned may
be necessary. 

	Date:	 	
	 	
 Print name:

        Accuray
Incorporated granted to the individual named in the attached Notice of Grant of Stock Options and Option Agreement an option to
purchase certain shares of Common Stock of the Company, in the manner and subject to the provisions of this Option Agreement. 

        1.    Definitions:    

        (a)   "Code"
shall mean the Internal Revenue Code of 1986, as amended. 

        (b)   "Company"
shall mean Accuray Incorporated, a California corporation, and any successor corporation thereto. 

        (c)   "Date
of Option Grant" shall be as defined in the Notice of Grant of Stock Options and Option Agreement attached. 

        (d)   "Exercise
Price" shall mean the per share price as adjusted from time to time pursuant to paragraph 9 below and as defined in the Notice
of Grant of Stock Options and Option Agreement attached. 

        (e)   "Number
of Option Shares" shall mean the number of shares of Common Stock of the Company as adjusted from time to time pursuant to paragraph 9 below defined in
the Notice of Grant of Stock Options and Option Agreement attached. 

        (f)    "Option"
shall mean the option to purchase shares of Common Stock of the Company granted hereunder. 

        (g)   "Option
Termination Date" shall mean the date ten (10) years after the Date of Option Grant. 

 

        (h)   "Optionee"
shall mean the grantee of the option as defined in the Notice of Grant of Stock Options and Option Agreement
attached. 

        (i)    "Plan"
shall mean the Accuray Incorporated 1998 Equity Incentive Plan. 

        (j)    "Vesting
Schedule." Except as provided in paragraphs 7 and 8 below, the "Vesting Schedule" shall be as defined in the Notice of
Grant of Stock Options and Option Agreement attached. 

        2.    Status of the Option.    This Option is intended to be a nonqualified stock option
and shall not be treated as an incentive stock option described in Section 422 of the Code. 

        3.    Administration.    All questions of interpretation concerning this Option Agreement
shall be determined by the Board of Directors of the Company (the "Board") and/or by a duly appointed committee of the Board having such powers as shall be specified by the Board, in accordance
with the terms of the Plan. Any subsequent references herein to the Board shall also mean the committee if such committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board granted in the Plan, including, without limitation, the power to terminate or amend the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law. All determinations by the Board shall be final and binding upon all persons having an interest in the Option. 

        4.    Exercise of the Option.    

        (a)   Right
to Exercise.    The Option shall become exercisable in accordance with the Vesting Schedule set forth in Section 1
above. In no event shall the Option be exercisable for more shares than the Number of Option Shares. 

        (b)   Method
of Exercise.    The Option may be exercised by written notice to the Company which must state the election to exercise the
Option, the number of shares for which the Option is being exercised and such other representations and agreements as to the Optionee's investment intent with respect to such shares relating to
compliance with applicable federal or state securities laws and other administrative matters as reasonably may be required pursuant to the provisions of this Option Agreement and the exercise form
used by the Company. The written notice must be signed by the Optionee and is not effective until it is delivered in person or by certified or registered mail, return receipt requested, to the
President of the Company prior to the termination of the Option as set forth in paragraph 6 below, accompanied by full payment of the exercise price for the number of shares being purchased. 

        (c)   Form
of Payment of Exercise Price.    Such payment shall be made in cash or by check. 

        (d)   Withholding.    At
the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company,
the Optionee hereby authorizes payroll withholding and otherwise agrees to make adequate provision for foreign, federal and state tax withholding obligations of the Company, if any, which arise in
connection with the Option. The Optionee is cautioned that the Option is not exercisable unless the Company's withholding obligations are satisfied. Accordingly, the Optionee may not be able to
exercise the Option when desired even though the Option is vested and the Company shall have no obligation to issue a certificate for such shares. 

        (e)   Certificate
Registration.    The certificate or certificates for the shares as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the Optionee and promptly delivered to such shareholder following satisfaction of the various requirements hereunder. 

        (f)    Restrictions
on Grant of the Option and Issuance of Shares.    The issuance of the shares upon exercise of the Option shall be
subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities. The Option may not be exercised if the 

2

 

issuance
of shares upon such exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations. In addition, the Option may not be exercised
unless (i) a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), shall at the time of exercise of the Option be in effect with respect to the
shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of
an applicable exemption from the registration requirements of the Securities Act. The Optionee is cautioned that the Option may not be exercisable unless the foregoing conditions are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested. Questions concerning this restriction should be directed to the President of the
Company. As a condition to the exercise of the Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any
applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. 

        (g)   Fractional
Shares.    The Company at its discretion shall determine whether to issue fractional shares upon the exercise of the
Option or to pay to the Optionee cash equal to the fair market value of such fractional shares. 

        5.    Non-Transferability of the Option.    The Option may be exercised
during the lifetime of the Optionee only by the Optionee or the Optionee's guardian or legal representative and may not be assigned or transferred in any manner except by will or by the laws of
descent and distribution. Following the death of the Optionee, the Option, to the extent unexercised and exercisable by the Optionee on the date of death, may be exercised by the Optionee's legal
representative or by any person empowered to do so under the deceased Optionee's will or under the then applicable laws of descent and distribution. 

        6.    Termination of the Option.    The Option shall terminate and may no longer be
exercised on the first to occur of (a) the Option Termination Date as defined above, (b) the last date for exercising the Option following termination of employment as described in
paragraph 7 below, or (c) upon an "Ownership Change" to the extent provided in paragraph 8 below. 

        7.    Termination of Employment.    

        (a)   Termination
of the Option. 

        (i)    Termination
for Cause.    If the Optionee is an employee at the time the option is granted and thereafter ceases to be an employee
of the Company by reason of "termination for cause," as defined below, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee ceased to be an employee,
shall terminate on the date on which the Optionee's employment terminated. For the purposes of this paragraph 7(a)(i), "termination for cause" shall mean an involuntary termination by
the Company or a voluntary termination by the Optionee as a result of or in connection with the following events: 

        (1)   the
Optionee's intentional, persistent failure, dereliction, or refusal to perform such duties as are reasonably assigned to him or her by the officers and directors of
the Company from time to time; or 

        (2)   the
Optionee's fraud, dishonesty, or other deliberate injury to the Company in the performance of his or her duties; or 

        (3)   the
Optionee's conviction of a crime which constitutes a felony involving moral turpitude, fraud or deceit in the jurisdiction in which the Optionee is employed,
regardless of whether such crime involves the Company; or 

3

 

        (4)   the
Optionee's material breach of his or her employment agreement or willful, improper disclosure of confidential information relating to the Company. 

        (ii)   Death.    Upon
the death of the Optionee, the Option, to the extent unexercised by the Optionee may be exercised by the Optionee
(or the Optionee's legal representative) at any time prior to the expiration of one (1) year from the date of death, but in any event no later than the Option Termination Date. 

        (iii)  Other
Termination.    If the Optionee is an employee at the time the option is granted and thereafter ceases to be an employee
of the Company for any reason, except death or "termination for cause," as defined in paragraph 7(a)(i) above, the Option, to the extent unexercised and exercisable by the Optionee on the date
on which the Optionee ceased to be an employee, may be exercised by the Optionee within three (3) months after the date on which the Optionee's employment terminated, but in any event no later
than the Option Termination Date. 

        Except
as provided in this paragraph 7(a), the Option shall terminate and may not be exercised after the Optionee, if an employee on the date the option is granted, ceases to be
an employee of the Company. 

        (b)   Extension
if Exercise Prevented by Law.    Notwithstanding the foregoing, if the exercise of the Option within the applicable time
periods set forth above is prevented by the provisions of paragraph 4(f) above, the Option shall remain exercisable until three (3) months after the date the Optionee is notified by the
Company that the Option is exercisable, but in any event no later than the Option Termination Date. 

        8.    Ownership Change.    An "Ownership Change" shall be deemed to have occurred in the
event any of the following occurs with respect to the Company: 

        (a)   In
the event of (i) the acquisition of the Company, including a merger or consolidation of the Company with or into another corporation where the existing
shareholders do not retain a majority of the beneficial interest in the voting stock of the Company, (ii) the direct or indirect sale or exchange by the shareholders of the Company of all or
substantially all of the stock of the Company where shareholders of the Company before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in
the voting stock of the Company after such sale or exchange; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (other than a sale, exchange, or
transfer to one or more parent or subsidiary corporations of the Company), the successor entity may either assume the Option or substitute it with an equivalent option, or the Board shall provide for
the Optionee to have the right to exercise all Options previously granted including Options that would otherwise not be exercisable, in accordance with the provisions of the Plan. 

        (b)   In
the event of a proposed liquidation or dissolution of the Company, the Board shall notify the Optionee at least fifteen days prior to the proposed action. 

        In
the event of an Ownership Change, the Option shall terminate and cease to be outstanding effective as of the date of the Ownership Change to the extent that the Option is neither
assumed or substituted for in connection with the Ownership Change nor exercised as of the date of the Ownership Change. 

        9.    Effect of Change in Stock Subject to the Option.    Appropriate adjustments shall
be made in the number, exercise price and class of shares of stock subject to the Option in the event of a stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or like change in the capital structure of the Company. In the event a majority of the shares which are of the same class as the shares that are subject to the Option are exchanged
for, converted into, or otherwise become 

4

 

shares
of another corporation (the "New Shares"), the Company may unilaterally amend the Option to provide that the Option is exercisable for New Shares. In the event of any such
amendment, the number of shares and the exercise price shall be adjusted in a fair and equitable manner. 

        10.    Rights as a Shareholder or Employee.    The Optionee shall have no rights as a
shareholder with respect to any shares covered by the Option until the date of the issuance of a certificate or certificates for the shares for which the Option has been exercised. No adjustment shall
be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued, except as provided in paragraph 9 above.
Nothing in the Option shall confer upon the Optionee any right to continue in the employ of the Company or, in the case of an Optionee who is an employee on the date the option is granted, interfere
in any way with any right of the Company to terminate the Optionee's employment at any time. 

        11.    Right of First Refusal.    

        (a)   Right
of First Refusal.    In the event the Optionee proposes to sell, pledge, or otherwise transfer any shares acquired upon the
exercise of the Option (the "Transfer Shares") to any person or entity, the Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set
forth in this paragraph 11 (the "Right of First Refusal"). 

        (b)   Notice
of Proposed Transfer.    Prior to any proposed transfer of the Transfer Shares, the Optionee shall give a written notice
(the "Transfer Notice") to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the "Proposed
Transferee") and, if the transfer is voluntary, the proposed transfer price and containing such information necessary to show the bona fide nature of the proposed transfer. In the event of a
bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the fair market value of the Transfer Shares as determined by the Company in good faith. In the event
the Optionee proposes to transfer any shares acquired upon the exercise of the Option to more than one (1) Proposed Transferee, the Optionee shall provide a separate Transfer Notice for the
proposed transfer to each Proposed Transferee. The Transfer Notice shall be signed by both the Optionee and the Proposed Transferee and must constitute a binding commitment of the Optionee and the
Proposed Transferee for the transfer of the Transfer Shares to the Proposed Transferee subject only to the Right of First Refusal. 

        (c)   Bona Fide
Transfer.    In the event that the Company shall determine that the information provided by the Optionee in the
Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Optionee written notice of the Optionee's failure to comply with
the procedure described in this paragraph 11 and the Optionee shall have no right to transfer the Transfer Shares without first complying with the procedure described in this
paragraph 11. The Optionee shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide. 

        (d)   Exercise
of the Right of First Refusal.    In the event the proposed transfer is deemed to be bona fide, the Company shall
have the right to purchase all or a portion of the Transfer Shares at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Optionee of a notice of exercise of the
Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company. The Company's exercise or failure to exercise the Right of First Refusal with
respect to any proposed transfer described in a Transfer Notice shall not affect the Company's ability to exercise the Right of First Refusal with respect to any proposed transfer described in any
other Transfer Notice, whether or not such other Transfer Notice is issued by the Optionee or issued by a person other than the Optionee with respect to a proposed transfer to the same Proposed
Transferee. If the Company exercises the Right of First Refusal, the Company and the Optionee shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the
Transfer Notice within sixty (60) days after the date of the 

5

 

Transfer
Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the
Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as
reasonably determined by the Company. For purposes of the foregoing, cancellation of any indebtedness of the Optionee shall be treated as payment to the Optionee in cash to the extent of the unpaid
principal and any accrued interest canceled. 

        (e)   Failure
to Exercise the Right of First Refusal.    If the Company fails to exercise the Right of First Refusal in full within the
period specified in paragraph 11(d) above, the Optionee may conclude a transfer to the Proposed Transferee of the Transfer Shares on the terms and conditions described in the Transfer Notice,
provided such transfer occurs not later than one hundred twenty (120) days following delivery to the Company of the Transfer Notice. The Company shall have the right to demand further
assurances from the Optionee and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions
described in the Transfer Notice. No Transfer Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed
transfer as bona fide. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall
again be subject to the Right of First Refusal and shall require compliance by the Optionee with the procedure described in this paragraph 11. 

        (f)    Transferees
of the Transfer Shares.    All transferees of the Transfer Shares or any interest therein, other than the Company,
shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interests
subject to the provisions of this paragraph 11 providing for the Right of First Refusal with respect to any subsequent transfer. Any sale or transfer of any shares acquired upon exercise of the
Option shall be void unless the provisions of this paragraph 11 are met. 

        (g)   Assignment
of the Right of First Refusal.    The Company shall have the right to assign the Right of First Refusal at any time,
whether or not the Optionee has attempted a transfer, to one (1) or more persons as may be selected by the Company. 

        12.    Stock Dividends Subject to Option Agreement.    If, from time to time, there is
any stock dividend, stock split, or other change in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement,
then in such event any and all new substituted or additional securities to which the Optionee is entitled by reason of the Optionee's ownership of the shares acquired upon exercise of the Option shall
be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately before such event. 

        13.   Legends.    The
Company may at any time place legends referencing the Right of First Refusal set forth in paragraph 11
above and any applicable federal or state securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement. The Optionee shall, at the
request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Optionee in order to effectuate the
provisions of this paragraph 13. Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following: 

        (a)   "THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH 

6

 

SECURITIES,
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT." 

        (b)   Any
legend required to be placed thereon by applicable law. 

        (c)   "THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN
THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION." 

        14.    Initial Public Offerings.    The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Optionee
shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to
acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided,
however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering. The
foregoing limitation shall not apply to shares registered in the initial public offering under the Securities Act. The Optionee shall be subject to this paragraph provided and only if the officers and
directors of the Company are also subject to similar arrangements. 

        15.    Binding Effect.    This Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. 

        16.    Termination or Amendment.    The Board, including any duly appointed committee of
the Board, may terminate or amend the Plan at any time; provided, however, that no such action shall deprive any person, without such person's consent, of any rights previously granted pursuant to
this Option Agreement. 

        17.    Incorporation of Terms of Plan; Integrated Agreement.    The terms of the Plan are
incorporated herein by reference. This Option Agreement constitutes the entire understanding and agreement of the Optionee and the Company with respect to the subject matter contained herein, and
there are no agreements, understandings, restrictions, representations, or warranties among the Optionee and the Company other than those as set forth or provided for herein. To the extent
contemplated herein, the provisions of this Option Agreement shall survive any exercise of the Option and shall remain in full force and effect. 

        18.    Applicable Law.    This Option Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its choice of law provisions. 

7

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ACCURAY INCORPORATED 1998 EQUITY INCENTIVE PLAN

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Exhibit 10.5  

 
 

ACCURAY INCORPORATED
  2007 INCENTIVE AWARD PLAN    
    

 
 

ARTICLE 1.
  
    PURPOSE    
    

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

 
 

ARTICLE 2.
  
    DEFINITIONS AND CONSTRUCTION    
    

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2

 

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

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

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

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

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

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

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

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

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

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

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

3

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 
 

ARTICLE 3.
  
    SHARES SUBJECT TO THE PLAN    
    

        3.1    Number of Shares.    

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

4

 

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

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

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

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

 
 

ARTICLE 4.
  
    ELIGIBILITY AND PARTICIPATION    
    

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

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

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

5

 

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

 
 

ARTICLE 5.
  
    STOCK OPTIONS    
    

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

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

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

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

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

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

6

 

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

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

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

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

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

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

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

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

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

 
 

ARTICLE 6.
  
    RESTRICTED STOCK AWARDS    
    

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

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

7

 

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

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

 
 

ARTICLE 7.
  
    STOCK APPRECIATION RIGHTS    
    

        7.1    Grant of Stock Appreciation Rights.    

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

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

        7.2    Payment and Limitations on Exercise.    

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

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

8

  

 
 

ARTICLE 8.    
    
    OTHER TYPES OF AWARDS    
    

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

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

        8.3    Dividend Equivalents.    

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

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

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

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

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

9

 

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

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

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

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

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

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

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

 
 

ARTICLE 9.    
    
    PERFORMANCE-BASED AWARDS    
    

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

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

10

 

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

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

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

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

 
 

ARTICLE 10.    
    
    PROVISIONS APPLICABLE TO AWARDS    
    

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

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

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

11

 

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

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

        10.5    Stock Certificates; Book Entry Procedures.    

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

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

12

 

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

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

 
 

ARTICLE 11.    
    
    CHANGES IN CAPITAL STRUCTURE    
    

        11.1    Adjustments.    

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

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

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

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

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

13

 

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

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

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

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

 
 

ARTICLE 12.    
    
    ADMINISTRATION    
    

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

14

 

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

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

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

        (a)   Designate
Participants to receive Awards; 

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

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

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

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

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

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

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

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

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

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

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

15

  

 
 

ARTICLE 13.    
    
    EFFECTIVE AND EXPIRATION DATE    
    

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

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

 
 

ARTICLE 14.    
    
    AMENDMENT, MODIFICATION, AND TERMINATION    
    

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

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

 
 

ARTICLE 15.    
    
    GENERAL PROVISIONS    
    

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

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

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

16

 

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

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

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

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

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

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

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

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

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

17

 

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

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

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

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

*
* * * * 

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

*
* * * * 

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

        Executed
on this            day of                        , 2007. 

	 	 	
 Corporate Secretary

18

  

Attachment 1  

 
 

ACCURAY INCORPORATED
  2007 INCENTIVE AWARD PLAN    
    
    STOCK OPTION GRANT NOTICE AND
  STOCK OPTION AGREEMENT    
    

        Accuray Incorporated, a Delaware corporation (the "Company"), pursuant to its 2007 Incentive Award Plan (the
"Plan"), hereby grants to the holder listed below ("Participant"), an option to purchase the number of
shares of the Company's common stock, 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:                        o Incentive
Stock Option
                o Non-Qualified Stock Option 

Vesting Schedule:  

        [VESTING SCHEDULE FOR NEW GRANTS: 

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

        [VESTING
SCHEDULE FOR SUBSEQUENT GRANTS: 

        The
Option shall vest and become exercisable with respect to 1/48th of the shares of Stock subject thereto on each monthly anniversary of the Grant Date.] 

1

 

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

	ACCURAY INCORPORATED	 	PARTICIPANT
	

By:	
 	

    
	
 	

By:	
 	

    

	Print Name:	 	    
	 	Print Name:	 	    

	Title:	 	    
	 	 	 	 
	Address:	 	    
	 	Address:	 	    
    

2

  

 
 

EXHIBIT A    
    
    TO STOCK OPTION GRANT NOTICE    
    
    ACCURAY INCORPORATED STOCK OPTION AGREEMENT    
    

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

 
 

ARTICLE I.    
    
    GENERAL    
    

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

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

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

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

A-1

 

other
change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section. 

        (d)   "Termination of Services" shall mean the Participant's Termination of Consultancy, Termination of Directorship or
Termination of Employment, as applicable. 

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

 
 

ARTICLE II.    
    
    GRANT OF OPTION    
    

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

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

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

 
 

ARTICLE III.    
    
    PERIOD OF EXERCISABILITY    
    

        3.1    Commencement of Exercisability.    

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

        (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. 

A-2

 

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

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

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

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

        (c)   The
expiration of [                        ] 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. 

        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 

A-3

 

designated
by the Company) of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3: 

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

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

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

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

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

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

        (a)   Cash;

        (b)   Check;

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

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

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

        (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; 

A-4

 

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

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

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

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

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

 
 

ARTICLE V.    
    
    OTHER PROVISIONS    
    

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

        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 

A-5

 

all
the terms and conditions of the Option as applicable to the Participant (other than the ability to further transfer the Option); and (iii) the Participant and the Permitted Transferee shall
execute any and all documents requested by the Committee, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any
requirements for an exemption for the transfer under applicable federal and state securities laws and (C) evidence the transfer. For purposes of this Section 5.2(b), "Permitted
Transferee" shall mean, with respect to a Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Participant's household (other than a tenant or employee), a trust in which these persons (or the
Participant) control the management of assets, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are these persons (or the Participant) and/or charitable
institutions, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests, or any other transferee specifically approved by the Committee after
taking into account any state or federal tax or securities laws applicable to transferable Options. Notwithstanding the foregoing, (i) in no event shall the Option be transferable by the
Participant to a third party (other than the Company) for consideration, and (ii) no transfer of an Incentive Stock Option will be permitted to the extent that such transfer would cause the
Incentive Stock Option to fail to qualify as an "incentive stock option" under Section 422 of the Code. 

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

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

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

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

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

        5.8    Amendments, Suspension and Termination.    To the extent permitted by the Plan, this Agreement may be wholly or
partially amended or otherwise modified, suspended or terminated at any 

A-6

 

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 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. 

A-7

  

Attachment 2  

 
 

ACCURAY INCORPORATED
  2007 INCENTIVE AWARD PLAN    
    
    RESTRICTED STOCK AWARD GRANT NOTICE AND
  RESTRICTED STOCK AWARD AGREEMENT    
    

        Accuray Incorporated, a Delaware corporation (the "Company"), pursuant to its 2007 Incentive Award Plan (the
"Plan"), hereby grants to the individual listed below ("Participant"), the 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 Restricted Stock:	
 	

shares

	

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. 

	ACCURAY INCORPORATED:	 	PARTICIPANT:
	

By:	
 	

    
	
 	

By:	
 	

    

	Print Name:	 	    
	 	Print Name:	 	    

	Title:	 	    
	 	 	 	 
	Address:	 	    
    
	 	Address:	 	    
    

1

  

 
 

EXHIBIT A    
    
    TO RESTRICTED STOCK AWARD GRANT NOTICE    
    
    ACCURAY 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, Accuray Incorporated, a Delaware corporation (the "Company"),
has granted to Participant the right to purchase the number of shares of Restricted Stock under the Company's 2007 Incentive Award 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 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 ACCURAY 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." 

A-1

 

        (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)): 

        (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 

A-2

 

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 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 Stockholder.    Except as otherwise provided herein, upon the Grant Date the Participant shall have
all the rights of a stockholder 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 California shall govern the interpretation, validity,
administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws. 

        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. 

A-3

 
 

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 Accuray 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 Accuray 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

  

 
 

APPENDIX B    
    
    ACCURAY INCORPORATED
  2007 INCENTIVE AWARD PLAN    
    
    RESTRICTED STOCK UNIT GRANT NOTICE    
    

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

        Participant:  

        Grant Date:  

        Number of RSUs:  

        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. 

	ACCURAY INCORPORATED:	 	PARTICIPANT:
	

By:	
 	

	
 	

By:	
 	

	Print Name:	 	
	 	Print Name:	 	

	Title:	 	
	 	Address:	 	

	 	 	 	 	 	 	

B-1

 
 
 

APPENDIX A
  TO RESTRICTED STOCK UNIT GRANT NOTICE    
    
    RESTRICTED STOCK UNIT AGREEMENT    
    

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

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

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

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

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

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

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

B-2

 

therein
shall be liable for the debts, contracts or engagements of the Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence. 

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

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

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

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

        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 

B-3

 

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

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

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

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

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

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

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

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

B-4

 
 

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 Accuray 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 Accuray 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

QuickLinks

ACCURAY INCORPORATED 2007 INCENTIVE AWARD PLAN

ARTICLE 1. PURPOSE

ARTICLE 2. DEFINITIONS AND CONSTRUCTION

ARTICLE 3. SHARES SUBJECT TO THE PLAN

ARTICLE 4. ELIGIBILITY AND PARTICIPATION

ARTICLE 5. STOCK OPTIONS

ARTICLE 6. RESTRICTED STOCK AWARDS

ARTICLE 7. STOCK APPRECIATION RIGHTS

ARTICLE 8. OTHER TYPES OF AWARDS

ARTICLE 9. PERFORMANCE-BASED AWARDS

ARTICLE 10. PROVISIONS APPLICABLE TO AWARDS

ARTICLE 11. CHANGES IN CAPITAL STRUCTURE

ARTICLE 12. ADMINISTRATION

ARTICLE 13. EFFECTIVE AND EXPIRATION DATE

ARTICLE 14. AMENDMENT, MODIFICATION, AND TERMINATION

ARTICLE 15. GENERAL PROVISIONS

ACCURAY INCORPORATED 2007 INCENTIVE AWARD PLAN STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT

EXHIBIT A TO STOCK OPTION GRANT NOTICE ACCURAY INCORPORATED STOCK OPTION AGREEMENT

ARTICLE I. GENERAL

ARTICLE II. GRANT OF OPTION

ARTICLE III. PERIOD OF EXERCISABILITY

ARTICLE IV. EXERCISE OF OPTION

ARTICLE V. OTHER PROVISIONS

ACCURAY INCORPORATED 2007 INCENTIVE AWARD PLAN RESTRICTED STOCK AWARD GRANT NOTICE AND RESTRICTED STOCK AWARD AGREEMENT

EXHIBIT A TO RESTRICTED STOCK AWARD GRANT NOTICE ACCURAY INCORPORATED RESTRICTED STOCK AWARD AGREEMENT

ARTICLE I. GENERAL

ARTICLE II. AWARD OF RESTRICTED STOCK

ARTICLE III. OTHER PROVISIONS

EXHIBIT B TO RESTRICTED STOCK AWARD GRANT NOTICE

CONSENT OF SPOUSE

APPENDIX B ACCURAY INCORPORATED 2007 INCENTIVE AWARD PLAN RESTRICTED STOCK UNIT GRANT NOTICE

APPENDIX A TO RESTRICTED STOCK UNIT GRANT NOTICE RESTRICTED STOCK UNIT AGREEMENT

EXHIBIT B TO RESTRICTED STOCK UNIT GRANT NOTICE CONSENT OF SPOUSE

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