-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AKCsWlFXrjSfim7Ll8FklxKFjKEax0k7CMZwwQWlqA9ia3hGPFtl4nm8gH2HhPUR fySszmseudzPKWAxmsEfDQ== 0001275287-05-004798.txt : 20051123 0001275287-05-004798.hdr.sgml : 20051123 20051123172729 ACCESSION NUMBER: 0001275287-05-004798 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20051117 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051123 DATE AS OF CHANGE: 20051123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIAN MEDICAL SYSTEMS INC CENTRAL INDEX KEY: 0000203527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 942359345 STATE OF INCORPORATION: DE FISCAL YEAR END: 0905 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07598 FILM NUMBER: 051226000 BUSINESS ADDRESS: STREET 1: 3100 HANSEN WAY CITY: PALO ALTO STATE: CA ZIP: 94304-1000 BUSINESS PHONE: 6504934000 MAIL ADDRESS: STREET 1: 3050 HANSEN WAY STREET 2: MAIL STOP E 224 CITY: PALO ALTO STATE: CA ZIP: 94304-1000 FORMER COMPANY: FORMER CONFORMED NAME: VARIAN ASSOCIATES INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VARIAN DELAWARE INC DATE OF NAME CHANGE: 19761123 8-K 1 vm4212.txt FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) November 17, 2005 VARIAN MEDICAL SYSTEMS, INC. ------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) Delaware 1-7598 94-2359345 ---------------------------- ---------------- ------------------- (State or Other Jurisdiction (Commission File (IRS Employer of Incorporation) Number) Identification No.) 3100 Hansen Way, Palo Alto, CA 94304-1030 ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (650) 493-4000 Not Applicable ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Item 1.01. Entry into a Material Definitive Agreement. EXECUTIVE COMPENSATION. As described in further detail in Item 5.02 below and in the press release attached hereto as Exhibit 99.1, on November 17, 2005, Varian Medical Systems, Inc. (the "Company") announced that Richard M. Levy, Chairman of the Board and Chief Executive Officer of the Company, will retire as Chief Executive Officer effective as of the close of business on February 17, 2006, and the Board of Directors of the Company (the "Board") appointed Timothy E. Guertin as the Company's new Chief Executive Officer, in addition to his title as President, effective as of close of business on February 17, 2006. In connection with Mr. Guertin's new position, the Board approved an annual base salary for Mr. Guertin for fiscal year 2006 of $700,000, to be effective as of the close of business on February 17, 2006. Also on November 17, 2005, the Compensation and Management Development Committee of the Board approved new compensation arrangements for the other named executive officers (determined by reference to the Company's 2005 proxy statement dated December 28, 2004), as well as Dow R. Wilson, who joined the Company in January 2005 and currently serves as Corporate Executive Vice President.(1) Set forth below are the annual base salaries for fiscal year 2006: Elisha W. Finney, Corporate Senior Vice President and Chief Financial Officer $ 410,000 Robert H. Kluge, Corporate Vice President $ 324,000 Dow R. Wilson, Corporate Executive Vice President $ 528,000 The Compensation and Management Development Committee also authorized the payment of annual incentive awards (bonuses) for the fiscal year ended September 30, 2005 under the Company's Management Incentive Plan. The payments were based on performance goals for the named executive officers and certain other executives established by the Compensation and Management Development Committee in November 2004 (described in the Company's Current Report on Form 8-K dated November 18, 2004, filed November 24, 2004). Set forth below are the incentive payments for fiscal year 2005: Richard M. Levy $ 1,001,532 Timothy Guertin $ 442,801 Elisha W. Finney $ 281,506 Robert H. Kluge $ 324,019 Mr. Wilson did not participate in the Management Incentive Plan in fiscal year 2005. In addition to authorizing Management Incentive Plan payments for fiscal year 2005, the Compensation and Management Development Committee set the performance goals for the named executive officers and certain other executives for fiscal year 2006, all of which are based on a percentage earnings before interest and taxes ("EBIT") growth formula. For Mr. Guertin and Ms. Finney, their performance goals are based 100% on Company-wide EBIT performance. For Mr. Kluge, his performance goal is based 50% on EBIT performance of the X-Ray Products business segment and 50% on Company-wide EBIT performance and, for Mr. Wilson, his performance goal is based 50% on EBIT performance of the Oncology Systems business segment and 50% on Company-wide EBIT performance. - ---------- (1) Mr. Wilson's compensation arrangements are governed by an employment letter, as amended. 2 Achievement of 100% of the goal will entitle the individuals listed below to the percentage of base salary that appears opposite his or her name below. Timothy Guertin(effective February 18, 2006) 100% Elisha W. Finney 80% Robert H. Kluge 60% Dow R. Wilson(2) 80% REVISED NONQUALIFIED STOCK OPTION AGREEMENT UNDER THE 2005 OMNIBUS STOCK PLAN On November 17, 2005, the Compensation and Management Development Committee approved revised forms of Nonqualified Stock Option Agreement for Officers under the 2005 Omnibus Stock Plan. Attached hereto as Exhibit 99.2 is the revised form of Nonqualified Stock Option Agreement for Officers under the 2005 Omnibus Stock Plan. This form was first used in connection with the November 17, 2005 grants. COMPENSATION FOR LEVY AS NON-EXECUTIVE EMPLOYEE On November 17, 2005, the Board also approved the following compensation arrangement for Dr. Levy in his role as a non-executive employee of the Company, to be effective as of the close of business on February 17, 2006: o base salary of $500,000 per annum; o provision of a leased offsite office space at fair market value; o provision of a part-time administrator; and o payment of accrued paid-time-off ("PTO") at his annual base salary rate as of the end of fiscal year 2005. Effective as of the close of business on February 17, 2006, Dr. Levy will be: o ineligible to accrue PTO effective as of the close of business on February 17, 2006 o ineligible to participate in executive perquisite programs, including the Executive Car Program and reimbursement for executive physicals and for financial, estate and tax planning services; and o ineligible for grants of stock options in fiscal year 2006. In his new role as a non-executive employee of the Company (and in addition to his responsibilities as Chairman of the Board), Dr. Levy will provide on-going advice and counsel to the management of the Company on strategic business and technological matters, will continue to have involvement with investor groups and key customers and will provide transitional support. - ---------- (2) Mr. Wilson's fiscal year 2006 target percentage of 80% of base salary upon achievement of 100% of the performance goals represents a modification to Mr. Wilson's employment letter, as amended, which originally set forth a fiscal year 2006 target percentage of 75% of base salary. 3 DIRECTOR COMPENSATION. On November 17, 2005, the Board approved a new structure for the cash portion of the non-employee director compensation. The new cash compensation, which takes effect on February 16, 2006, provides that each director who is not a Company employee will receive an annual retainer of $45,000. The "lead" outside director will receive an extra annual retainer of $15,000, the chairs of the Compensation and Management Development Committee and the Nominating and Corporate Governance Committee will receive an extra $10,000 annual retainer, and the chair of the Audit Committee will receive an extra $15,000 annual retainer. Each non-employee director also will receive meeting fees as follows for each meeting that he or she attends: Attended meeting by Attended meeting telephone or in-person video conference ---------------- -------------------- In-person Board meeting $ 2,000 $ 1,000 Telephonic or video Board meeting N/A $ 2,000 In-person Committee meeting $ 1,500 $ 750 Telephonic or video Committee meeting N/A $ 1,500 Each non-employee director also r eceives reimbursement for out-of-pocket expenses of the director and the director's spouse associated with attending such meetings. Directors may convert their annual retainers to options to purchase the Company's common stock at the rate of $1 cash to $4 of stock options, at an exercise price equal to the fair market value of the common stock on the grant date. These options are immediately exercisable and expire ten years after the grant date unless terminated earlier. Directors may alternatively elect to defer their retainer and/or meeting fees under the Varian Medical Systems, Inc. 2005 Deferred Compensation Plan described below. DEFERRED COMPENSATION ARRANGEMENTS On November 17, 2005, the Board approved an amendment to the Company's existing Varian Medical Systems, Inc. Deferred Compensation Plan (the "Frozen Plan") freezing it such that no new deferrals will be made pursuant to the Frozen Plan as of January 1, 2005. The Frozen Plan's name was also changed to the "Varian Medical Systems, Inc. Frozen Deferred Compensation Plan." The purpose of this action was to ensure that amounts previously deferred under the Frozen Plan would be grandfathered and, therefore, not be subject to the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), which is generally effective January 1, 2005. Thus, any amounts credited to participant accounts (and fully vested) under the Frozen Plan as of December 31, 2004 will be subject to the terms of the Frozen Plan as in effect on December 31, 2004. In addition, the Board approved the adoption of a new nonqualified deferred compensation plan, the "Varian Medical Systems, Inc. 2005 Deferred Compensation Plan (the "2005 Plan"). The 2005 Plan is effective as of January 1, 2005 and applies to amounts deferred on or after January 1, 2005. The 2005 Plan is intended to comply with Section 409A of the Code and, like the Frozen Plan, is intended to provide deferred compensation for a select group of management or highly compensated employees and directors as selected by the administrator or a person or persons appointed by the administrator. For this purpose, the administrator of the 2005 Plan will be the Compensation and Management Development Committee. 4 Each participant in the 2005 Plan may elect to defer payment of his or her base annual salary, incentive payments, or director fees, as applicable. The maximum amount of deferrals will be 75% of base annual salary, and 100% of incentive payments and director fees. Amounts deferred by a participant are credited to a bookkeeping account maintained on behalf of each participant. These bookkeeping accounts are utilized solely as a device for the measurement and determination of amounts to be paid to a participant, or his or her designated beneficiary, pursuant to the terms of the 2005 Plan. Although amounts will remain subject to the Company's creditors, the Company's existing rabbi trust will be used to pay 2005 Plan benefits. In addition to these elective deferral amounts, each calendar year, the Company will credit an amount to the participant's account, the "Company Supplement Contribution Amount," equal to the product of (a) the excess of the participant's base annual salary and other incentive payments over the compensation limit imposed by Section 401(a)(17) of the Code; and (b) the Company's matching contribution rate under the Varian Medical Systems, Inc. Retirement Plan as amended and restated January 1, 2004. Further, the Company may credit additional amounts on a discretionary basis on behalf of the 2005 Plan's participants (these discretionary contributions, together with the Company Supplemental Contribution Amount, are referred to as "Company Contributions"). Amounts credited to each participant under the 2005 Plan will be adjusted for earnings and losses based upon hypothetical investment elections made by the participant. One of these investment options will be a "phantom stock fund" which is based on the rate of return of the Company's common stock. Under the 2005 Plan, a participant may make separate distribution elections with respect to each year's deferrals. These distribution elections will include the ability to elect a single lump-sum payment or installment payments for employees who retire from the Company. Deferrals also may be paid out prior to separation from service in the event of a financial hardship, or if the participant makes a "short-term payment election." A "short-term deferral election" must be made at the time the participant makes his or her initial deferral elections. Amounts credited as Company Contributions only will be paid in the form of a lump sum following a participant's separation from service. Non-retirement separations from service generally will result in payments being made in the form of single lump sums. All deferral elections, including payment elections, under the 2005 Plan are intended to comply with the requirements of Section 409A of the Code. The Company may terminate the 2005 Plan by action of the Board in which event benefits will be distributed as soon as Section 409A of the Code permits. The foregoing description of the 2005 Plan is qualified in its entirety by reference to the 2005 Plan, a copy of which is attached hereto as Exhibit 99.3. Item 5.02 Departure of Directors or Principal Officer; Election of Directors; Appointment of Principal Officers On November 17, 2005, Richard M. Levy, currently Chairman of the Board and Chief Executive Officer of the Company, announced his plans to retire as Chief Executive Officer of the Company effective as of the close of business on February 17, 2006. Dr. Levy will remain a non-executive employee of the Company and will continue to serve as Chairman of the Board. On November 17, 2005, the Board of Directors appointed Timothy E. Guertin as the Company's new Chief Executive Officer, in addition to his title as President, effective as of close of business on February 17, 2006. Mr. Guertin, 56, has been a director, President and Chief Operating Officer of the Company since August 2005. Prior to that, Mr. Guertin was Executive Corporate Vice President and Chief Operating Officer since January 2005. He had been Executive Corporate Vice President of the Company from October 2002 to August 2005 and Corporate Vice President of the Company from 1992 to September 2002. Mr. Guertin was also President of the Oncology Systems business unit from [1992] to January 2005. Mr. Guertin's new compensation as President and Chief Executive Officer is described under Item 1.01 above and incorporated by reference into this item. 5 Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year On November 17, 2005, the Board has also amended the By-Laws of the Company to clarify language regarding the circumstances in which a lead director should be appointed. Whereas Section 17 of the By-Laws previously stated that a lead director should be appointed when the Chairman of the Board and Chief Executive Officer are the same person, it now specifies that a lead director should be appointed in the event the Chairman of the Board is an employee director or is otherwise not an independent director. A copy of the Company's Amended and Restated By-Laws is attached hereto as Exhibit 99.4 and incorporated herein by reference. Item 8.01 Other Events On November 21, 2005, the Company issued a press release reporting that the Board had approved the Company's repurchase of up to 6,000,000 shares of its common stock from time to time until December 31, 2006. A copy of the press release is attached as Exhibit 99.5 and incorporated by reference into this item. Item 9.01. Financial Statements and Exhibits (c) Exhibits. 99.1 Press Release dated November 17, 2005 announcing Varian Medical Systems' CEO Richard M. Levy Announces Plans to Retire in February 2006; Board of Directors Names Timothy E. Guertin as Successor. 99.2 Nonqualified Stock Option Agreement for Officers 99.3 2005 Deferred Compensation Plan 99.4 Amended and Restated By-Laws of Varian Medical Systems, Inc. 99.5 Press Release dated November 21, 2005 announcing Varian Medical Systems' Board of Directors Authorizes Repurchase of Another Six Million Shares of Stock. 6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Varian Medical Systems, Inc. By: /s/ JOHN W. KUO ------------------------- Name: John W. Kuo Title: Corporate Vice President, General Counsel and Corporate Secretary Dated: November 23, 2005 7 EXHIBIT INDEX Number Exhibit - -------- -------------------------------------------------------------------- 99.1 Press Release dated November 17, 2005 announcing Varian Medical Systems' CEO Richard M. Levy Announces Plans to Retire in February 2006; Board of Directors Names Timothy E. Guertin as Successor. 99.2 Nonqualified Stock Option Agreement for Officers 99.3 2005 Deferred Compensation Plan 99.4 Amended and Restated By-Laws of Varian Medical Systems, Inc. 99.5 Press Release dated November 21, 2005 announcing Varian Medical Systems' Board of Directors Authorizes Repurchase of Another Six Million Shares of Stock. 8 EX-99.1 2 vm4212ex991.txt EXHIBIT 99.1 Exhibit 99.1 FOR INFORMATION CONTACT: Elisha Finney (650) 424-6803 elisha.finney@varian.com Spencer Sias (650) 424-5782 spencer.sias@varian.com FOR IMMEDIATE RELEASE: VARIAN MEDICAL SYSTEMS' CEO RICHARD M. LEVY ANNOUNCES PLANS TO RETIRE IN FEBRUARY 2006; BOARD OF DIRECTORS NAMES TIMOTHY E. GUERTIN AS SUCCESSOR Levy to continue serving as Chairman of the Board of Directors PALO ALTO, Calif., Nov. 17, 2005 - Richard M. Levy, Chairman and CEO of Varian Medical Systems, Inc. (NYSE:VAR) today announced plans to retire as CEO on February 17, 2006. The Company's Board of Directors has elected Timothy E. Guertin, the Company's current President and Chief Operating Officer, to succeed Levy upon his retirement. Guertin, 56 and a member of the Company's Board of Directors, will retain the title of President. Levy, 67 and a 37-year veteran with Varian, will continue serving as the Chairman of the Company's Board of Directors. "Varian Medical Systems has more than doubled its net orders, revenues and earnings in the last six years through excellent execution of a sound growth strategy," said Levy. "We have successfully developed and commercialized new technologies and products that have led to revolutionary advances in radiation oncology and X-ray imaging. We have extended our market leadership and added to our potential for growth in new markets. I have had the good fortune to direct the efforts of an accomplished management team that is well prepared to continue our growth under the leadership of Tim Guertin. "Tim Guertin, who has worked with Varian for 30 years, is a principal architect of our successful growth strategy," Levy added. "In his previous role as President of our Oncology Systems business, Tim defined, developed and deployed a broad range of products for intensity modulated radiation therapy (IMRT) and image-guided radiation therapy (IGRT), utilizing technology from all parts of our company. Coincident with this effort, Tim added to the financial performance and profitability of this business. "Part of our work over the last several years involved the development of a succession plan for the company," Levy said. "With Tim Guertin, I am confident that Varian will be in very good hands." "Dick Levy is Varian's guiding light, and it has been an honor and a privilege to help him build this company for the last 25 years that we have worked together," said Guertin. "He has cultivated a company committed to growing a profitable business by commercializing true solutions for improving the quality and cost efficiency of medical care. His vision, leadership and management model will help us to sustain Varian Medical System's growth for years to come." - more - Guertin, who has been serving as President and Chief Operating Officer for the Company since August, is responsible for the development, production, promotion, and sales of all Varian Medical Systems' products and services throughout the world. He served as President of the Oncology Systems segment, which represents more than 80 percent of Varian's business, from 1990 until being named Chief Operating Officer in January. Before being named to lead the Oncology Systems segment, Guertin managed its customer service business. He holds a BS in electrical engineering and computer science from the University of California at Berkeley. Varian Medical System's nine-member senior management team has more than 140 years of combined service with the Company. In addition to Guertin, it includes Dow R. Wilson, Corporate Executive Vice President and President of Oncology Systems; Elisha W. Finney, Corporate Senior Vice President and Chief Financial Officer; Robert H. Kluge, Corporate Vice President and President of X-Ray Products; John W. Kuo, Corporate Vice President and General Counsel; Franco N. Palomba, Corporate Vice President and Treasurer; Crisanto C. Raimundo, Corporate Vice President and Controller; Wendy S. Reitherman, Vice President of Human Resources; and John "Andy" Thorson II, Vice President of Business Development; and George A. Zdasiuk, Corporate Vice President and Chief Technology Officer. # # # Varian Medical Systems, Inc., (NYSE:VAR) of Palo Alto, California is the world's leading manufacturer of integrated cancer therapy systems, which are used to treat thousands of patients per day. The company is also a premier supplier of X-ray tubes and flat-panel digital subsystems for imaging in medical, scientific, and industrial applications. Varian Medical Systems employs approximately 3,500 people who are located at manufacturing sites in North America and Europe and in its 56 sales and support offices around the world. Additional information is available on the company's investor relations web site at www.varian.com. FORWARD LOOKING STATEMENTS Except for historical information, this news release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning industry outlook, including market acceptance of or transition to new products or technology such as IMRT or IGRT; growth drivers; the company's orders, revenues, backlog, or earnings growth; future financial results and any statements using the terms "expect," "will," "scheduled," "continue," or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results to differ materially from those anticipated. Such risks and uncertainties include demand for the company's products; the company's ability to develop and commercialize new products; the impact of competitive products and pricing; the effect of economic conditions and currency exchange rates; the company's ability to maintain or increase operating margins; the company's ability to meet demand for manufacturing capacity; the effect of environmental claims and expenses; the company's ability to protect the company's intellectual property; the company's reliance on sole or limited-source suppliers; the impact of reduced or limited demand by sole purchasers of certain X-ray tubes; the impact of managed care initiatives or other health care reforms on capital expenditures and/or third-party reimbursement levels; the company's ability to meet FDA and other regulatory requirements or product clearances; the potential loss of key distributors or key personnel; consolidation in the X-ray tubes market; the possibility that material product liability claims could harm future revenues or require us to pay uninsured claims; the ability to make strategic acquisitions and to successfully integrate the acquired operations into the company's business; the effect of changes in accounting principles; the risk of operations interruptions due to terrorism, disease (such as Severe Acute Respiratory Syndrome) or other events beyond the company's control; and the other risks listed from time to time in the company's filings with the Securities and Exchange Commission. The company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise. EX-99.2 3 vm4212ex992.txt EXHIBIT 99.2 Exhibit 99.2 VARIAN MEDICAL SYSTEMS, INC. 2005 OMNIBUS STOCK PLAN NONQUALIFIED STOCK OPTION AGREEMENT Varian Medical Systems, Inc. (the "Company") hereby grants you, <> <> (the "Employee"), a nonqualified stock option under the Company's 2005 Omnibus Stock Plan (the "Plan"), to purchase shares of common stock of the Company ("Shares"). The date of this Agreement is <> (the "Grant Date"). In general, the latest date this option will expire is <> (the "Expiration Date"). However, as provided in Appendix A (attached hereto as "2005 Omnibus Stock Plan Appendix A"), this option may expire earlier than the Expiration Date. Subject to the provisions of Appendix A and of the Plan, the principal features of this option are as follows: Maximum Number of Shares Purchasable with this Option: <> Purchase Price per Share: $<> - ---------------------------- ------------------------
Scheduled Vesting Dates: Number of Shares*: - ----------------------- ----------------- <> 1/3rd of shares granted <> through 1/36th of shares granted <> *Shares vest in only whole share increments, fractions of shares vest only when they equal whole share increments. EVENT TRIGGERING MAXIMUM TIME TO EXERCISE TERMINATION OF OPTION: AFTER TRIGGERING EVENT**: - --------------------- ------------------------ Termination of Service for cause None Termination of Service due to Disability 1 year Termination of Service due to Retirement 3 years Termination of Service due to death 3 years All other Terminations of Service 3 months **However, in no event may this option be exercised after the Expiration Date (except in certain cases of the death of the Employee). Your signature below indicates your agreement and understanding that this option is subject to all of the terms and conditions contained in Appendix A and the Plan. For example, important additional information on vesting and termination of this option is contained in Paragraphs 4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX A AND THE PLAN, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION. YOU CAN REQUEST A COPY OF THE PLAN BY CONTACTING THE CORPORATE HUMAN RESOURCES OFFICE IN PALO ALTO, CALIFORNIA. VARIAN MEDICAL SYSTEMS, INC. EMPLOYEE By: ------------------------------------- ---------------------------------- Vice President, Human Resources <> <> APPENDIX A OFFICERS TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION 1. Grant of Option. The Company hereby grants to the --------------- Employee under the Plan, as a separate incentive in connection with his or her employment and not in lieu of any salary or other compensation for his or her services, a nonqualified stock option to purchase, on the terms and conditions set forth in this Agreement and the Plan, all or any part of an aggregate of <> Shares. 2. Exercise Price. The purchase price per Share for this -------------- option (the "Exercise Price") shall be $<> which is the Fair Market Value of a Share on the Grant Date. 3. Number of Shares. The number and class of Shares ---------------- specified in Paragraph 1 above, and/or the Exercise Price, are subject to adjustment by the Committee in the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, Share combination or other change in the corporate structure of the Company affecting the Shares. In the event an Employee's termination of service due to the Employee's Retirement within one (1) year following the Grant Date, then the number of Shares Granted shall be adjusted proportionally by the time during such one (1) year period that the Employee remained an active, full-time employee of the Company (based upon a 365 day year). For example, if the Employee is granted an option for 6,000 shares of Common Stock of the Company and the Employee terminated service due to the Employee's Retirement 30 days after the Grant Date, then the Employee's number of Shares Granted would be reduced from 6,000 shares to 493 shares (6,000 x 30/365) and the balance of the Shares Granted would be cancelled. 4. Vesting Schedule. Except as otherwise provided in ---------------- this Agreement, the right to exercise this option will vest as to thirty-three and one-third percent (33-1/3%) of the Shares specified in Paragraph 1 above on the first anniversary date of the Grant Date, and as to an additional 1/36th of the shares on each succeeding monthly anniversary date, until the right to exercise this option shall have vested with respect to one hundred percent (100%) of such Shares. On any scheduled vesting date, vesting actually will occur only if the Employee has been continuously employed by the Company or an Affiliate from the Grant Date until such scheduled vesting date, or the vesting date occurs within three (3) years following the employees termination of service due to the Employee's Retirement. Notwithstanding the foregoing, in the event of the Employee's Termination of Service due to death, if the right to exercise any of the Shares specified in Paragraph 1 had not yet vested, then the right to exercise such Shares will vest on the date of the Employee's Termination of Service. 5. Expiration of Option. In the event of the Employee's -------------------- Termination of Service for any reason other than Retirement, Disability, death or for cause, the Employee may, within three (3) months after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Service due to Disability, the Employee may, within one (1) year after the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Service due to Retirement, the Employee may, within three (3) years from the date of such Termination, or prior to the Expiration Date, whichever shall first occur, exercise any vested but unexercised portion of this option. In the event of the Employee's Termination of Service by the Company for cause (as determined by the Company), the Employee may not exercise any portion of this option that is unexercised on the date of such Termination. D-2 6. Death of Employee. In the event that the Employee ----------------- dies while in the employ of the Company and/or an Affiliate or during the three (3) month, three (3) year or one (1) year periods referred to in Paragraph 5 above, the Employee's designated beneficiary, or if either no beneficiary survives the Employee or the Committee does not permit beneficiary designations, the administrator or executor of the Employee's estate, may, within three (3) years after the date of death, exercise any vested but unexercised portion of the option. Any such transferee must furnish the Company (a) written notice of his or her status as a transferee, (b) evidence satisfactory to the Company to establish the validity of the transfer of this option and compliance with any laws or regulations pertaining to such transfer, and (c) written acceptance of the terms and conditions of this option as set forth in this Agreement. 7. Persons Eligible to Exercise Option. This option ----------------------------------- shall be exercisable during the Employee's lifetime only by the Employee. The option shall not be transferable by the Employee, except by (a) a valid beneficiary designation made in a form and manner acceptable to the Committee, or (b) will or the applicable laws of descent and distribution. 8. Exercise of Option. This option may be exercised by ------------------ the person then entitled to do so as to any Shares which may then be purchased (a) by giving written notice of exercise to the Secretary of the Company (or his or her designee), specifying the number of full Shares to be purchased and accompanied by full payment of the Exercise Price (and the amount of any income or other taxes the Company determines is required to be withheld by reason of such exercise), and (b) by giving satisfactory assurances in writing if requested by the Company, signed by the person exercising the option, that the Shares to be purchased upon such exercise are being purchased for investment and not with a view to the distribution thereof. In the absolute discretion of the Committee, the person entitled to exercise the option may elect to satisfy the tax-withholding requirement described in subparagraph (a) above by having the Company withhold Shares or by delivering to the Company already-owned Shares. No partial exercise of this option may be for less than ten (10) Share lots or multiples thereof. 9. Suspension of Exercisability. If at any time the ---------------------------- Company shall determine, in its discretion, that the listing, registration or qualification of the Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory authority, is necessary or desirable as a condition of the purchase of Shares hereunder, this option may not be exercised, in whole or in part, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. The Company shall make reasonable efforts to meet the requirements of any such state or federal law or securities exchange and to obtain any such consent or approval of any such governmental authority. 10. No Rights of Stockholder. Neither the Employee (nor ------------------------ any beneficiary) shall be or have any of the rights or privileges of a stockholder of the Company in respect of any of the Shares issuable pursuant to the exercise of this option, unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Employee (or beneficiary). 11. No Effect on Service. The Employee's employment with -------------------- the Company and its Affiliates is on an at-will basis only. Accordingly, subject to any written, express employment with the Employee, nothing in this Agreement or the Plan shall confer upon the Employee any right to continue to be employed by the Company or any Affiliate or shall interfere with or restrict in any way the rights of the Company or the Affiliate, which are hereby expressly reserved, to terminate the employment of the Employee at any time for any reason whatsoever, with or without good cause. Such reservation of rights can be modified only in an express written contract executed by a duly authorized officer of the Company or the Affiliate employing or otherwise engaging the Employee. For purposes of this Agreement, the transfer of the employment of the Employee between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Service. Nothing herein contained shall affect the Employee's right to participate in and receive benefits under and in accordance with the then current provisions of any pension, insurance or other employee welfare plan or program of the Company or any Affiliate. D-3 12. Address for Notices. Any notice to be given to the ------------------- Company under the terms of this Agreement shall be addressed to the Company, in care of its Secretary, at 3100 Hansen Way, Palo Alto, California 94304, or at such other address as the Company may hereafter designate in writing. 13. Option is Not Transferable. Except as otherwise -------------------------- expressly provided herein, this option and the rights and privileges conferred hereby may not be transferred, pledged, assigned or otherwise hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, pledge, assign, hypothecate or otherwise dispose of this option, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this option and the rights and privileges conferred hereby immediately shall become null and void. 14. Maximum Term of Option. Notwithstanding any other ---------------------- provision of this Agreement except Paragraph 6 above relating to the death of the Employee (in which case this option is exercisable to the extent set forth therein), this option is not exercisable after the Expiration Date. 15. Binding Agreement. Subject to the limitation on the ----------------- transferability of this option contained herein, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto. 16. Conditions to Exercise. The Exercise Price for this ---------------------- option must be paid in the legal tender of the United States (including, in the Committee's sole discretion, by means of a broker-assisted cashless exercise) or, in the Committee's sole discretion, in Shares of equivalent value. Exercise of this option will not be permitted until satisfactory arrangements have been made for the payment of the appropriate amount of withholding taxes (as determined by the Company). If the Employee fails to remit to the Company such withholding amount within the time period specified by the Committee (in its discretion), the award may be forfeited and in such case the Employee shall not receive any of the Shares subject to this Agreement. 17. Plan Governs. This Agreement is subject to all of the ------------ terms and provisions of the Plan. In the event of a conflict between one or more provisions of this Agreement and one or more provisions of the Plan, the provisions of the Plan shall govern. Capitalized terms and phrases used and not defined in this Agreement shall have the meaning set forth in the Plan. 18. Committee Authority. The Committee shall have all ------------------- discretion, power, and authority 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. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons, and shall be given the maximum deference permitted by law. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement. 19. Governing Law. This Agreement shall be governed by ------------- and construed in accordance with the laws of the State of California, without reference to its principles of conflicts of law. 20. Captions. The captions provided herein are for -------- convenience only and are not to serve as a basis for the interpretation or construction of this Agreement. 21. Agreement Severable. In the event that any provision ------------------- in this Agreement shall be held invalid or unenforceable, such provision shall be severable from, and such invalidity or unenforceability shall not be construed to have any effect on, the remaining provisions of this Agreement. D-4 22. Retirement Definition and Fortifier. For purposes of ----------------------------------- this Agreement, Retirement shall mean an employee's voluntary termination of employment at age 65 or above, or at age 55 with a minimum of 10 years employment with the Company, provided, however, that in the event employee commences employment with a company which competes with the Company in any of Company's business, including but not limited to, equipment, software or other products for the treatment of cancer, X-ray tubes, flat panel imaging devices and industrial X-ray imaging devices, Company may, in its sole discretion, terminate this Agreement, including the vesting of any options or other grants which remain unvested as of the date employee commences employment with the competitive company. 23. Modifications to the Agreement. This Agreement ------------------------------ constitutes the entire understanding of the parties on the subjects covered. The Employee expressly warrants that he or she is not executing this Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. D-5 EX-99.3 4 vm4212ex993.txt EXHIBIT 99.3 Exhibit 99.3 2005 DEFERRED COMPENSATION PLAN [GRAPHIC APPEARS HERE] VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT - ------------------------------------------------------------------------------- EFFECTIVE JANUARY 1, 2005 ADOPTED NOVEMBER 17, 2005 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... TABLE OF CONTENTS Page ---- PURPOSE ..........................................................1 ARTICLE 1 DEFINITIONS.........................................................1 ARTICLE 2 SELECTION/ENROLLMENT/ELIGIBILITY....................................7 2.1 Eligibility.......................................................7 2.2 Enrollment Requirements...........................................8 2.3 Commencement of Participation.....................................8 2.4 Termination of Participation and/or Deferrals.....................8 ARTICLE 3 DEFERRAL COMMITMENTS/COMPANY CONTRIBUTIONS/CREDITING/TAXES.....................................8 3.1 Minimum Deferral..................................................8 3.2 Maximum Deferral..................................................9 3.3 Election to Defer/Effect of Election Form.........................9 3.4 Withholding of Annual Deferral Amounts...........................11 3.5 Annual Company Supplemental Contribution Amount..................11 3.6 Annual Company Discretionary Contribution Amount.................12 3.7 Investment of Trust Assets.......................................12 3.8 Vesting..........................................................12 3.9 Crediting/Debiting of Account Balances...........................14 3.10 FICA and Other Taxes.............................................16 3.11 Distributions....................................................17 ARTICLE 4 SHORT-TERM PAYOUT/UNFORESEEABLE FINANCIAL EMERGENCIES......................................................17 4.1 Short-Term Payout................................................17 4.2 Other Benefits Take Precedence Over Short-Term Payout............18 4.3 Withdrawal Payout/Termination of Deferral Election for Unforeseeable Emergencies...................................18 ARTICLE 5 RETIREMENT BENEFIT...............................................19 5.1 Retirement Benefit...............................................19 5.2 Payment of Retirement Benefit....................................19 - -------------------------------------------------------------------------------- i VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... ARTICLE 6 SURVIVOR BENEFIT.................................................21 6.1 Pre-Termination Survivor Benefit.................................21 6.2 Payment of Pre-Termination Survivor Benefit......................21 6.3 Death Prior to Completion of Regular Termination Benefit or Retirement Benefit........................................21 ARTICLE 7 REGULAR TERMINATION BENEFIT......................................21 7.1 Regular Termination Benefit......................................21 7.2 Payment of Regular Termination Benefit...........................21 ARTICLE 8 BENEFICIARY DESIGNATION..........................................22 8.1 Beneficiary......................................................22 8.2 Beneficiary Designation/Change...................................22 8.3 Acknowledgment...................................................22 8.4 No Beneficiary Designation.......................................22 8.5 Doubt as to Beneficiary..........................................22 8.6 Discharge of Obligations.........................................23 ARTICLE 9 TERMINATION/AMENDMENT/MODIFICATION...............................23 9.1 Termination......................................................23 9.2 Amendment........................................................24 9.3 Plan Agreement...................................................24 9.4 Effect of Payment................................................25 9.5 Amendment to Ensure Proper Characterization of the Plan..........25 9.6 Changes in Law Affecting Taxability..............................25 ARTICLE 10 ADMINISTRATION...................................................26 10.1 Administrator Duties.............................................26 10.2 Agents...........................................................27 10.3 Binding Effect of Decisions......................................27 10.4 Indemnity of Administrator.......................................27 10.5 Employer Information.............................................28 ARTICLE 11 OTHER BENEFITS AND AGREEMENTS....................................28 11.1 Coordination with Other Benefits.................................28 ARTICLE 12 CLAIMS PROCEDURES................................................28 12.1 Scope of Claims Procedures.......................................28 12.2 Initial Claim....................................................28 12.3 Review Procedures................................................29 12.4 Calculation of Time Periods......................................30 12.5 Legal Action.....................................................30 - -------------------------------------------------------------------------------- ii VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... ARTICLE 13 TRUST............................................................31 13.1 Establishment of the Trust.......................................31 13.2 Interrelationship of the Plan and the Trust......................31 13.3 Distributions from the Trust.....................................31 ARTICLE 14 MISCELLANEOUS....................................................31 14.1 Status of Plan...................................................31 14.2 Unsecured General Creditor.......................................31 14.3 Employer's Liability.............................................31 14.4 Nonassignability.................................................32 14.5 Not a Contract of Continued Service..............................32 14.6 Furnishing Information...........................................32 14.7 Terms............................................................32 14.8 Captions.........................................................33 14.9 Governing Law....................................................33 14.10 Notice...........................................................33 14.11 Successors.......................................................33 14.12 Spouse's Interest................................................33 14.13 Validity.........................................................33 14.14 Incompetent......................................................34 14.15 Court Order......................................................34 14.16 Acceleration of Distribution.....................................34 14.17 Delay in Payment.................................................35 14.18 Prohibited Acceleration/Distribution Timing......................35 14.19 Insurance........................................................35 14.20 Aggregation of Employers.........................................35 - -------------------------------------------------------------------------------- iii VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... VARIAN MEDICAL SYSTEMS, INC. 2005 DEFERRED COMPENSATION PLAN Effective January 1, 2005 Adopted November 17, 2005 PURPOSE ------- The purpose of this Plan is to provide specified benefits to a select group of management or highly compensated Employees and Directors who contribute materially to the continued growth, development and future business success of Varian Medical Systems, Inc., a Delaware corporation, and its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. This Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, as added by the American Jobs Creation Act of 2004 and the final Treasury regulations or any other authoritative guidance issued thereunder. ARTICLE 1 --------- DEFINITIONS ----------- For purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings: 1.1 "Administrator" shall mean the Committee, or, to the extent provided in Article 10, appropriate management personnel designated by the Committee to perform certain of the Committee's duties and responsibilities in respect of the Plan. 1.2 "Account Balance" shall mean, with respect to a Participant, a credit on the records of the Employer equal to the sum of (i) the Deferral Account balance, (ii) the Company Supplemental Contribution Account balance and (iii) the vested Company Discretionary Contribution Account balance. The Account Balance, and each other specified account balance, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan. 1.3 "Annual Company Discretionary Contribution Amount" shall mean, for the Plan Year of reference, the amount determined in accordance with Section 3.6. 1 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 1.4 "Annual Company Supplemental Contribution Amount" shall mean, for the Plan Year of reference, the amount determined in accordance with Section 3.5. 1.5 "Annual Deferral Amount" shall mean that portion of a Participant's Base Annual Salary, Incentive Payments and/or Directors' Fees that a Participant elects to have, and is deferred, in accordance with Article 3, for any one Plan Year. In the event of a Participant's Retirement, death or a Regular Termination prior to the end of a Plan Year, such year's Annual Deferral Amount shall be the actual amount withheld prior to such event. 1.6 "Base Annual Salary" shall mean the annual cash compensation relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, Directors' Fees and other fees, automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee's gross income). Base Annual Salary shall be calculated after reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Employer and shall be calculated to exclude amounts not otherwise included in the Participant's gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Employer. 1.7 "Beneficiary" shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 8, that are entitled to receive benefits under this Plan upon the death of a Participant. 1.8 "Beneficiary Designation Form" shall mean the form established from time to time by the Administrator that a Participant completes, signs and returns to the Administrator to designate one or more Beneficiaries (which form may take the form of an electronic transmission, if required or permitted by the Administrator). 1.9 "Board" shall mean the board of directors of the Company. 1.10 "Claimant" shall have the meaning set forth in Section 12.2. 1.11 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.12 "Committee" shall mean the Company's Compensation and Management Development Committee. 2 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 1.13 "Company" shall mean Varian Medical Systems, Inc. a Delaware corporation, and any successor. 1.14 "Company Discretionary Contribution Account" shall mean (i) the sum of all of the Participant's Annual Company Discretionary Contribution Amounts, plus (ii) amounts credited or debited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Company Discretionary Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Company Discretionary Contribution Account. 1.15 "Company Supplemental Contribution Account" shall mean (i) the sum of all of the Participant's Annual Company Supplemental Contribution Amounts, plus (ii) amounts credited or debited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Company Supplemental Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant's Company Supplemental Contribution Account. 1.16 "Deduction Limitation" shall mean the following described limitation on a benefit that may otherwise be distributable pursuant to the provisions of this Plan. Except as otherwise provided, this limitation shall be applied to all distributions that are "subject to the Deduction Limitation" under this Plan. If the Employer determines in good faith that there is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the Employer would not be deductible by the Employer solely by reason of the limitation under Code Section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution to the Participant pursuant to this Plan is deductible, the Employer may delay all or any portion of a distribution under this Plan. Any amounts delayed pursuant to this limitation shall continue to be credited or debited with additional amounts in accordance with Section 3.9 below, even if such amount is being paid out in installments. The amounts so deferred and amounts credited or debited thereon shall be distributed to the Participant or his or her Beneficiary (in the event of the Participant's death) at the earliest possible date, as determined by the Employer in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Employer during which the distribution is made will not be limited by Code Section 162(m). Notwithstanding the foregoing, this Section 1.16 shall apply only to the extent permitted by Section 409A. 1.17 "Deferral Account" shall mean (i) the sum of all of a Participant's Annual Deferral Amounts, plus (ii) amounts credited or debited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant's Deferral Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account. 3 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 1.18 "Director" shall mean any member of the Board. 1.19 "Directors' Fees" shall mean the fees paid by the Employer, including retainer fees and meetings fees, as compensation for serving on the Board. 1.20 "Effective Date" shall mean the effective date of this Plan, which is January 1, 2005. 1.21 "Election Form" shall mean the form or forms established from time to time by the Administrator that a Participant completes, signs and returns to the Administrator to make an election under the Plan (which form or forms may take the form of an electronic transmission, if required or permitted by the Administrator). 1.22 "Employee" shall mean a person who is an employee of the Employer. 1.23 "Employer" shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor. For purposes of this Plan, "subsidiary" shall include entities permitted to participate in the Plan in accordance with Section 409A. 1.24 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.25 "401(k) Plan" shall mean the Varian Medical Systems, Inc. Retirement Plan, as it may be amended from time to time. 1.26 "Incentive Payments" shall mean any compensation payable to a Participant under the Annual Incentive Plan, Employee Incentive Plan, Sales Incentive Plan or Service Incentive Plan. 1.27 "Measurement Funds" shall have the meaning set forth in Section 3.9(d). 1.28 "Participant" shall mean any Employee who is selected to participate in the Plan or any Director; provided that such Employee or Director (i) elects to participate in the Plan, (ii) signs a Plan Agreement, an Election Form(s) and a Beneficiary Designation Form, (iii) has his or her signed Plan Agreement, Election Form(s) and Beneficiary Designation Form accepted by the Administrator, (iv) commences participation in the Plan, and (v) has not had his or her Plan Agreement terminated. A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account Balance under the Plan under any circumstance. 4 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 1.29 "Performance-Based Compensation" shall mean that portion of a Participant's Incentive Payments which is based on the performance of services by the Participant for the Employer over a period of at least twelve (12) months and which qualifies as "performance-based compensation" under Section 409A. 1.30 "Plan" shall mean this 2005 Deferred Compensation Plan, as evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time. 1.31 "Plan Agreement" shall mean a written agreement (which may take the form of an electronic transmission, if required or permitted by the Administrator), as may be amended from time to time, which is entered into by and between the Employer and a Participant. Each Plan Agreement executed by a Participant and the Employer shall provide for the entire benefit to which such Participant is entitled under the Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement. The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant. In the Plan Agreement, each Participant shall acknowledge that he or she accepts all of the terms of the Plan including the discretionary authority of the Administrator as set forth in Article 10. 1.32 "Plan Year" shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year during which this Plan is in effect. 1.33 "Pre-Termination Survivor Benefit" shall mean the benefit set forth in Article 6. 1.34 "Regular Termination" shall mean Separation from Service, voluntarily or involuntarily, for any reason other than Retirement or death. 1.35 "Regular Termination Benefit" shall mean the benefit set forth in Article 7. 5 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 1.36 "Retirement", "Retire(s)" or "Retired" shall mean, with respect to an Employee, Separation from Service for any reason other than a leave of absence or death on or after the earlier of the attainment of (a) age sixty-five (65) or (b) age fifty-five (55) with ten (10) Years of Service; and shall mean with respect to a Director who is not an Employee, Separation from Service on or after the later of (a) the attainment of age seventy (70), or (b) in the sole discretion of the Administrator, an age later than age seventy (70). If a Participant is both an Employee and a Director, Retirement shall not occur until he or she Retires as both an Employee and a Director, which Retirement shall be deemed to be a Retirement as a Director. 1.37 "Retirement Benefit" shall mean the benefit set forth in Article 5. 1.38 "Section 409A" shall mean Code Section 409A and the Treasury regulations or other authoritative guidance issued thereunder. 1.39 "Separation from Service" shall mean the Participant's separation from service, within the meaning of Section 409A. 1.40 "Short-Term Payout" shall mean the payout set forth in Section 4.1. 1.41 "Trust" shall mean the trust established pursuant to this Plan, as amended from time to time. The assets of the Trust shall be the property of the Employer. 1.42 "Unforeseeable Financial Emergency" shall mean a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse or the Participant's dependent (as defined in Code Section 152(a)), (ii) a loss of the Participant's property due to casualty (including the need to rebuild a home following damage not otherwise covered by insurance, for example, not as a result of a natural disaster), or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant (e.g., imminent foreclosure of or eviction from the Participant's primary residence, the need to pay for medical expenses, including non-refundable deductibles and prescription drugs, the need to pay funeral expenses of a spouse or dependent), all as determined in the sole discretion of the Administrator (which discretion the Administrator is bound to exercise, however, within the limitations of Section 409A). 1.43 "Yearly Installment Method" shall be a yearly installment payment over one of the installment payout alternatives selected by the Participant in accordance with this Plan, calculated as follows (subject to Section 3.11): The Account Balance of the Participant shall be calculated as of the close of business on the date of reference (or, if the date of reference is not a business day, on the immediately following business day), and shall be paid as soon as practicable thereafter. The date of reference with respect to the first yearly installment payment shall be as provided in Section 5.2 and the date of reference with respect to subsequent yearly installment payments shall be the anniversary of the first yearly installment payment (to be paid as soon as practicable thereafter). 6 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... The installment payout alternative available for election by the Participant with respect to his or her Retirement Benefit is substantially equal annual installments of between two (2) and fifteen (15) years. The yearly installment shall be calculated by multiplying this Account Balance by a fraction, the numerator of which is one (1), and the denominator of which is the remaining number of yearly payments due the Participant. By way of example, if the Participant elects a five (5) year Yearly Installment Method, the first payment shall be one-fifth (1/5) of the Account Balance (or applicable portion thereof), calculated as described in this definition. On or as soon as practicable after the anniversary of the first yearly installment payment, the payment shall be one-fourth (1/4) of the Account Balance (or applicable portion thereof), calculated as described in this definition 1.44 "Years of Service" shall mean the total number of full years in which a Participant has been employed by one or more Employers. For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the Employee's date of hiring and that, for any subsequent year, commences on an anniversary of that hiring date. Any partial year of employment shall not be counted. ARTICLE 2 --------- SELECTION/ENROLLMENT/ELIGIBILITY -------------------------------- 2.1 Eligibility. Participation in the Plan shall be limited to Employees ----------- whom the Administrator designates, in its sole discretion, for participation, provided that any Employees may not participate in the Plan unless they are members of a select group of management or highly compensated employees of the Employer, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA (which determination shall be made by the Administrator in its sole discretion). In addition to Employees described in the preceding sentence, each Director shall become eligible for participation in the Plan upon the date he or she is named as a Director (or upon the Effective Date, if later). 7 2.2 Enrollment Requirements. As a condition to participation, each Employee ----------------------- and Director who is eligible for participation shall complete, execute and return to the Administrator a Plan Agreement, an Election Form(s) and a Beneficiary Designation Form, all within thirty (30) days after he or she first becomes eligible for participation in the Plan. In addition, the Administrator shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary. Timely enrollment in the Plan for the 2005 Plan Year, although conducted prior to the date of adoption of the Plan, is intended to constitute good faith operational compliance with Section 409A. 2.3 Commencement of Participation. Provided an Employee or Director who is ----------------------------- eligible for participation has met all enrollment requirements set forth in this Plan and required by the Administrator, that Employee or Director shall commence participation in the Plan immediately following the Employee's or Director's timely completion of all enrollment requirements (or as soon as practicable thereafter as the Administrator may determine). If an Employee or Director fails to meet all such requirements within the specified period required, in accordance with Section 2.2, that Employee or Director shall not be eligible to participate in the Plan until the first day of the following Plan Year, again subject to timely delivery to and acceptance by the Administrator of the required documents. 2.4 Termination of Participation and/or Deferrals. If the Administrator --------------------------------------------- determines in good faith that an Employee no longer qualifies as a member of a select group of management or highly compensated employees of the Employer, the Administrator shall have the right, in its sole discretion, to prevent the Participant from making future deferral elections and/or from being credited with any further Annual Company Supplemental Contribution Amounts or Annual Company Discretionary Contribution Amounts. Solely if, and to the extent that future guidance issued under Section 409A permits, the Administrator shall also have the right, in its sole discretion, to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership status changes and/or (ii) immediately distribute the Participant's then vested Account Balance as a Regular Termination Benefit and terminate the Participant's participation in the Plan. ARTICLE 3 --------- DEFERRAL COMMITMENTS/COMPANY CONTRIBUTIONS/CREDITING/TAXES ---------------------------------------------------------- 3.1 Minimum Deferral. For each Plan Year, a Participant may elect to defer, ---------------- as his or her Annual Deferral Amount, Base Annual Salary, Incentive Payments and/or Directors' Fees (in the case of a Participant who is also a Director) in the following minimum amounts for each deferral elected: 8 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... Minimum Deferral Amount -------------------- ------- Base Annual Salary $ 2,000 Incentive Payments $ 2,000 Directors' Fees $ 2,000 Notwithstanding the foregoing, the Administrator may, in its sole discretion, establish for any Plan Year different minimum amount(s). Subject to Section 409A, if an election is made for less than the stated minimum amount, or if no election is made, the amount deferred shall be zero (0). 3.2 Maximum Deferral. ---------------- For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary, Incentive Payments and/or Directors' Fees (in the case of a Participant who is also a Director) up to the following maximum percentages for each deferral elected: Maximum Deferral Amount -------------------- ------- Base Annual Salary 75% Incentive Payments 100% Directors' Fees 100% Notwithstanding the foregoing, the Administrator may, in its sole discretion, establish for any Plan Year maximum percentage(s) which differ from that set forth above. 3.3 Election to Defer/Effect of Election Form. --------------------------------------- (a) Timing of Election. Except as provided below, a Participant ------------------ shall make a deferral election with respect to Base Annual Salary, Incentive Payments and/or Directors' Fees, as applicable, to be earned for services performed during an upcoming twelve (12) month Plan Year. Such election must be made during such period as shall be established by the Administrator which ends no later than the last day of the Plan Year preceding the Plan Year in which the services giving rise to the Base Annual Salary, Incentive Payments and/or Directors' Fees, as applicable, to be deferred are to be performed. For these purposes, to the extent permitted under Section 409A, Base Annual Salary payable after the last day of the Plan Year for services performed during the final payroll period containing the last day of the Plan Year shall be treated as Base Annual Salary for services performed in the subsequent Plan Year. 9 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... Notwithstanding the preceding, in the case of the first Plan Year in which an Employee or Director first becomes eligible to become a Participant, if and to the extent permitted by the Administrator, the individual may make an election no later than thirty (30) days after the date he or she becomes eligible to become a Participant to defer Base Annual Salary, Incentive Payments and/or Directors' Fees (as applicable) for services to be performed after the election. Also, notwithstanding the preceding, if and to the extent permitted by the Administrator, a Participant may make an election to defer that portion (if any) of his or her Incentive Payments which qualifies as Performance-Based Compensation no later than six (6) months prior to the last day of the period over which the services giving rise to the Performance-Based Compensation are performed. In addition, notwithstanding the preceding, to the extent permitted by the Administrator and under Section 409A, a Participant may make an election to defer Annual Deferral Amounts that relate all or in part to services performed on or before December 31, 2005 no later than the earlier of (i) March 15, 2005, or (ii) the date such Annual Deferral Amounts are otherwise payable to the Participant. Notwithstanding the preceding, the Administrator shall, in its discretion, be permitted to cause to be paid to the Participant Base Annual Salary, Incentive Payments and/or Directors' Fees, as applicable, rather than being deferred under the Plan if, under Section 409A, an earlier election was required in order to properly defer tax with respect to such amount(s). In addition, the Administrator, in its discretion, shall be permitted to allow a Participant to revoke or modify a Base Annual Salary, Incentive Payments and/or Directors' Fees deferral election he or she has made if Section 409A provides an opportunity to later modify a deferral election with respect to such amount(s); provided, however, that no such revocation or modification will be effective or available if and to the extent Section 409A provides that such revocation or modification, or the availability thereof, prevents the proper deferral of tax with respect to such amount(s). 10 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (b) Manner of Election. For any Plan Year (or portion thereof), a ------------------ deferral election for amount(s) earned during that Plan Year (or portion thereof), and such other elections as the Administrator deems necessary or desirable under the Plan, shall be made by timely delivering to the Administrator, in accordance with its rules and procedures, by the deadline(s) set forth above, an Election Form, along with such other elections as the Administrator deems necessary or desirable under the Plan. For these elections to be valid, the Election Form(s) must be completed and signed by the Participant, timely delivered to the Administrator (in accordance with Section 2.2 above) and accepted by the Administrator. If no such Election Form(s) is timely delivered for a Plan Year (or portion thereof), the Annual Deferral Amount shall be zero (0) for that Plan Year (or portion thereof). (c) Change in Election. Once a Plan Year has commenced, a Participant may not elect to change his or her deferral election that is in effect for that Plan Year, except if and to the extent permitted by the Administrator and made in accordance with the provisions of Section 409A specifically relating to the change and/or revocation of deferral elections (such as, for example, following an Unforeseeable Financial Emergency). 3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the Base -------------------------------------- Annual Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary. The Incentive Payments and/or Directors' Fees portion of the Annual Deferral Amount shall be withheld at the time the Incentive Payments or Directors' Fees are or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself. 3.5 Annual Company Supplemental Contribution Amount. A Participant's Annual ----------------------------------------------- Company Supplemental Contribution Amount for the Plan Year of reference shall be equal to the product of (a) the excess, if any, of the Participant's Base Annual Salary and any applicable Incentive Payments over the dollar limit on recognizable compensation under Code Section 401(a)(17) for the Plan Year (i.e., $210,000 for 2005 and $220,000 for 2006, as indexed for future years), and (b) the Company matching contribution rate under the 401(k) Plan applicable to the Participant for the Plan Year. The Annual Company Supplemental Contribution Amount, if any, shall be credited no earlier than January 1 and no later than March 15 of the following Plan Year. 11 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 3.6 Annual Company Discretionary Contribution Amount. For each Plan Year, ------------------------------------------------ an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant's Company Discretionary Contribution Account under this Plan, which amount shall be for that Participant the Annual Company Discretionary Contribution Amount for that Plan Year. The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive an Annual Company Discretionary Contribution Amount for that Plan Year. If a Participant is not employed by the Employer as of the last day of a Plan Year other than by reason of his or her Retirement or death while employed, the Annual Company Discretionary Contribution Amount for that Plan Year shall be zero. The Annual Company Discretionary Contribution Amount, if any, shall be credited as agreed upon between the Employer and the Participant; provided, however, to the extent required under Section 409A, such agreement shall be made prior to the commencement of the Plan Year in which the Participant first performs services relating to the Annual Company Discretionary Contribution Amount. 3.7 Investment of Trust Assets. The trustee of the Trust shall be -------------------------- authorized to invest and reinvest the assets of the Trust in accordance with the applicable Trust agreement, including the reinvestment of the proceeds in one or more investment vehicles designated by the Administrator. 3.8 Vesting. ------- (a) A Participant shall at all times be 100% vested in his or her Deferral Account. (b) A Participant shall at all times be 100% in his or her Company Discretionary Contribution Account unless a vesting schedule is approved and documented by the Administrator at the time the Annual Company Discretionary Contribution Amount is credited to the Participant's Company Discretionary Contribution Account for that Plan Year. (c) A Participant shall at all times be 100% vested in his or her Company Supplemental Contribution Account. (d) Notwithstanding anything to the contrary contained in this Section 3.8, in the event of a Change in Control, a Participant's Company Discretionary Contribution Account shall immediately become 100% vested (if it is not already vested in accordance with a vesting schedule). For purposes of this Section 3.8, a "Change in Control" shall be deemed to have occurred if: 12 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (i) Any individual or group constituting a "person," as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act (other than (A) the Company or any of its subsidiaries or (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any of its subsidiaries), is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's outstanding securities then entitled ordinarily (and apart from rights accruing under special circumstances) to vote for the election of Directors; or (ii) Continuing Directors cease to constitute at least a majority of the Board; or (iii) there occurs a reorganization, merger, consolidation or other corporate transaction involving the Company (a "Transaction"), in each case with respect to which the stockholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own more than 50% of the combined voting power of the Company or other corporation resulting from such Transaction; or (iv) all or substantially all of the assets of the Company are sold, liquidated or distributed. Notwithstanding the forgoing a "Change in Control" shall not be deemed to have occurred under this Plan if, prior to the occurrence of a specified event that would otherwise constitute a Change in Control hereunder, the disinterested Continuing Directors then in office, by a majority vote thereof, determine that the occurrence of such specified event shall not be deemed to be a Change in Control with respect to an Employee hereunder if the Change in Control results from actions or events in which an Employee is a participant in a capacity other than solely as an officer, employee or Director of the Company. "Continuing Directors" for purposes of the above shall mean the Directors of the Company in office on the date of the adoption of this Plan and any successor to any such Director who was nominated or selected by a majority of the Continuing Directors in office at the time of the Director's nomination or selection and who is not an "affiliate" or "associate" (as defined in Regulation12B under the Exchange Act) of any person who is the beneficial owner, directly or indirectly, of securities representing ten percent (10%) or more of the combined voting power of the Company's outstanding securities then entitled ordinarily to vote for the election of Directors. 13 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 3.9 Crediting/Debiting of Account Balances. In accordance with, and -------------------------------------- subject to, the rules and procedures that are established from time to time by the Administrator, in its sole discretion, amounts shall be credited or debited to a Participant's Account Balance in accordance with the following rules: (a) Sub-Accounts. Separate sub-accounts shall be established and ------------ maintained with respect to each Participant's Account Balance (together, the "Sub-Accounts"), each attributable to the portion of the Participant's Account Balance with respect to which the same time and form of distribution has been elected pursuant to Sections 4.1 and 5.2 hereof. (b) Election of Measurement Funds. Subject to Section 3.9(f) ----------------------------- below, a Participant, in connection with his or her initial deferral election in accordance with Section 3.3(a) above, shall elect, on the Election Form(s), one or more Measurement Funds (as described in Section 3.9(d) below) to be used to determine the additional amounts to be credited or debited to each of his or her Sub-Accounts for the first business day of the Plan Year, continuing thereafter unless changed in accordance with the next sentence. Commencing with the first business day of the Plan Year, and continuing thereafter for the remainder of the Plan Year (unless the Participant ceases during the Plan Year to participate in the Plan), the Participant may (but is not required to) elect daily, by submitting an Election Form(s) to the Administrator that is accepted by the Administrator (which submission may take the form of an electronic transmission, if required or permitted by the Administrator), to add or delete one or more Measurement Funds to be used to determine the additional amounts to be credited or debited to each of his or her Sub-Accounts, or to change the portion of each of his or her Sub-Accounts allocated to each previously or newly elected Measurement Funds. If an election is made in accordance with the previous sentence, it shall apply to the next business day and continue thereafter for the remainder of the Plan Year (unless the Participant ceases during the Plan Year to participate in the Plan), unless changed in accordance with the previous sentence. (c) Proportionate Allocation. In making any election described in ------------------------ Section 3.9(b) above, the Participant shall specify on the Election Form(s), in whole percentage points, the percentage of each of his or her Sub-Account(s) to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of his or her Account Balance). 14 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (d) Measurement Funds. Subject to Section 3.9(f) below, the ----------------- Participant may elect one or more of the Measurement Funds set forth on Schedule A (the "Measurement Funds"), for the purpose of crediting or debiting additional amounts to his or her Account Balance. The Administrator may, in its sole discretion, discontinue, substitute or add a Measurement Fund. Each such action will take effect as of the first business day that follows by thirty (30) days the day on which the Administrator gives Participants advance written notice of such change. If the Administrator receives an initial or revised Measurement Funds election which it deems to be incomplete, unclear or improper, the Participant's Measurement Funds election then in effect shall remain in effect (or, in the case of a deficiency in an initial Measurement Funds election, the Participant shall be deemed to have filed no deemed investment direction). If the Administrator possesses (or is deemed to possess as provided in the previous sentence) at any time directions as to Measurement Funds of less than all of the Participant's Account Balance, the Participant shall be deemed to have directed that the undesignated portion of the Account Balance be deemed to be invested in a money market, fixed income or similar Measurement Fund made available under the Plan as determined by the Administrator in its discretion. Each Participant hereunder, as a condition to his or her participation hereunder, agrees to indemnify and hold harmless the Administrator, the Employer and the Company, and their agents and representatives, from any losses or damages of any kind relating to (i) the Measurement Funds made available hereunder and (ii) any discrepancy between the credits and debits to the Participant's Account Balance based on the performance of the Measurement Funds and what the credits and debits otherwise might be in the case of an actual investment in the Measurement Funds. (e) Crediting or Debiting Method. The performance of each elected ---------------------------- Measurement Fund (either positive or negative) will be determined by the Administrator, in its sole discretion, based on the performance of the Measurement Funds themselves. A Participant's Account Balance shall be credited or debited on a daily basis based on the performance of each Measurement Fund selected by the Participant, or as otherwise determined by the Administrator in its sole discretion, as though (i) a Participant's Account Balance were invested in the Measurement Funds selected by the Participant, in the percentages elected by the Participant as of such date, at the closing price on such date; (ii) the portion of the Annual Deferral Amount that was actually deferred was invested in the Measurement Funds selected by the Participant, in the percentages elected by the Participant, no later than the close of business on the third (3rd) business day after the day on which such amounts are actually deferred from the Participant's Base Annual Salary, Incentive Payments or Directors' Fees, as applicable, at the closing price on such date; 15 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (iii) any Annual Company Supplemental Contribution Amounts and/or Annual Company Discretionary Contribution Amounts credited to a Participant's Account Balance were invested in the Measurement Fund(s) selected by the Participant, in the percentages elected by the Participant, as soon as administratively practicable following the date such amount(s) were credited to the Participant's Plan Account; and (iv) any distribution made to a Participant that decreases such Participant's Account Balance ceased being invested in the Measurement Funds, in the percentages applicable to such calendar day, no earlier than three (3) business days prior to the distribution, at the closing price on such date. (f) No Actual Investment. Notwithstanding any other provision of -------------------- this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation of his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant's Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund. In the event that the Employer or the trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the Measurement Funds, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Employer or the Trust; the Participant shall at all times remain an unsecured general creditor of the Employer. (g) Beneficiary Elections. Each reference in this Section 3.9 to a --------------------- Participant shall be deemed to include, where applicable, a reference to a Beneficiary. 3.10 FICA and Other Taxes. -------------------- (a) Annual Deferral Amounts. For each Plan Year in which an Annual ----------------------- Deferral Amount is being withheld from a Participant, the Employer shall withhold from that portion of the Participant's Base Annual Salary, Incentive Payments that is not being deferred, in a manner determined by the Employer, the Participant's share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Administrator may reduce the Annual Deferral Amount in order to comply with this Section 3.10. (b) Annual Company Supplemental Contribution Amounts. When a ------------------------------------------------ Participant is credited with Annual Company Supplemental Contribution Amounts, the Employer shall have the discretion to withhold from the Participant's Base Annual Salary and/or Incentive Payments that is not deferred, in a manner determined by the Employer, the Participant's share of FICA and other employment taxes. If necessary, the Administrator may reduce the Participant's Annual Company Supplemental Contribution Amounts in order to comply with this Section 3.10. 16 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (c) Annual Company Discretionary Contribution Amounts. When a ------------------------------------------------- Participant becomes vested in his or her Company Discretionary Contribution Account, the Employer shall withhold from the Participant's Base Annual Salary, Incentive Payments and/or Directors' Fees that is not deferred, in a manner determined by the Employer, the Participant's share of FICA and other employment taxes. If necessary, the Committee may reduce the vested portion of the Participant's Company Discretionary Contribution Account in order to comply with this Section 3.10. 3.11 Distributions. Notwithstanding anything herein to the contrary, any ------------- payments made to a Participant under this Plan shall be in cash form, and the Employer, or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all Federal, state and local income, employment and other taxes required to be withheld by the Employer, or the trustee of the Trust, in connection with such payments, and, subject to Section 409A, all indebtedness of the Participant to the Employer as of the date(s) of distribution, in amounts and in a manner to be determined in the reasonable discretion of the Employer. ARTICLE 4 --------- SHORT-TERM PAYOUT/UNFORESEEABLE FINANCIAL EMERGENCIES ----------------------------------------------------- 4.1 Short-Term Payout. At the same time that a Participant elects to defer ----------------- an Annual Deferral Amount for a given Plan Year, the Participant may irrevocably elect to receive a future "Short-Term Payout" from the Plan. For these purposes, any Incentive Payments deferred pursuant to a deferral election made during a given Plan Year shall be considered as part of the immediately following Plan Year's Annual Deferral Amount regardless of when the Incentive Payments would have been payable in absence of the deferral election (e.g., Incentive Payments deferred pursuant to a deferral election made in December 2005 shall be considered as part of the Participant's 2006 Annual Deferral Amount). Subject to such requirements as may be imposed by the Administrator, a Participant may make separate Short-Term Payout elections in respect of the Base Annual Salary, Incentive Payments and/or Directors' Fees portions of his or her Annual Deferral Amount. Subject to the Deduction Limitation and to Section 3.11, the Short-Term Payout shall be a lump sum payment in an amount that is equal to the Annual Deferral Amount (or applicable portion thereof) and amounts credited or debited thereto in the manner provided in Section 3.9 above, determined at the time that the Short-Term Payout becomes payable. 17 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... Subject to the Deduction Limitation and the other terms and conditions of this Plan, each Short-Term Payout elected shall be paid out during a period beginning one (1) day and ending sixty (60) days after the last day of any Plan Year designated by the Participant that is at least three (3) Plan Years after the Plan Year of the Annual Deferral Amount as specifically elected by the Participant. By way of example, if a three (3) year Short-Term Payout is elected for 2006 Plan Year Annual Deferral Amounts, the three (3) year Short-Term Payout would become payable during a sixty (60) day period commencing January 1, 2010. Notwithstanding the preceding sentences or any other provision of this Plan that may be construed to the contrary, a Participant who is in active service with the Employer may, with respect to each Short-Term Payout, on a form determined by the Administrator, make one (1) or more additional deferral elections (a "Subsequent Election") to defer payment of such Short-Term Payout to a Plan Year subsequent to the Plan Year originally (or subsequently) elected; provided, however, any such Subsequent Election will be null and void unless accepted by the Administrator no later than one (1) year prior to the first day of the Plan Year in which, but for the Subsequent Election, such Short-Term Payout would be paid, and such Subsequent Election provides for a deferral of at least five (5) Plan Years following the Plan Year in which the Short-Term Payout, but for the Subsequent Election, would be paid. Any amounts credited to the Participant's Company Supplemental Contribution Account and/or Company Discretionary Contribution Account shall not be eligible for a Short-Term Payout under the Plan. 4.2 Other Benefits Take Precedence Over Short-Term Payout. Should an event ----------------------------------------------------- occur that triggers a benefit under Article 5, 6 or 7 prior to the occurrence of the Short-Term Payout Date, any Annual Deferral Amounts, plus or minus amounts credited or debited thereon, that are subject to a Short-Term Payout election under Section 4.1 shall not be paid in accordance with Section 4.1 but shall be paid in accordance with the other applicable Article. 4.3 Withdrawal Payout/Termination of Deferral Election for Unforeseeable ----------------------------------------------------------------------- Financial Emergencies. If a Participant experiences an Unforeseeable --------------------- Financial Emergency, the Participant may petition the Administrator to (i) halt any deferrals required to be made by a Participant to the extent permitted under Section 409A and (ii) receive a partial or full payout from the Plan. The payout shall not exceed the lesser of the Participant's Account Balance, or the amount reasonably needed to satisfy the Unforeseeable Financial Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the payouts, after taking into account the extent to which the Unforeseeable Financial Emergency is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant's assets (to the extent the liquidation of assets would not itself cause severe financial hardship) or by termination of deferrals hereunder. 18 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... A termination of deferrals or payout under this Section 4.3 shall be permitted solely to the extent permitted under Section 409A. If, subject to the sole discretion of the Administrator (which discretion the Administrator is bound to exercise, however, within the limitations of Section 409A), the petition for a termination of deferrals and payout is approved, cessation shall take effect upon the date of approval and any payout shall be made within sixty (60) days of the date of approval. The payment of any amount under this Section 4.3 shall be subject to Section 3.11, but shall not be subject to the Deduction Limitation. ARTICLE 5 --------- RETIREMENT BENEFIT ------------------ 5.1 Retirement Benefit. Subject to the Deduction Limitation and to ------------------ Section 3.11, a Participant who Retires shall receive, as a Retirement Benefit, his or her vested Account Balance (or applicable portion thereof). 5.2 Payment of Retirement Benefit. At the same time that a Participant ----------------------------- elects to defer an Annual Deferral Amount for a given Plan Year, the Participant may elect to receive that portion of his or her Retirement Benefit attributable to the Annual Deferral Amount in a lump sum, or pursuant to one of the available Yearly Installment Methods. For these purposes, any Incentive Payments deferred pursuant to a deferral election made during a given Plan Year shall be considered as part of the immediately following Plan Year's Annual Deferral Amount regardless of when the Incentive Payments would have been payable in absence of the deferral election (e.g., Incentive Payments deferred pursuant to a deferral election made in December 2005 shall be considered as part of the Participant's 2006 Annual Deferral Amount). Subject to such requirements as may be imposed by the Administrator, a Participant may make separate Retirement Benefit distribution elections in respect of the Base Annual Salary, Incentive Payments and/or Directors' Fees portions of his or her Annual Deferral Amount. The lump sum payment shall be made, or installments shall commence, (i) if the Participant's Retirement occurs during January through June of any Plan Year, on or after January 1 of the Plan Year following the Plan Year of the Participant's Retirement; 19 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (ii) if the Participant's Retirement occurs during July through December of any Plan Year, on or after July 1 of the Plan Year following the Plan Year of the Participant's Retirement The Participant may change his or her election to an allowable alternative payout period date by submitting a new Election Form to the Administrator, provided that any such Election Form is submitted at least one (1) year prior to the distribution date then in effect and, if required by Section 409A, provides for a distribution (or commencement of distributions) date which is at least five (5) years from the distribution date then in effect. Subject to the foregoing, the Election Form most recently accepted by the Administrator shall govern the payout of the Retirement Benefit with respect to the portion of the Participant's Account Balance to which it pertains. Notwithstanding anything above or elsewhere in the Plan to the contrary, no change submitted on an Election Form shall be accepted by the Administrator if the change accelerates the time over which distributions shall be made to the Participant (except as otherwise permitted under Section 409A) and the Administrator shall deny any change made to an election if the Administrator determines that the change violates the requirement under Section 409A that the first payment with respect to which such election is made be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made. For these purposes, installment payments shall be treated as a single payment, with the result that an election to change from installments to a lump sum will require that the lump sum be postponed until a date which is at least five (5) years from the scheduled payment date of the first installment. If the Participant does not make any election with respect to the payment of any portion of the Retirement Benefit, then such portion shall be paid in a lump sum: (i) if the Participant's Retirement occurs during January through June of any Plan Year, on or after January 1 of the Plan Year following the Plan Year of the Participant's Retirement; (ii) if the Participant's Retirement occurs during July through December of any Plan Year, on or after July 1 of the Plan Year following the Plan Year of the Participant's Retirement. Any payment made shall be subject to Section 3.11 and to the Deduction Limitation. Any amounts credited to the Participant's Company Supplemental Contribution Account and/or Company Discretionary Contribution Account shall be payable under the Plan solely in the form of a lump sum and shall not be eligible for installment distribution. 20 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... ARTICLE 6 --------- SURVIVOR BENEFIT ---------------- 6.1 Pre-Termination Survivor Benefit. The Participant's Beneficiary shall -------------------------------- receive a Pre-Termination Survivor Benefit equal to the Participant's entire Account Balance if the Participant dies before he or she experiences a Retirement or a Regular Termination. 6.2 Payment of Pre-Termination Survivor Benefit. The Pre-Termination ------------------------------------------- Survivor Benefit shall be paid to the Participant's Beneficiary in a lump sum as soon as practicable following the date on which the Administrator receives proof that is satisfactory to the Administrator of the Participant's death. Any payment made hereunder shall be subject to Section 3.11, but shall not be subject to the Deduction Limitation. 6.3 Death Prior to Completion of Regular Termination Benefit or Retirement ----------------------------------------------------------------------- Benefit. If a Participant dies after Regular Termination or Retirement ------- but before the Regular Termination Benefit or Retirement Benefit is paid in full, the Participant's unpaid Regular Termination Benefit or Retirement Benefit shall be paid to the Participant's Beneficiary in a lump sum as soon as practicable following the date on which the Administrator is satisfied of the Participant's death. Any payment made hereunder shall be subject to Section 3.11, but shall not be subject to the Deduction Limitation. ARTICLE 7 --------- REGULAR TERMINATION BENEFIT --------------------------- 7.1 Regular Termination Benefit. Subject to the Deduction Limitation and to --------------------------- Section 3.11, the Participant shall receive a Regular Termination Benefit, which shall be equal to the Participant's vested Account Balance if a Participant experiences a Regular Termination prior to his or her Retirement or death. 7.2 Payment of Regular Termination Benefit. The Participant's Regular -------------------------------------- Termination Benefit shall be paid in a lump sum: (i) if the Participant's Regular Termination occurs during January through June of any Plan Year, on or after January 1 of the Plan Year following the Plan Year of the Participant's Regular Termination; (ii) if the Participant's Regular Termination occurs during July through December of any Plan Year, on or after July 1 of the Plan Year following the Plan Year of the Participant's Regular Termination. Any payment made shall be subject to Section 3.11 and the Deduction Limitation. 21 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... ARTICLE 8 --------- BENEFICIARY DESIGNATION ----------------------- 8.1 Beneficiary. Each Participant shall have the right, at any time, to ----------- designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of the Employer in which the Participant participates. 8.2 Beneficiary Designation/Change. A Participant shall designate his or ------------------------------ her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Administrator or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Administrator's rules and procedures, as in effect from time to time. If the Participant names someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Administrator, must be signed by the Participant's spouse and returned to the Administrator. Upon the acceptance by the Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Administrator prior to his or her death. 8.3 Acknowledgment. No designation or change in designation of a -------------- Beneficiary shall be effective until received and acknowledged in writing by the Administrator or its designated agent. 8.4 No Beneficiary Designation. If a Participant fails to designate a -------------------------- Beneficiary as provided in Sections 8.1, 8.2 and 8.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant's benefits, then the Participant's designated Beneficiary shall be deemed to be his or her surviving spouse, or, if the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant's estate. 8.5 Doubt as to Beneficiary. If the Administrator has any doubt as to the ----------------------- proper Beneficiary to receive payments pursuant to this Plan, the Administrator shall have the right, exercisable in its discretion, to cause the Employer to withhold such payments until this matter is resolved to the Administrator's satisfaction. 22 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 8.6 Discharge of Obligations. The payment of benefits under the Plan to a ------------------------ person believed in good faith by the Administrator to be a valid Beneficiary shall fully and completely discharge the Employer and the Administrator from all further obligations under this Plan with respect to the Participant, and that Participant's Plan Agreement shall terminate upon such full payment of benefits. Neither the Administrator nor the Employer shall be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such person's last known address. If the Administrator notifies any Participant or Beneficiary that he or she is entitled to an amount under the Plan and the Participant or Beneficiary fails to claim such amount or make his or her location known to the Administrator within three (3) years thereafter, then, except as otherwise required by law, if the location of one or more of the next of kin of the Participant is known to the Administrator, the Administrator may direct distribution of such amount to any one or more or all of such next of kin, and in such proportions as the Administrator determines. If the location of none of the foregoing persons can be determined, the Administrator shall have the right to direct that the amount payable shall be deemed to be a forfeiture, except that the dollar amount of the forfeiture, unadjusted for deemed gains or losses in the interim, shall be paid by the Employer if a claim for the benefit subsequently is made by the Participant or the Beneficiary to whom it was payable. If a benefit payable to an unlocated Participant or Beneficiary is subject to escheat and/or unclaimed property laws pursuant to applicable law, neither the Administrator nor the Employer shall be liable to any person for any payment made in accordance with such law. ARTICLE 9 --------- TERMINATION/AMENDMENT/MODIFICATION ---------------------------------- 9.1 Termination. Although the Employer anticipates that it will continue ----------- the Plan for an indefinite period of time, there is no guarantee that the Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, the Employer reserves the right to discontinue its sponsorship of the Plan and/or to terminate the Plan at any time with respect to any or all of its participating Employees or Directors, by action of the Administrator. Upon a complete or partial termination of the Plan, the Plan Agreements of the affected Participants shall terminate and their vested Account Balances, determined as if they had experienced a Regular Termination on the date of Plan termination or, if Plan termination occurs after the date upon which a Participant was eligible for Retirement, then with respect to that Participant as if he or she had Retired on the date of Plan termination, shall, subject to Section 9.6, be paid to the Participants in accordance with their distribution elections in effect at the time of the Plan termination (but not to commence before or end after any distribution period required by Section 409A); provided however, if, due to the circumstances surrounding the Plan termination, a distribution of a Participant's Account Balance upon Plan termination is not permitted by Section 409A, the payment of the Account Balance shall be made only after Plan benefits otherwise become due hereunder. The termination of the Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination. 23 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... Without limiting the generality of the foregoing, and subject at all times to Section 409A, the Employer specifically reserves the right to terminate the Plan with respect to all of its participating Employees and Directors, in its discretion and by action of the Administrator, within the thirty (30) days preceding or the twelve (12) months following a change in control event (as defined in Section 409A); provided, however, that, to the extent required under Section 409A, such termination shall be permitted only if all substantially similar arrangements sponsored by the Employer are terminated, so that the Employees or Directors participating under the Plan and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date of termination of the arrangements. 9.2 Amendment. The Employer may, at any time, amend or modify the Plan in --------- whole or in part by the action of the Administrator; provided, however, that no amendment or modification shall be effective to decrease or restrict the value of a Participant's vested Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Regular Termination as of the effective date of the amendment or modification or, if the amendment or modification occurs after the date upon which the Participant was eligible for Retirement, the Participant had Retired as of the effective date of the amendment or modification. The amendment or modification of the Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under the Plan as of the date of the amendment or modification. 9.3 Plan Agreement. Despite the provisions of Sections 9.1 and 9.2 above, -------------- subject to Section 409A, if a Participant's Plan Agreement contains benefits or limitations that are not in this Plan document, the Employer may only amend or terminate such provisions with the consent of the Participant. 24 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 9.4 Effect of Payment. The full payment of the applicable benefit under ----------------- Articles 4, 5, 6 or 7 of the Plan shall completely discharge all obligations to a Participant and his or her designated Beneficiaries under this Plan and the Participant's Plan Agreement shall terminate. 9.5 Amendment to Ensure Proper Characterization of the Plan. ------------------------------------------------------- Notwithstanding the previous Sections of this Article, the Plan may be amended at any time, retroactively if required, if found necessary, in the opinion of the Employer, in order to ensure that the Plan is characterized as a non-tax-qualified "top hat" plan of deferred compensation maintained for a select group of management or highly compensated employees, as described under ERISA Sections 201(2), 301(a)(3) and 401(a)(1), to conform the Plan to the provisions to Section 409A and to ensure that amounts under the Plan are not considered to be taxed to a Participant under the Federal income tax laws prior to the Participant's receipt of the amounts or to conform the Plan and the Trust to the provisions and requirements of any applicable law (including ERISA and the Code). 9.6 Changes in Law Affecting Taxability. ----------------------------------- (a) Operation. This Section shall become operative upon the --------- enactment of any change in applicable statutory law or the promulgation by the Internal Revenue Service of a final regulation or other pronouncement having the force of law, which statutory law, as changed, or final regulation or pronouncement, as promulgated, would cause any Participant to include in his or her federal gross income amounts accrued by the Participant under the Plan on a date (an "Early Taxation Event") prior to the date on which such amounts are made available to him or her hereunder; provided, however, that no portion of this Section shall become operative to the extent that portion would result in a violation of Section 409A (e.g., by causing an impermissible distribution under Section 409A). (b) Affected Right or Feature Nullified. Notwithstanding any other ----------------------------------- Section of this Plan to the contrary (but subject to subsection (c), below), as of an Early Taxation Event, the feature or features of this Plan that would cause the Early Taxation Event shall be null and void, to the extent, and only to the extent, required to prevent the Participant from being required to include in his or her federal gross income amounts accrued by the Participant under the Plan prior to the date on which such amounts are made available to him or her hereunder. If only a portion of a Participant's Account Balance is impacted by the change in the law, then only such portion shall be subject to this Section, with the remainder of the Account Balance not so affected being subject to such rights and features as if the law were not changed. If the law only impacts Participants who have a certain status with respect to the Employer, then only such Participants shall be subject to this Section. 25 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (c) Tax Distribution. If an Early Taxation Event is earlier than ---------------- the date on which the statute, regulation or pronouncement giving rise to the Early Taxation Event is enacted or promulgated, as applicable (i.e., if the change in the law is retroactive), there shall be distributed to each Participant, as soon as practicable following such date of enactment or promulgation, the amounts that became taxable on the Early Taxation Event. ARTICLE 10 ---------- ADMINISTRATION -------------- 10.1 Administrator Duties. This Plan shall be administered by the Committee, -------------------- or, with respect to those duties and responsibilities described below, appropriate management personnel designated by the Committee to perform such duties and responsibilities. The Administrator shall have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and (ii) decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan. Any individual serving as a member of the Administrator who is a Participant shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Administrator shall be entitled to rely on information furnished by a Participant or the Employer. Any of the duties and responsibilities of the Administrator under the Plan, including, but not limited to those listed below, may be performed by appropriate management personnel designated by the Committee to perform such duties and responsibilities, except that any decision, interpretation, calculation or other action which would materially increase the Employer's liability and/or costs associated with the Plan must be approved by the Committee: (a) the appropriate management personnel may designate those Employees of the Employer who are eligible to participate in the Plan in accordance with Section 2.1; (b) the appropriate management personnel may make all discretionary decisions under the Plan with respect to Annual Company Discretionary Contribution Amounts; provided, however, that the appropriate management personnel may only credit an Annual Company Discretionary Contribution Amount under the Plan on behalf of a Participant without Committee approval if, but for the decision to so credit, the appropriate management personnel could otherwise have directed, without Committee approval, that the Participant receive an amount equal to the Annual Company Discretionary Contribution Amount in cash; 26 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (c) the appropriate management personnel may administer the claims procedure requirements of the Plan set forth in Article 12; (d) the appropriate management personnel may make Plan amendments under Article 9, but only to the extent such amendments do not materially increase the Employer's liability and/or costs associated with the Plan; (e) the appropriate management personnel may change service providers used in connection with the Plan; (f) the appropriate management personnel may allocate expenses associated with the Plan's administration among Participants' Account Balances; (g) the appropriate management personnel may change the deemed investment alternatives available under the Plan. 10.2 Agents. In the administration of this Plan, the Administrator may, from ------ time to time, employ agents and delegate to them such administrative duties as they see fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Employer. 10.3 Binding Effect of Decisions. The decision or action of the --------------------------- Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan. 10.4 Indemnity of Administrator. The Employer shall indemnify and hold -------------------------- harmless the members of the Administrator, and any individuals to whom the duties of the Administrator may be delegated, against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Administrator or any of its members or any such individuals. This indemnification shall be in addition to, and not in limitation of, any other indemnification protections of the Administrator. 27 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 10.5 Employer Information. To enable the Administrator to perform its -------------------- functions, the Employer shall supply full and timely information to the Administrator on all matters relating to the compensation of the Participants, the date and circumstances of the Retirement, death or Regular Termination of the Participants, and such other pertinent information as the Administrator may reasonably require. ARTICLE 11 ---------- OTHER BENEFITS AND AGREEMENTS ----------------------------- 11.1 Coordination with Other Benefits. The benefits provided for a -------------------------------- Participant or a Participant's Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for Employees or Directors of the Employer. The Plan shall supplement and shall not supersede, modify or amend any other plan or program except as may otherwise be expressly provided. ARTICLE 12 ---------- CLAIMS PROCEDURES ----------------- 12.1 Scope of Claims Procedures. This Article is based on final regulations -------------------------- issued by the Department of Labor and published in the Federal Register on November 21, 2000 and codified at 29 C.F.R. section 2560.503-1. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail. 12.2 Initial Claim. A Participant or Beneficiary who believes he or she is ------------- entitled to any benefit under the Plan (a "Claimant") may file a claim with the Administrator. The Administrator shall review the claim itself or appoint an individual or an entity to review the claim. (a) Decision on Initial Claim. The Claimant shall be notified ------------------------- within ninety (90) days after the claim is filed whether the claim is allowed or denied, unless the Claimant receives written notice from the Administrator or appointee of the Administrator prior to the end of the ninety (90) day period stating that special circumstances require an extension of the time for decision, such extension not to extend beyond the day which is one hundred eighty (180) days after the day the claim is filed. (b) Manner and Content of Denial of Initial Claims. If the ---------------------------------------------- Administrator denies a claim, it must provide to the Claimant, in writing or by electronic communication: (i) The specific reasons for the denial; 28 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (ii) A reference to the Plan provision or insurance contract provision upon which the denial is based; (iii) A description of any additional information or material that the Claimant must provide in order to perfect the claim; (iv) An explanation of why such additional material or information is necessary; (v) Notice that the Claimant has a right to request a review of the claim denial and information on the steps to be taken if the Claimant wishes to request a review of the claim denial; and (vi) A statement of the Participant's right to bring a civil action under ERISA Section 502(a) following a denial on review of the initial denial. 12.3 Review Procedures. ----------------- (a) Request for Review of Denied Claim. A request for review of a ---------------------------------- denied claim must be made in writing to the Administrator within sixty (60) days after receiving notice of denial. The decision upon review will be made within sixty (60) days after the Administrator's receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered not later than one hundred twenty (120) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial sixty (60) day period and must explain the special circumstances and provide an expected date of decision. The reviewer shall afford the Claimant an opportunity to review and receive, without charge, all relevant documents, information and records and to submit issues and comments in writing to the Administrator. The reviewer shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim regardless of whether the information was submitted or considered in the initial benefit determination. (b) Manner and Content of Notice of Decision on Review. Upon -------------------------------------------------- completion of its review of an adverse initial claim determination, the Administrator will give the Claimant, in writing or by electronic notification, a notice containing: (i) its decision; (ii) the specific reasons for the decision; 29 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... (iii) the relevant Plan provisions or insurance contract provisions on which its decision is based; (iv) a statement that the Claimant is entitled to receive, upon request and without charge, reasonable access to, and copies of, all documents, records and other information in the Plan's files which is relevant to the Claimant's claim for benefits; (v) a statement describing the Claimant's right to bring an action for judicial review under ERISA Section 502(a); and (vi) if an internal rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination on review, a statement that a copy of the rule, guideline, protocol or other similar criterion will be provided without charge to the Claimant upon request. 12.4 Calculation of Time Periods. For purposes of the time periods specified --------------------------- in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds. 12.5 Legal Action. If the Plan fails to follow the claims procedures ------------ required by this Article, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to pursue any available remedy under ERISA Section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. A Claimant's compliance with the foregoing provisions of this Article is a mandatory prerequisite to a Claimant's right to commence any legal action with respect to any claims for benefits under the Plan. However, notwithstanding anything herein that may suggest otherwise, with respect to any claim pertaining to a Participant who is not subject to ERISA, following the Claimant's exhaustion of the foregoing provisions of this Article, all disputes in connection with such claim shall be resolved by binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association. 30 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... ARTICLE 13 ---------- TRUST ----- 13.1 Establishment of the Trust. The Company has established the Trust, and -------------------------- the Employer intends, but is not required, to transfer over to the Trust at least annually such assets as the Employer determines, in its sole discretion, are necessary to provide for its respective future liabilities created with respect to the Annual Deferral Amounts, Annual Company Supplemental Contribution Amounts and Annual Company Discretionary Contribution Amounts for the Participants. 13.2 Interrelationship of the Plan and the Trust. The provisions of the Plan ------------------------------------------- and the Plan Agreement shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employer, Participants and the creditors of the Employer to the assets transferred to the Trust. The Employer shall at all times remain liable to carry out its obligations under the Plan. 13.3 Distributions from the Trust. The Employer's obligations under the Plan ---------------------------- may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer's obligations under this Plan. ARTICLE 14 ---------- MISCELLANEOUS ------------- 14.1 Status of Plan. The Plan is intended to be a plan that is not qualified -------------- within the meaning of Code Section 401(a) and that "is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted to the extent possible in a manner consistent with that intent. 14.2 Unsecured General Creditor. Participants and their Beneficiaries, -------------------------- heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of the Employer. For purposes of the payment of benefits under this Plan, any and all of the Employer's assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. The Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future. 14.3 Employer's Liability. The Employer's liability for the payment of -------------------- benefits shall be defined only by the Plan and the Plan Agreement, as entered into between the Employer and a Participant. The Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan and his or her Plan Agreement. 31 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 14.4 Nonassignability. Subject to Section 3.11, neither a Participant nor ---------------- any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. Subject to Section 14.15, no part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise. 14.5 Not a Contract of Continued Service. The terms and conditions of this ----------------------------------- Plan shall not be deemed to constitute a contract of continued service by the Participant to the Employer and a Participant, whether in an employee or independent contractor capacity. Such service is hereby acknowledged, subject to applicable state law, to be an "at will" service relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment, consulting or like agreement. Nothing in this Plan shall be deemed to give any Participant the right to be retained in the service of the Employer either as an Employee or Director, or to interfere with the right of the Employer to discipline or discharge the Participant at any time. 14.6 Furnishing Information. A Participant or his or her Beneficiary will ---------------------- cooperate with the Administrator by furnishing any and all information requested by the Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including, but not limited to, taking such physical examinations as the Administrator may deem necessary. 14.7 Terms. Whenever any words are used herein in the masculine, they shall ----- be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. 32 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 14.8 Captions. The captions of the articles, sections and paragraphs of this -------- Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 14.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be ------------- construed and interpreted according to the internal laws of the State of California without regard to its conflicts of laws principles. 14.10 Notice. Any notice or filing required or permitted to be given to the ------ Administrator under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below: Vice President, Human Resources 3100 Hansen Way Palo Alto, California 94304 With Copy To: General Counsel 3100 Hansen Way Palo Alto, California 94304 Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant. 14.11 Successors. The provisions of this Plan shall bind and inure to the ---------- benefit of the Participant's Employer and its successors and assigns and the Participant and the Participant's designated Beneficiaries. 14.12 Spouse's Interest. The interest in the benefits hereunder of a spouse ----------------- of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse's will, nor shall such interest pass under the laws of intestate succession. 14.13 Validity. In case any provision of this Plan shall be illegal or -------- invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. 33 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 14.14 Incompetent. If the Administrator determines in its discretion that a ----------- benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person's property, the Administrator may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Administrator may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant's Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount. 14.15 Court Order. The Administrator is authorized to make any payments ----------- otherwise distributable here under as directed by court order in any action in which the Plan or the Administrator has been named as a party. In addition, if a court determines that a spouse or former spouse of a Participant has an interest in the Participant's benefits under the Plan in connection with a property settlement or otherwise, the Administrator, in its sole discretion but solely if and to the extent permitted by Section 409A, shall have the right, notwithstanding any election made by a Participant, to immediately distribute the spouse's or former spouse's interest in the Participant's benefits under the Plan to that spouse or former spouse. 14.16 Acceleration of Distribution. ---------------------------- (a) In General. The Employer may, its discretion, accelerate the ---------- date of distribution or commencement of distributions hereunder, or accelerate installment payments by paying the vesting Account Balance in a lump sum or pursuant to a Yearly Installment Method using fewer years, to the extent permitted under Section 409A (such as, for example, as provided in Q&A 15 of IRS Notice 2005-1 to comply with domestic relations orders or certain conflict of interest rules, to pay employment taxes, or to pay certain de minimus amount, or to make payments upon income inclusion under Section 409A). (b) Trust. If the Trust terminates in accordance with the ----- provisions of the Trust and benefits are distributed from the Trust to a Participant in accordance with such provisions, the Participant's benefits under this Plan shall be reduced to the extent of such distributions. 34 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... 14.17 Delay in Payment. If the Employer determines in good faith that there ---------------- is a reasonable likelihood that any payment scheduled to be made hereunder would violate securities laws (or other applicable laws) or loan covenants or other contractual terms to which the Employer is subject, and that such a violation would result in material harm to the Employer, the Employer may defer all or any portion of a distribution under this Plan. In addition, the Employer may, in its discretion, delay a payment upon such other events and conditions as the IRS may prescribe, such as to avoid jeopardizing the solvency of the Employer. Any amounts deferred pursuant to this Section shall continue to be credited or debited with additional amounts in accordance with Section 3.9 above, even if such amount is being paid out in installments. The amounts so deferred and amounts credited or debited thereon shall be distributed to the Participant or his or her Beneficiary (in the event of the Participant's death) at the earliest possible date, as determined by the Employer in good faith, on which such violation or material harm would be avoided or as otherwise prescribed by the IRS. Notwithstanding the foregoing, this Section 14.17 shall apply only to the extent permitted by Section 409A. 14.18 Prohibited Acceleration/Distribution Timing. This Section shall take ------------------------------------------- precedence over any other provision of the Plan or this Article 14 to the contrary. No provision of this Plan shall be followed if following the provision would result in the acceleration of the time or schedule of any payment from the Plan as would require immediate income tax to Participants based on the law in effect at the time the distribution is to be made, including, but not limited to Section 409A. In addition, if the timing of any distribution election would result in any tax or other penalty (other than ordinarily payable Federal, state or local income or payroll taxes), which tax or penalty can be avoided by payment of the distribution at a later time, then the distribution shall be made (or commence, as the case may be) on (or as soon as practicable after) the first date on which such distributions can be made (or commence) without such tax or penalty. 14.19 Insurance. The Employer, on its own behalf or on behalf of the trustee --------- of the Trust, and, in its sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Employer or the trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Employer shall supply such information and execute such documents as may be required by the insurance company or companies to whom the Employer has applied for insurance. 14.20 Aggregation of Employers. To the extent required under Section 409A, if ------------------------ the Employer is a member of a controlled group of corporations or a group of trades or business under common control (as described in Code Section 414(b) or (c)), all members of the group shall be treated as a single Employer for purposes of whether there has occurred a Separation from Service and for any other purposes under the Plan as Section 409A shall require. 35 VARIAN MEDICAL SYSTEMS, INC. PLAN DOCUMENT continued... IN WITNESS WHEREOF, the Employer has adopted this Plan document effective as of January 1, 2005. VARIAN MEDICAL SYSTEMS, INC By: ----------------------------- Print Name: ----------------------------- Title: ----------------------------- Date: ----------------------------- OTHER SPONSORING EMPLOYERS: ----------------------------- By: ----------------------------- Print Name: ----------------------------- Title: ----------------------------- Date: ----------------------------- ----------------------------- By: ----------------------------- Print Name: ----------------------------- Title: ----------------------------- Date: ----------------------------- 36 Schedule A Measurement Funds Pursuant to Section 3.9(d), the Participant may elect one or more of the following Measurement Funds: MEASUREMENT FUND First Eagle Overseas Vanguard VIF Balanced Vanguard VIF Diversified Value Vanguard VIF Equity Index Vanguard VIF Mid-Cap Index Vanguard VIF Small Company Growth Vanguard VIF International Fidelity VIP Contrafund Fidelity VIP Growth Fidelity VIP Money Market Janus Aspen Series Worldwide Growth AIM VIF Dynamics (aka INVESCO VIF Dynamics) PIMCO VIT Short-Term Bond PIMCO VIT Total Return Royce & Assoc. Micro-Cap Portfolio Vanguard VIF Capital Growth PIMCO VIT Real Return Varian Medical Systems EX-99.4 5 vm4212ex994.txt EXHIBIT 99.4 Exhibit 99.4 BY-LAWS OF VARIAN MEDICAL SYSTEMS, INC. a Delaware Corporation As amended on November 18, 2005, to be effective on November 18, 2005. TABLE OF CONTENTS
PAGE ---- ARTICLE I OFFICES...................................................................................1 Section 1. Registered Office.....................................................................1 Section 2. General Office and Other Offices......................................................1 ARTICLE II STOCKHOLDERS' MEETINGS....................................................................1 Section 3. Annual Meeting........................................................................1 Section 4. Business to be Conducted at Annual Meeting............................................1 Section 5. Special Meetings......................................................................2 Section 6. Place of Meetings.....................................................................2 Section 7. Notice of Meetings....................................................................3 Section 8. Nominations of Directors..............................................................3 Section 9. List of Stockholders..................................................................5 Section 10. Quorum................................................................................5 Section 11. Voting and Required Vote..............................................................6 Section 12. Proxies...............................................................................6 Section 13. Inspectors of Election; Polls.........................................................6 Section 14. Organization..........................................................................6 ARTICLE III BOARD OF DIRECTORS........................................................................6 Section 15. General Powers, Number, Term of Office................................................6 Section 16. Vacancies.............................................................................7 Section 17. Chairman, Vice Chairman and Lead Director of the Board................................7 Section 18. Regular Meetings......................................................................7 Section 19. Special Meetings......................................................................8 Section 20. Meetings of Non-Management Directors and Independent Directors........................8 Section 21. Conference Telephone or Other Remote Communication Meetings...........................8 Section 22. Quorum................................................................................8 Section 23. Organization of Board Meetings........................................................9 Section 24. Organization of Non-Management or Independent Directors Meetings......................9 Section 25. Removal...............................................................................9 Section 26. Action Without a Meeting..............................................................9 Section 27. Location of Books.....................................................................9 Section 28. Dividends.............................................................................9 Section 29. Compensation of Directors.............................................................9 Section 30. Additional Powers.....................................................................10 ARTICLE IV COMMITTEES OF DIRECTORS...................................................................10 Section 31. Designation, Power, Alternate Members.................................................10 Section 32. Quorum, Manner of Acting..............................................................10 Section 33. Minutes...............................................................................10 ARTICLE V ADVISORY DIRECTORS........................................................................11 Section 34. Advisory Directors....................................................................11
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PAGE ---- ARTICLE VI OFFICERS.................................................................................11 Section 35. Designation..........................................................................11 Section 36. Election and Term....................................................................11 Section 37. Removal..............................................................................11 Section 38. Resignations.........................................................................11 Section 39. Vacancies............................................................................11 Section 40. Chief Executive Officer..............................................................11 Section 41. President............................................................................12 Section 42. Chief Operating Officer..............................................................12 Section 43. Vice Presidents......................................................................12 Section 44. Secretary............................................................................12 Section 45. Assistant Secretaries................................................................12 Section 46. Chief Financial Officer..............................................................12 Section 47. Treasurer............................................................................13 Section 48. Assistant Treasurers.................................................................13 Section 49. Controller...........................................................................13 Section 50. Assistant Controllers................................................................13 ARTICLE VII CONTRACTS, INSTRUMENTS AND PROXIES.......................................................13 Section 51. Contracts and Other Instruments......................................................13 Section 52. Proxies..............................................................................14 ARTICLE VIII CAPITAL STOCK............................................................................14 Section 53. Stock Certificates; Book-Entry Accounts..............................................14 Section 54. Record Ownership.....................................................................14 Section 55. Record Dates.........................................................................14 Section 56. Transfer of Stock....................................................................14 Section 57. Lost, Stolen or Destroyed Certificates...............................................15 Section 58. Terms of Preferred Stock.............................................................15 ARTICLE IX INDEMNIFICATION..........................................................................15 Section 59. Actions, Suits or Proceedings Other Than By or in the Right of the Corporation.......15 Section 60. Actions or Suits by or in the Right of the Corporation...............................15 Section 61. Indemnification for Costs, Charges and Expenses of Successful Party..................16 Section 62. Advancement of Costs, Charges and Expenses...........................................16 Section 63. Determination of Right to Indemnification............................................16 Section 64. Other Rights; Continuation of Right to Indemnification; Limitations..................17 Section 65. Indemnification of Others............................................................17 Section 66. Insurance; Contracts; Funding........................................................18 Section 67. Savings Clause.......................................................................18
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PAGE ---- ARTICLE X MISCELLANEOUS............................................................................18 Section 68. Corporate Seal.......................................................................18 Section 69. Fiscal Year..........................................................................18 Section 70. Auditors.............................................................................18 Section 71. Waiver of Notice.....................................................................19 ARTICLE XI AMENDMENT TO BY-LAWS.....................................................................19 Section 72. Amendments...........................................................................19
-iii- BY-LAWS OF VARIAN MEDICAL SYSTEMS, INC. A DELAWARE CORPORATION (Effective November 18, 2005) ARTICLE I OFFICES ------- Section 1. Registered Office. The name of the registered agent of ----------------- Varian Medical Systems, Inc. (the "Corporation") is The Corporation Trust Company and the registered office of the Corporation shall be located in the City of Wilmington, County of New Castle, State of Delaware. Section 2. General Office and Other Offices. The Corporation shall -------------------------------- have its General Offices in the City of Palo Alto, State of California (the "General Offices"), and may also have offices at such other places in or outside the State of Delaware as the Board of Directors of the Corporation (the "Board of Directors") may from time to time designate or the business of the Corporation may require. ARTICLE II STOCKHOLDERS' MEETINGS ---------------------- Section 3. Annual Meeting. An annual meeting of stockholders shall -------------- be held on such day and at such time as may be designated by the Board of Directors for the purpose of electing directors and for the transaction of such other business as properly may come before such meeting. Any previously scheduled annual meeting of the stockholders may be postponed by resolution of the Board of Directors upon public notice given on or prior to the date previously scheduled for such annual meeting of stockholders. Section 4. Business to be Conducted at Annual Meeting. ------------------------------------------ (a) At an annual meeting of stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation's notice of the meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of the notice provided for in this By-Law, who shall be entitled to vote at such meeting and who shall have complied with the notice procedures set forth in this By-Law. (b) For business to be properly brought before an annual meeting by a stockholder pursuant to Section 4(a)(iii) of this By-Law, notice in writing must be delivered or mailed to the Secretary and received at the General Offices, not less than 60 days nor more than 90 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders; provided, however, that in the event that the date of the meeting is advanced by more than 30 days or delayed by more than 60 days from such meeting's anniversary date, notice by the stockholder must be received not earlier than the 90th day prior to such date of mailing of proxy materials and not later than the close of business on the later of the 60th day prior to such date of mailing of proxy materials or the 10th day following the day on which public announcement of the date of the annual meeting is first made. Such stockholder's notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business to be brought before the annual meeting and the reasons for conducting such business at such meeting; (ii) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class and number of shares of the Corporation's stock which are beneficially owned by the stockholder, and by the beneficial owner, if any, on whose behalf the proposal is made; and (iv) any material interest of the stockholder, and of the beneficial owner, if any, on whose behalf the proposal is made, in such business. For purposes of these By-Laws, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (c) Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this By-Law. The chairman of the meeting may, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this By-Law; and if the chairman should so determine, the chairman shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, and any such proposal so included shall be deemed timely given for purposes of this By-Law. Section 5. Special Meetings. Special meetings of stockholders for ---------------- any proper purpose or purposes, unless otherwise provided by the General Corporation Law of the State of Delaware, may be called by the Chairman of the Board or the Chief Executive Officer, or in the absence of each of them, by the Vice Chairman of the Board, or by the Secretary at the written request of a majority of the directors. Business transacted at a special meeting of stockholders shall be confined to the purpose or purposes of the meeting as stated in the notice of the meeting. Any previously scheduled special meeting of the stockholders may be postponed by resolution of the Board of Directors upon notice by public announcement given on or prior to the date previously scheduled for such special meeting of stockholders. Section 6. Place of Meetings. All meetings of stockholders shall be ----------------- held at such place as may be determined by resolution of the Board of Directors; provided, however, that the Board may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware. 2 Section 7. Notice of Meetings. ------------------ (a) Except as otherwise required by applicable law, notice of each meeting of the stockholders, whether annual or special, shall, at least 10 days but not more than 60 days before the date of the meeting, be given to each stockholder of record entitled to vote at the meeting by mailing such notice in the U.S. mail, postage prepaid, addressed to such stockholder at such stockholder's address as the same appears on the records of the Corporation. Such notice shall state the place, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and in the case of a special meeting, shall also state the purpose or purposes thereof. (b) Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to a stockholder given by the Corporation may be given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked (i) if the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. (c) Notice given pursuant to subsection (a) of this section shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein. (d) For purposes of these By-Laws, "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. Section 8. Nominations of Directors. ------------------------ (a) Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors may be made at a meeting of stockholders (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving of the notice provided for in this By-Law, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this By-Law. 3 (b) Nominations by stockholders shall be made pursuant to notice in writing, delivered or mailed to the Secretary and received at the General Offices (i) in the case of an annual meeting, not less than 60 days nor more than 90 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year's annual meeting of stockholders, provided, however, that in the event that the date of the meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder must be received not earlier than the 90th day prior to such date of mailing of proxy materials and not later than the close of business on the later of the 60th day prior to such date of mailing of proxy materials or the 10th day following the day on which public announcement of the date of the meeting is first made; or (ii) in the case of a special meeting at which directors are to be elected, not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement of the date of the meeting and of the nominees proposed by the Board of Directors to be elected at such meeting is first made. In the case of a special meeting of stockholders at which directors are to be elected, stockholders may nominate a person or persons (as the case may be) for election only to such position(s) as are specified in the Corporation's notice of meeting as being up for election at such meeting. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person's written consent to being named as a nominee and to serving as a Director if elected); (ii) as to the stockholder giving the notice, the name and address, as they appear on the Corporation's books, of such stockholder and the class and number of shares of the Corporation's stock which are beneficially owned by such stockholder; and (iii) as to any beneficial owner on whose behalf the nomination is made, the name and address of such person and the class and number of shares of the Corporation's stock which are beneficially owned by such person. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary that information required to be set forth in a stockholder's notice of nomination that pertains to the nominee. Notwithstanding anything in this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public statement naming all the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the General Offices not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. (c) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in these By-Laws. The chairman of the meeting may, if the facts warrant, determine that a nomination was not made in accordance with the procedures prescribed in this By-Law; and if the chairman should so determine, the chairman shall so declare to the meeting, and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this By-Law. 4 Section 9. List of Stockholders. -------------------- (a) The Secretary of the Corporation shall prepare, at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. (b) The stock ledger of the Corporation shall be the only evidence as to the identity of the stockholders entitled (i) to vote in person or by proxy at any meeting of stockholders, or (ii) to exercise the rights in accordance with applicable law to examine the stock ledger, the list required by this By-Law or the books and records of the Corporation. Section 10. Quorum. The holders of a majority of the stock issued ------ and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of any business at all meetings of the stockholders, except as otherwise provided by applicable law, by the Certificate of Incorporation or by these By-Laws. The stockholders present at any duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of sufficient stockholders to render the remaining stockholders less than a quorum. Whether or not a quorum is present, either the Chairman of the meeting or a majority of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which the requisite amount of voting stock shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. 5 Section 11. Voting and Required Vote. Subject to the provisions of ------------------------ the Certificate of Incorporation, each stockholder shall, at every meeting of stockholders, be entitled to one vote for each share of capital stock held by such stockholder. Subject to the provisions of the Certificate of Incorporation and applicable law, directors shall be chosen by the vote of a plurality of the shares present in person or represented by proxy at the meeting; and all other questions shall be determined by the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. Elections of directors shall be by written ballot. Section 12. Proxies. Each stockholder entitled to vote at a meeting ------- of stockholders may authorize another person or persons to act for such stockholder by proxy, provided the instrument authorizing such proxy to act shall have been executed in writing in the manner prescribed by applicable law. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Section 13. Inspectors of Election; Polls. Before each meeting of ----------------------------- stockholders, the Chairman of the Board or another officer of the Corporation designated by resolution of the Board of Directors shall appoint one or more inspectors of election for the meeting and may appoint one or more inspectors to replace any inspector unable to act. If any of the inspectors appointed shall fail to attend, or refuse or be unable to serve, substitutes shall be appointed by the chairman of the meeting. Each inspector shall have such duties as are provided by applicable law, and shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such person's ability. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting. Section 14. Organization. The Chairman of the Board of Directors, or ------------ in the Chairman's absence, (i) the Chief Executive Officer, (ii) the Vice Chairman of the Board of Directors, (iii) the President, or (iv) in the absence of each of them, a chairman chosen by a majority of the directors present, shall act as chairman of the meetings of the stockholders, and the Secretary or, in the Secretary's absence, an Assistant Secretary or any employee of the Corporation appointed by the chairman of the meeting, shall act as secretary of the meeting. The order of business and the procedure at any meeting of stockholders shall be determined by the chairman of the meeting. ARTICLE III BOARD OF DIRECTORS ------------------ Section 15. General Powers, Number, Term of Office. The business of -------------------------------------- the Corporation shall be managed under the direction of its Board of Directors. The Board of Directors shall be composed of a majority of "independent directors" as defined under the rules of the New York Stock Exchange and the Exchange Act ("Independent Directors"). Subject to the rights of the holders of any series of preferred stock, $0.01 par value per share, of the Corporation ("Preferred Stock") to elect additional directors under specified circumstances, the number of directors of the Corporation shall be fixed from time to time exclusively by resolution of a majority of the then authorized number of directors of the Corporation (the number of then authorized directors of the Corporation is referred to herein as the "Whole Board"), but in no event shall the number of directors be fewer than three. 6 The directors, other than those who may be elected solely by the holders of any series of Preferred Stock (unless the relevant Certificate of Designation for such Preferred Stock so provides), shall be divided into three classes, as nearly equal in number as possible, designated "Class I," "Class II" and "Class III." Directors of each class shall serve for a term ending on the third annual meeting of stockholders following the annual meeting at which such class was elected. The foregoing notwithstanding, each director shall serve until his or her successor shall have been duly elected and qualified, unless such director shall die, resign, retire or be disqualified or removed. At each annual election, the directors chosen to succeed those directors whose terms then expire shall be identified as being of the same class as the directors they succeed. If for any reason the number of directors in the various classes shall not be as nearly equal as possible, the Board of Directors may redesignate any director into a different class in order that the balance of directors in such classes shall be as nearly equal as possible. Section 16. Vacancies. Subject to the rights of the holders of any --------- series of Preferred Stock to elect additional directors under specified circumstances, vacancies resulting from one or more directors' death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, or by a sole remaining director, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 17. Chairman, Vice Chairman and Lead Director of the Board. ------------------------------------------------------ The Chairman of the Board of Directors shall be chosen from among the directors. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors, except as may be otherwise required under applicable law. The Chairman shall act in an advisory capacity with respect to matters of policy and other matters of importance pertaining to the affairs of the Corporation. The Chairman, alone or with the Chief Executive Officer, the President, and/or the Secretary shall sign and send out reports and other messages which are to be sent to stockholders from time to time. The Chairman shall also perform such other duties as may be assigned to the Chairman by these By-Laws or the Board of Directors. The Board of Directors may also choose a Vice Chairman of the Board of Directors from among the directors. The Vice Chairman if chosen shall perform such duties as may be assigned by these By-Laws, the Board of Directors or the Chairman of the Board. When the Chairman of the Board is an employee Director or is otherwise not an independent director, the Board of Directors shall select a Lead Director. The Lead Director shall perform such duties as may be assigned by the Board of Directors or these By-Laws. Section 18. Regular Meetings. Following the annual meeting of ---------------- stockholders, the first meeting of each newly elected Board of Directors may be held, without notice, on the same day and at the same place as such stockholders' meeting. The Board of Directors by resolution may provide for the holding of regular meetings and may fix the times and places at which such meetings shall be held. Notice of regular meetings shall not be required, provided that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be given promptly to each director who was not present at the meeting at which such action was taken. 7 Section 19. Special Meetings; Notice. Special Meetings of the Board ------------------------ of Directors shall be held whenever called by the Chairman of the Board of Directors, the Vice Chairman of the Board, the Lead Director, the Chief Executive Officer, the president, or in the absence of each of them, by the Secretary at the written request of a majority of the directors. Notice of the time and place of Special Meetings shall be delivered personally or by telephone to each director or sent by first-class mail, facsimile, electronic transmission, or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by facsimile, electronic transmission, telephone or telegram, it shall be delivered at least 48 hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. Unless otherwise required by these By-laws, the notice need not specify the purpose of the meeting. The notice need not specify the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a Special Meeting. Section 20. Meetings of Non-Management Directors and Independent -------------------------------------------------------- Directors. The non-management directors of the Corporation shall schedule - --------- regular executive sessions in which such directors meet without representatives of the Corporation's management present to discuss significant corporate governance matters, executive review, management succession and other items. If the group of non-management directors includes directors who are not Independent Directors, the Independent Directors shall also meet at least once a year in an executive session including only Independent Directors. Section 21. Conference Telephone or Other Remote Communication -------------------------------------------------- Meetings. Members of the Board of Directors or any committee thereof, may - -------- participate in a meeting of the Board of Directors or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Section 22. Quorum. One-half of the total number of directors ------ constituting the Whole Board, but not less than two, shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such required number of directors for a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. Except as otherwise specifically provided by applicable law, the Certificate of Incorporation or these By-Laws, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. 8 Section 23. Organization of Board Meetings. At each meeting of the ------------------------------ Board of Directors, the Chairman of the Board or, in the Chairman's absence, (i) the Chief Executive Officer, if a member of the Board of Directors, (ii) the Vice Chairman of the Board, (iii) the President, if a member of the Board of Directors, or (iv) in the absence of each of them, a chairman chosen by a majority of the directors present, shall act as chairman of the meeting, and the Secretary or, in the Secretary's absence, an Assistant Secretary or any employee of the Corporation appointed by the chairman of the meeting, shall act as secretary of the meeting. Section 24. Organization of Non-Management or Independent Directors -------------------------------------------------------- Meetings. The Lead Director, when chosen as provided in Section 17 above, shall - -------- chair each meeting of non-management or Independent Directors as provided in Section 20. At all other meetings of the Board of Directors, the Chairman of the Board or, in the Chairman's absence (i) the Chief Executive Officer, if a member of the Board of Directors, (ii) the Vice Chairman of the Board, (iii) the Lead Director, (iv) the President, if a member of the Board of Directors, or (v) in the absence of each of them, a chairman chosen by a majority of the directors present, shall act as chairman of the meeting, and the Secretary or, in the Secretary's absence, an Assistant Secretary or any employee of the Corporation appointed by the chairman of the meeting, shall act as secretary of the meeting. Section 25. Removal. Subject to the rights of the holders of any ------- series of Preferred Stock to elect additional directors under specified circumstances, any director may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the voting power of the then outstanding Voting Stock, voting together as a single class. For purposes of these By-Laws, "Voting Stock" shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors. Section 26. Action Without a Meeting. Unless otherwise restricted by ------------------------ the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, or by electronic transmission and the writing or writings or electric transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Section 27. Location of Books. Except as otherwise provided by ----------------- resolution of the Board of Directors and subject to applicable law, the books of the Corporation may be kept at the General Offices and at such other places as may be necessary or convenient for the business of the Corporation. Section 28. Dividends. Subject to the provisions of the Certificate --------- of Incorporation and applicable law, dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock. Section 29. Compensation of Directors. Directors shall receive such ------------------------- compensation and benefits as may be determined by resolution of the Board of Directors for their services as members of the Board of Directors and committees. Directors shall also be reimbursed for their expenses of attending Board of Directors and committee meetings. Nothing contained herein shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. 9 Section 30. Additional Powers. In addition to the powers and ----------------- authorities by these By-Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the stockholders. ARTICLE IV COMMITTEES OF DIRECTORS ----------------------- Section 31. Designation, Power, Alternate Members. The Board of ------------------------------------- Directors may, by resolution or resolutions passed by a majority of the Whole Board, designate an Executive Committee, an Audit Committee, a Compensation and Management Development Committee, a Nominating and Corporate Governance Committee and one or more additional committees, each committee to consist of one or more of the directors of the Corporation; provided, however, that the Audit Committee, the Compensation and Management Development Committee and the Nominating and Corporate Governance Committee shall consist of three or more Independent Directors of the Corporation. Any such committee, to the extent provided in said resolution or resolutions and in any subsequent resolutions or any charter passed by a majority of the Whole Board and, subject to any limitations provided by applicable law, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The term of office of the members of each committee shall be as fixed from time to time by the Board of Directors and any committee member may be removed, with our without cause, at any time by the Board of Directors; provided, however, that any committee member who ceases to be a member of the Board of Directors shall automatically cease to be a committee member. Section 32. Quorum, Manner of Acting. At any meeting of a committee, ------------------------ the presence of one-half of its members then in office shall constitute a quorum for the transaction of business; and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of the committee; provided, however, that in the event that any member or members of the committee is or are in any way interested in or connected with any other party to a contract or transaction being approved at such meeting, or are themselves parties to such contract or transaction, the act of a majority of the members present who are not so interested or connected, or are not such parties, shall be the act of the committee. Each committee may provide for the holding of regular meetings, make provision for the calling of special meetings and, except as otherwise provided in these By-Laws or by resolution of the Board of Directors, make rules for the conduct of its business. Section 33. Minutes. The committees shall keep minutes of their ------- proceedings and report the same to the Board of Directors when required; but failure to keep such minutes shall not affect the validity of any acts of the committee or committees. 10 ARTICLE V ADVISORY DIRECTORS ------------------ Section 34. Advisory Directors. The Board of Directors may, by ------------------ resolution adopted by a majority of the Whole Board, appoint such Advisory Directors as the Board of Directors may from time to time determine. The Advisory Directors shall have such advisory responsibilities as the Chairman of the Board may designate and the term of office of such Advisory Directors shall be as fixed by the Board of Directors. ARTICLE VI OFFICERS -------- Section 35. Designation. The officers of the Corporation shall be ----------- the Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a Treasurer and a Controller. The Board of Directors may also elect a Chief Operating Officer, one or more Executive Vice Presidents, Senior Vice Presidents, Group Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers as it shall deem necessary. Any number of offices may be held by the same person. Section 36. Election and Term. At its first meeting after each ----------------- annual meeting of stockholders, the Board of Directors shall elect the officers of the Corporation and at any time thereafter the Board of Directors may elect additional officers of the Corporation, and each such officer shall hold office until the officer's successor is elected and qualified or until the officer's earlier death, resignation or removal. Alternatively, at the last regular meeting of the Board of Directors prior to an annual meeting of stockholders, the Board of Directors may elect the officers of the Corporation, contingent upon the election of the persons nominated to be directors by the Board of Directors; and each such officer so elected shall hold office until the officer's successor is elected and qualified or until the officer's earlier death, resignation or removal. Section 37. Removal. Any officer shall be subject to removal or ------- suspension at any time, for or without cause, by the affirmative vote of a majority of the Whole Board. Section 38. Resignations. Any officer may resign at any time by ------------ giving written notice to the Chairman of the Board, the President or to the Secretary. Such resignation shall take effect upon receipt thereof or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 39. Vacancies. A vacancy in any office because of death, --------- resignation, removal or any other cause may be filled for the unexpired portion of the term by the Board of Directors. Section 40. Chief Executive Officer. The Chief Executive Officer ----------------------- shall have the general and active management and supervision of the business of the Corporation. The Chief Executive Officer, if a member of the Board of Directors, shall, in the absence of the Chairman of the Board, preside at all meetings of the stockholders and of the Board of Directors. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer shall also perform such other duties as may be assigned to the Chief Executive Officer by these By-Laws or the Board of Directors. The Chief Executive Officer shall designate who shall perform the duties of the Chief Executive Officer in the Chief Executive Officer's absence. 11 Section 41. President. The President shall perform such duties as --------- may be assigned to the President by these By-Laws, the Board of Directors or, if applicable, the Chief Executive Officer. Section 42. Chief Operating Officer. The Chief Operating Officer, if ----------------------- one shall be elected, shall perform such duties as may be assigned to the Chief Operating Officer by these By-Laws, the Board of Directors, the Chief Executive Officer or the President. Section 43. Vice Presidents. Each Executive Vice President, Senior --------------- Vice President, Group Vice President and each other Vice President shall perform the duties and functions and exercise the powers assigned to such officer by these By-Laws, the Board of Directors, the Chief Executive Officer, the President or, if one shall be elected, the Chief Operating Officer. Section 44. Secretary. The Secretary shall attend all meetings of --------- the Board of Directors and of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and, when appropriate, shall cause the corporate seal to be affixed to any instruments executed on behalf of the Corporation. The Secretary shall also perform all duties incident to the office of Secretary and such other duties as may be assigned to the Secretary by these By-Laws, the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. Section 45. Assistant Secretaries. The Assistant Secretaries shall, --------------------- during the absence of the Secretary, perform the duties and functions and exercise the powers of the Secretary. Each Assistant Secretary shall perform such other duties as may be assigned to such Assistant Secretary by these By-Laws, the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Section 46. Chief Financial Officer. The Chief Financial Officer ----------------------- shall have overall responsibility for causing (1) the funds and securities of the Corporation to be deposited in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or by any officer or officers authorized by the Board of Directors to designate such depositories; (2) the disbursement of funds of the Corporation when properly authorized by vouchers prepared and approved by the Controller; (3) the investment of funds of the Corporation when authorized by the Board of Directors or a committee thereof; and (4) to be kept full and accurate account of receipts and disbursements in books of the Corporation. The Chief Financial Officer shall render to the Board of Directors, the Chief Executive Officer, or the President, whenever requested, an account of all transactions as Chief Financial Officer and shall also perform all duties incident to the office of Chief Financial Officer and such other duties as may be assigned to the Chief Financial Officer by these By-Laws, the Board of Directors, the Chief Executive Officer, or the President. 12 Section 47. Treasurer. The Treasurer shall have the custody of the --------- funds and securities of the Corporation and shall deposit them in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or by any officer or officers authorized by the Board of Directors to designate such depositories; disburse funds of the Corporation when properly authorized by vouchers prepared and approved by the Controller; and invest funds of the Corporation when authorized by the Board of Directors or a committee thereof. The Treasurer shall render to the Board of Directors, the Chief Executive Officer, the President or the Chief Financial Officer, whenever requested, an account of all transactions as Treasurer and shall also perform all duties incident to the office of Treasurer and such other duties as may be assigned to the Treasurer by these By-Laws, the Board of Directors, the Chief Executive Officer, the President or the Chief Financial Officer. Section 48. Assistant Treasurers. The Assistant Treasurers shall, -------------------- during the absence of the Treasurer, perform the duties and functions and exercise the powers of the Treasurer. Each Assistant Treasurer shall perform such other duties as may be assigned to the Assistant Treasurer by these By-Laws, the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Section 49. Controller. The Controller shall serve as the principal ---------- accounting officer of the Corporation and shall keep full and accurate account of receipts and disbursements in books of the Corporation and render to the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, whenever requested, an account of all transactions as Controller and of the financial condition of the Corporation. The Controller shall also perform all duties incident to the office of Controller and such other duties as may be assigned to the Controller by these By-Laws, the Board of Directors, the Chief Executive Officer, or the President. Section 50. Assistant Controllers. The Assistant Controllers shall, --------------------- during the absence of the Controller, perform the duties and functions and exercise the powers of the Controller. Each Assistant Controller shall perform such other duties as may be assigned to such officer by these By-Laws, the Board of Directors, the Chief Executive Officer, the President or the Controller. ARTICLE VII CONTRACTS, INSTRUMENTS AND PROXIES ---------------------------------- Section 51. Contracts and Other Instruments. Except as otherwise ------------------------------- required by applicable law, the Certificate of Incorporation or these By-Laws, any contracts or other instruments may be signed by such person or persons as from time to time may be designated by the Board of Directors or by any officer or officers authorized by the Board of Directors to designate such signers; and the Board of Directors or such officer or officers may determine that the signature of any such authorized signer may be facsimile. Such authority may be general or confined to specific instances as the Board of Directors or such officer or officers may determine. 13 Section 52. Proxies. Except as otherwise provided by resolution of ------- the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President, the Vice Chairman of the Board, any Vice President, the Treasurer and any Assistant Treasurer, the Controller and any Assistant Controller, the Secretary and any Assistant Secretary of the Corporation, shall each have full power and authority, in behalf of the Corporation, to exercise any and all rights of the Corporation with respect to any meeting of stockholders of any corporation in which the Corporation holds stock, including the execution and delivery of proxies therefor, and to consent in writing to action by such corporation without a meeting. ARTICLE VIII CAPITAL STOCK ------------- Section 53. Stock Certificates; Book-Entry Accounts. The interest of --------------------------------------- each stockholder of the Corporation shall be evidenced by (a) certificates signed by, or in the name of the Corporation by, the Chairman or Vice-Chairman of the Board, or the President or any Vice President, and by Treasurer or Assistant Treasurer, or the Secretary or any Assistant Secretary of the Corporation, certifying the number of shares owned by such holder in the Corporation, or (b) registration in book-entry accounts without certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe. Any of or all the signatures on a stock certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 54. Record Ownership. The Corporation shall be entitled to ---------------- treat the person in whose name any share, right or option is registered as the owner thereof, for all purposes, and shall not be bound to recognize any equitable or other claim to or interest in such share, right or option on the part of any other person, whether or not the Corporation shall have notice thereof, except as otherwise provided by applicable law. Section 55. Record Dates. In order that the Corporation may ------------ determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. Section 56. Transfer of Stock. Transfers of shares of stock of the ----------------- Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by the registered holder's attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or a transfer agent of the Corporation, and on surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon, or by appropriate book-entry procedures. 14 Section 57. Lost, Stolen or Destroyed Certificates. The Board of -------------------------------------- Directors may authorize a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or the owner's legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate. Section 58. Terms of Preferred Stock. The provisions of these ------------------------ By-Laws, including those pertaining to voting rights, election of directors and calling of special meetings of stockholders, are subject to the terms, preferences, rights and privileges of any then outstanding class or series of Preferred Stock as set forth in the Certificate of Incorporation and in any resolutions of the Board of Directors providing for the issuance of such class or series of Preferred Stock; provided, however, that the provisions of any such Preferred Stock shall not affect or limit the authority of the Board of Directors to fix, from time to time, the number of directors which shall constitute the Whole Board as provided in Section 16 above, subject to the right of the holders of any class or series of Preferred Stock to elect additional directors as and to the extent specifically provided by the provisions of such Preferred Stock. ARTICLE IX INDEMNIFICATION --------------- Section 59. Actions, Suits or Proceedings Other Than By or in the ----------------------------------------------------- Right of the Corporation. In the case of any person who, by reason of the fact - ------------------------ that such person is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of an affiliate of the Corporation or by reason of anything done or not done by such person was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or arbitration, whether civil, criminal, administrative or investigative in nature other than an action by or in the right of the Corporation, the Corporation shall to the fullest extent permitted by applicable law indemnify such person against all expenses (including attorneys' fees), costs, judgments, penalties, fines, and amounts paid in settlement, actually and reasonably incurred by such person or on such person's behalf in connection with such action, suit or proceeding and any appeal therefrom, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such person's conduct was unlawful. Section 60. Actions or Suits by or in the Right of the Corporation. ------------------------------------------------------ In the case of any person who, by reason of the fact that such person is or was a director, officer or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of an affiliate of the Corporation or by reason of anything done or not done by such person, was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit brought by or in the right of the Corporation to procure a judgment in its favor, the Corporation shall to the fullest extent permitted by applicable law indemnify such person against all expenses (including attorneys' fees) and costs actually and reasonably incurred by such person or on such person's behalf in connection with such action or suit and any appeal therefrom, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made under this Section 60 in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation for gross negligence or misconduct in the performance of such person's duty to the Corporation, unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. 15 Section 61. Indemnification for Costs, Charges and Expenses of -------------------------------------------------- Successful Party. Notwithstanding any other provision of this Article IX, to the - ---------------- extent that any person entitled to indemnification pursuant to Sections 59 or 60 of these By-Laws (an "Indemnitee") has been successful on the merits or otherwise in defense of any action, suit, proceeding or arbitration or appeal thereof (a "Proceeding") referred to in Sections 59 or 60 or in defense of any claim, issue or matter described therein, the Corporation shall indemnify such Indemnitee against expenses (including attorneys' fees) and costs actually and reasonably incurred by such Indemnitee in connection therewith; provided that such person shall not be entitled to indemnification in connection with any Proceeding commenced by such person unless such indemnification has been provided by the Corporation in the specific Proceeding. Section 62. Advancement of Costs, Charges and Expenses. All ------------------------------------------ reasonable expenses (including attorney's fees) and costs incurred by an Indemnitee in connection with a Proceeding shall be paid by the Corporation, in advance of a determination of right to indemnification pursuant to Section 63 of these By-Laws or the final disposition of such Proceeding, upon the written request of such director or officer (which request shall be directed to the Secretary of the Corporation and include a statement or statements reasonably evidencing the expenses, costs and/or charges incurred by such person); provided, however, that the payment of such expenses in advance of the determination of right to indemnification or the final disposition of such Proceeding shall be made only upon receipt of an undertaking by or on behalf of such Indemnitee to repay such amount if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article IX. The Corporation shall so advance expenses, costs and other charges within 20 days' of receipt of such request (together with such statement or statements) from such Indemnitee. Section 63. Determination of Right to Indemnification. Any ----------------------------------------- indemnification under Sections 59 or 60 of these By-Laws (unless ordered by a court) shall be paid by the Corporation only as authorized in the specific case upon a determination that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in Sections 59 and 60 of these By-Laws. Such determination shall be made (i) by the Board of Directors by a majority vote or decision of a quorum consisting of directors who are or were not parties to or a subject of the Proceeding in respect of which indemnification is being sought by the Indemnitee, (ii) if such a vote or decision is not obtainable, or, even if obtainable, if a majority of such disinterested directors so directs, by Independent Legal Counsel in a written opinion to the Board of Directors, or (iii) by the stockholders. In the event such determination is to be made by Independent Legal Counsel, a majority of such disinterested directors shall select the Independent Legal Counsel. "Independent Legal Counsel" means a law firm or a member of a law firm that neither presently is, nor in the past five years has been, retained to represent: (x) the Corporation or the Indemnitee in any matter material to either such party or (y) any other party to the Proceeding giving rise to a claim for indemnification under this Article IX. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or the Indemnitee in an action to determine the Indemnitee's rights under this Article IX. 16 (i) To obtain indemnification under this Article IX, an Indemnitee shall submit to the Secretary of the Corporation a written request, including such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification (the "Supporting Documentation"). The determination of the Indemnitee's entitlement to indemnification shall be made not later than 60 days after receipt by the Corporation of the written request for indemnification together with the Supporting Documentation. The Secretary shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that the Indemnitee has requested indemnification. (ii) In the event that a determination is made pursuant to this Section 63 that the Indemnitee is not entitled to indemnification under this Article IX, (A) the Indemnitee shall be entitled to seek an adjudication of entitlement to such indemnification either, at the Indemnitee's sole option, in (x) an appropriate court of the State of Delaware or any other court of competent jurisdiction or (y) an arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association; and (B) any such judicial proceeding or arbitration shall be de novo and the Indemnitee shall not be prejudiced by reason of such prior adverse determination. Section 64. Other Rights; Continuation of Right to Indemnification; ------------------------------------------------------- Limitations. The indemnification (including attorney's fees) and advancement of - ----------- costs provided by, or granted pursuant to, this Article IX shall not be deemed exclusive of any other rights to which an Indemnitee may be entitled under any applicable law, agreement, vote of stockholders or otherwise, whether as to action in Indemnitee's official capacity and as to action in another capacity while holding such office or employment as set forth in Sections 59 and 60 of these By-Laws or otherwise, and, unless otherwise provided when authorized or ratified, shall continue as to a person who has ceased to hold such office or employment. Section 65. Indemnification of Others. The Board of Directors in its ------------------------- discretion shall have the power on behalf of the Corporation, subject to applicable law, and upon such terms and subject to such conditions as the Board shall determine, to indemnify any person that is or was an agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit or welfare plans), who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or arbitration, whether civil, criminal, administrative or investigative against all expenses (including attorneys' fees), costs, judgments, penalties, fines, amounts paid in settlement and excise taxes or penalties assessed with respect to any employee benefit or welfare plan reasonably incurred or suffered by such person or on such person's behalf in connection with any such action, suit, proceeding or arbitration and any appeal therefrom, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such person's conduct was unlawful. 17 Section 66. Insurance; Contracts; Funding. The Corporation may ----------------------------- purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, service with respect to employee benefit or welfare plans) against any liability asserted against such person and incurred by such person or on such person's behalf in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article IX. The Corporation may enter into contracts with any such person in furtherance of the provisions of this Article IX and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided or authorized in this Article IX. Section 67. Savings Clause. If this Article IX or any portion hereof -------------- shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and officer of the Corporation as to expenses (including attorneys' fees), costs, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred with respect to any Proceeding, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article IX that shall not have been invalidated. ARTICLE X MISCELLANEOUS ------------- Section 68. Corporate Seal. The seal of the Corporation shall be -------------- circular in form, containing the words "Varian Medical Systems, Inc." and the word "Delaware" on the circumference surrounding the word "Seal." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 69. Fiscal Year. The fiscal year of the Corporation is the ----------- 51- to 53-week period that ends on the Friday nearest September 30. Section 70. Auditors. The Audit Committee of the Board of Directors -------- shall select certified public accountants to audit the books of account and other appropriate corporate records of the Corporation annually and at such other times as the Audit Committee of the Board of Directors shall determine by resolution. 18 Section 71. Waiver of Notice. Whenever notice is required to be ---------------- given pursuant to applicable law, the Certificate of Incorporation or these By-Laws, a written waiver thereof, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting of stockholders or the Board of Directors or a committee thereof shall constitute a waiver of notice of such meeting, except when the stockholder or Director attends such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or by these By-Laws. ARTICLE XI AMENDMENT TO BY-LAWS -------------------- Section 72. Amendments. These By-Laws may be amended or repealed, ---------- or new By-Laws may be adopted, at any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change was given in the notice of the meeting and, in the case of a meeting of the Board of Directors, in a notice given not less than 24 hours prior to the meeting. 19 EX-99.5 6 vm4212ex995.txt EXHIBIT 99.5 Exhibit 99.5 FOR INFORMATION CONTACT: Elisha Finney (650) 424-6803 elisha.finney@varian.com Spencer Sias (650) 424-5782 spencer.sias@varian.com FOR IMMEDIATE RELEASE: VARIAN MEDICAL SYSTEMS' BOARD OF DIRECTORS AUTHORIZES REPURCHASE OF ANOTHER SIX MILLION SHARES OF STOCK Palo Alto, Calif. - November 21, 2005 - Varian Medical Systems, Inc. (NYSE:VAR) today announced that its Board of Directors has authorized the Company to repurchase up to an additional six million shares of its stock over a period extending through December 31, 2006. As of the end of fiscal year 2005, Varian Medical Systems had repurchased approximately 4.5 million shares of stock under an existing 6-million share repurchase authorization which extends through December, 2005. Since commencing stock repurchases in fiscal year 2001, the company has spent about $593 million to repurchase approximately 18.5 million shares of stock at a weighted average price of approximately $32 per share. As of the end of the fiscal year 2005 on September 30, 2005, the company had a reported $382 million in cash and marketable securities The stock repurchases will be made through programs, including Company 10b5-1 stock purchase plans, using brokers-dealers on the New York Stock Exchange or in privately-negotiated transactions with nonaffiliated stockholders. Shares will be retired and cancelled upon repurchase. # # # Varian Medical Systems, Inc., (NYSE:VAR) of Palo Alto, California is the world's leading manufacturer of integrated cancer therapy systems, which are used to treat thousands of patients per day. The company is also a premier supplier of X-ray tubes and flat-panel digital subsystems for imaging in medical, scientific, and industrial applications. Varian Medical Systems employs approximately 3,500 people who are located at manufacturing sites in North America and Europe and in its 56 sales and support offices around the world. Additional information is available on the company's investor relations web site at www.varian.com. FORWARD LOOKING STATEMENTS Except for historical information, this news release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning our financial performance or future plans to repurchase our and any statements using the terms "will," "scheduled," "continue," or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results to differ materially from those anticipated. Such risks and uncertainties include demand for the company's products; the company's ability to develop and commercialize new products; the impact of competitive products and pricing; the effect of economic conditions and currency exchange rates; the company's ability to maintain or increase operating margins; the company's ability to meet demand for manufacturing capacity; the effect of environmental claims and expenses; the company's ability to protect the company's intellectual property; the company's reliance on sole or limited-source suppliers; the impact of reduced or limited demand by sole purchasers of certain X-ray tubes; the impact of managed care initiatives or other health care reforms on capital expenditures and/or third-party reimbursement levels; the company's ability to meet FDA and other regulatory requirements or product clearances; the potential loss of key distributors or key personnel; consolidation in the X-ray tubes market; the possibility that material product liability claims could harm future revenues or require us to pay uninsured claims; the ability to make strategic acquisitions and to successfully integrate the acquired operations into the company's business; the effect of changes in accounting principles; the risk of operations interruptions due to terrorism, disease (such as Severe Acute Respiratory Syndrome) or other events beyond the company's control; and the other risks listed from time to time in the company's filings with the Securities and Exchange Commission. The company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise. -----END PRIVACY-ENHANCED MESSAGE-----