VARIAN MEDICALSYSTEMS, INC. Third Amended and Restated2005 Omnibus Stock Plan PERFORMANCEUNIT AGREEMENT

Exhibit 10.3

VARIAN MEDICAL SYSTEMS, INC.

Third Amended and Restated 2005 Omnibus Stock Plan

PERFORMANCE UNIT AGREEMENT

Varian Medical Systems, Inc. (the “Company”) hereby awards to the designated employee (“Employee”), Performance Units under the Company’s Third Amended and Restated 2005 Omnibus Stock Plan (the “Plan”). The Performance Units awarded under this Performance Unit Agreement (the "Agreement") consist of the right to receive shares of common stock of the Company (“Shares”). The Grant Date is the date of this Agreement (the “Grant Date”). Subject to the provisions of Appendix A of this Agreement ("Appendix A") (attached) and of the Plan, the principal features of this award are as follows:

Number of Performance Units at or Below Threshold Performance: Zero (0)

Number of Performance Units at Target Performance: (Your Target Grant)

Maximum Number of Performance Units: (Potential Maximum)

Performance Period: [INSERT PERFORMANCE PERIOD]

Performance Goals: The actual number of Shares to be earned under this award will be determined based on the performance goals set forth in Appendix B which shall be separately provided to Employee by the Company (the “Performance Goals”). Such Performance Goals and the extent to which they have been achieved will be determined by the Compensation and Management Development Committee (the “Committee”) of the Board of Directors of the Company (the “Board”), in its sole discretion. The number of Shares earned on account of performance between threshold and target or between target and maximum shall be determined in accordance with the applicable performance curve(s) set forth in Appendix B which shall be separately provided to Employee by the Company.

As provided in the Plan, this Agreement and Appendix A, this Award may terminate before the end of the Performance Period. For example, if Employee’s employment ends before the end of the Performance Period, this Award will terminate at the same time as such termination unless an exception applies as set forth in Appendix A. Important additional information on vesting and forfeiture of the Performance Units covered by this Award is contained in Paragraphs 2 through 7 of Appendix A.

Your signature below indicates your agreement and understanding that this award is subject to all of the terms and conditions contained in Appendix A and the Plan. For example, important additional information on vesting and forfeiture of the Performance Units covered by this award is contained in Paragraphs 1 through 7 of Appendix A. PLEASE BE SURE TO READ ALL OF APPENDIX A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS AGREEMENT. YOU CAN REQUEST A COPY OF THE PLAN BY CONTACTING THE CORPORATE HUMAN RESOURCES OFFICE IN PALO ALTO, CALIFORNIA. TO THE EXTENT ANY CAPITALIZED TERMS USED IN APPENDIX A ARE NOT DEFINED HEREIN, THEY WILL HAVE THE MEANING ASCRIBED TO THEM IN THE PLAN.

APPENDIX A

TERMS AND CONDITIONS OF PERFORMANCE UNITS

1.           Award. The Company hereby awards 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, an award of (Your Target Grant) Performance Units on the date hereof, subject to all of the terms and conditions in this Agreement and the Plan.

2.           Vesting. To the extent that the Performance Goals are achieved and Shares are earned (which may range from zero to (Potential Maximum)), as determined and certified by the Committee in its sole discretion, then the earned Shares shall be paid following the end of the Performance Period no later than _________ immediately following the end of the Performance Period (the “Settlement Date”) provided that Employee shall have been continuously employed by the Company or by one of its Affiliates from the Grant Date through the last day of the Performance Period (the “Employment Requirement”). For the avoidance of doubt, in the event that the Employment Requirement is waived pursuant to Paragraph 3, 4 or 6, except as set forth in Paragraph 7, payout of the Performance Units shall continue to depend on the extent to which the Performance Goals are achieved and Shares are earned, as determined and certified by the Committee in its sole discretion.

3.           Retirement If Employee has a Termination of Service due to Retirement (defined as 55 years or more of age with 10 or more years of service with the Company or its Affiliates, or age 65 or older) on or prior to the last day of the Performance Period, Employee shall be treated for purposes of this Agreement as having been continuously employed by the Company or by one of its Affiliates through the last day of the Performance Period; provided, however, that the threshold, target and maximum number of Performance Units subject to this Agreement (and potential payouts in between) shall be adjusted proportionally by the time during the three (3) year Performance Period that the Employee remained an employee of the Company (based upon a 365 day year).  For example, if the Employee is granted a target number of Performance Units equal to 6,000 and the Employee Terminated Service due to the Employee's Retirement 30 days after the Grant Date, then the Employee's target number of Performance Units would be reduced from 6,000 shares to 164 shares (6,000 x 30/1,095) and the balance of the Performance Units would be cancelled. For the avoidance of doubt, except as set forth in Paragraph 7, the actual number of Shares earned with respect to such adjusted number of Performance Units shall continue to depend on the extent to which the Performance Goals are achieved and Shares are earned, as determined and certified by the Committee in its sole discretion.

4.           Committee Discretion. The Committee, in its absolute discretion, may waive the Employment Requirement with respect to all or any portion of the Performance Units at any time.

5.           Forfeiture. Except as provided in Paragraphs 3, 4, 6 or 7(b) and notwithstanding any contrary provision of this Agreement, in the event that Employee ceases to be continuously employed by the Company or by one of its Affiliates through the last day of the Performance Period, the Performance Units shall thereupon be forfeited.

6.           Death or Disability of Employee. In the event of the Employee's death prior to Employee's Termination of Service or Termination of Service due to Disability, Employee shall be treated for purposes of this Agreement as having been continuously employed by the Company or by one of its Affiliates through the last day of the Performance Period. Any distribution or delivery to be made to the Employee under this Agreement shall, if the Employee is then deceased, be made to the Employee’s designated beneficiary, or if either no beneficiary survives the Employee or the Committee does not permit beneficiary designations, to the administrator or executor of the Employee’s estate. Any designation of a beneficiary by the Employee shall be effective only if such designation is made in a form and manner acceptable to the Committee. Any transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

7.           Change in Control.

(a)           In the event of a Change in Control (defined below) in which the Performance Units are assumed, the Performance Goals shall be deemed to be satisfied at target and the target number of Shares (as adjusted pursuant to Section 12 hereof) shall be paid to the Employee on the Settlement Date provided that Employee shall have been continuously employed by the Company or by one of its Affiliates from the Grant Date through the last day of the original Performance Period (or shall have had an earlier Termination of Service due to Retirement or death or as described in the second to last sentence of this Section 7(a)). In the event Employee shall have had an earlier Termination of Service due to Retirement, such target number of Shares shall be prorated in accordance with Paragraph 3 hereof. If Employee has entered into a Change in Control Agreement (the “CIC Agreement”) with the Company on or prior to the date of the applicable Change in Control and the Employee’s employment terminates under the circumstances described in Section 2(d) or 4(a) of the CIC Agreement, then Employee shall become vested in the target number of Shares (as adjusted pursuant to Section 12 hereof, if applicable) upon the Release Deadline (as defined in the CIC Agreement) provided that Employee shall have executed and not revoked the Release (as defined in the CIC Agreement) by the Release Deadline and such Shares shall be paid to the Employee on the Settlement Date; provided, however, that if a Change in Control is not consummated by the Release Deadline, Employee shall not be entitled to any payments or benefits on account of Employee’s termination described in such Section 2(d). In the event of any conflict between this Agreement and CIC Agreement, this Agreement shall control.

(b)           Notwithstanding the foregoing or anything to the contrary set forth in the Plan or any other agreement or arrangement, in the event that the Performance Units are not assumed in connection with a Change in Control, the Performance Goals shall be deemed satisfied at target and the target number of Shares shall be paid to the Employee on the Settlement Date in the same form, and determined in accordance with the undiscounted value of, the consideration received by the holders of Shares in the Change in Control without the requirement that Employee shall have been continuously employed by the Company or by one of its Affiliates from the Grant Date through the last day of the original Performance Period and without the requirement that any portion of such payment be subject to any escrow, earn-out or similar provision.

For purposes of this Agreement, Change in Control shall mean the occurrence of any of the following:

(i) Any individual or group constituting a “person”, as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended, (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 (directors of the Company in office on the date hereof 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 Regulation 12B under the Securities Exchange Act of 1934, as amended) 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) 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;

provided, however, that a “Change in Control” shall not be deemed to have occurred under this Agreement 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 Employee hereunder if the Change in Control results from actions or events in which Employee is a participant in a capacity other than solely as an officer, employee or director of the Company.

8.           Settlement of Performance Units; Dividend Equivalents.

a)            Status as a Creditor. Prior to settlement of any vested Performance Units, the Performance Units will represent an unfunded and unsecured obligation of the Company, payable (if at all) only from the general assets of the Company. The Employee is an unsecured general creditor of the Company, and settlement of vested Performance Units is subject to the claims of the Company’s creditors.

b)           Form and Timing of Settlement. Performance Units will automatically be settled in the form of Shares on the Settlement Date to the extent earned in accordance with the terms hereof. Fractional Shares will not be issued with respect to Performance Units. Where a fractional Share would be owed to the Employee with respect to vested Performance Units, a cash payment equivalent will be paid in place of any such fractional Share using the Fair Market Value on the relevant Settlement Date.

c)           Dividend Equivalents. In the event that the Company declares a cash dividend on its Shares having a record date on or after the Grant Date and prior to the date the vested Performance Units are settled, an amount equal to the per Share cash dividend(s) multiplied by the number of Shares earned and payable under the Performance Units granted to Employee under this Agreement, if any, shall be accrued on the Employee’s behalf and paid in cash to Employee at the same time and otherwise under the same terms and conditions as apply to such earned and payable Performance Units.

9.           Tax Liability and Withholding. The Company or one if its Affiliates shall assess applicable tax liability and requirements in connection with the Employee’s participation in the Plan, including, without limitation, tax liability associated with the grant or settlement of Performance Units or sale of the underlying Shares (the “Tax Liability”). These requirements may change from time to time as laws or interpretations change. Regardless of the Company’s or the Affiliate’s actions in this regard, the Employee hereby acknowledges and agrees that the Tax Liability shall be the Employee’s responsibility and liability. The Employee acknowledges that the Company’s obligation to issue or deliver Shares shall be subject to satisfaction of the Tax Liability. Unless otherwise determined by the Company, Tax Liability shall be satisfied by the Company’s withholding all or a portion of any Shares that otherwise would be issued to the Employee upon settlement of the vested Performance Units; provided that amounts withheld shall not exceed the amount necessary to satisfy the Company’s tax withholding obligations (minimum tax withholding obligations if necessary to avoid adverse accounting consequences). Such withheld Shares shall be valued based on the Fair Market Value as of the date the withholding obligations are satisfied. The Company or one if its Affiliates may, at their discretion, use other methods to satisfy the Tax Liability. Furthermore, the Employee agrees to pay the Company or the Affiliate any Tax Liability that cannot be satisfied by the foregoing methods.

10.         Rights as Stockholder. Neither the Employee nor any person claiming under or through the Employee shall have any of the rights or privileges of a stockholder of the Company in respect of any Performance Units (whether vested or unvested) unless and until such Performance Units are settled in Shares and 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. After such issuance, recordation and delivery, the Employee shall have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares.

11.         Acknowledgments. The Employee acknowledges and agrees to the following:

12.         Changes in Stock. In the event that as a result of a stock dividend, stock split, reclassification, recapitalization, combination of Shares or the adjustment in capital stock of the Company or otherwise, or as a result of a merger, consolidation, spin-off or other reorganization, the Company’s common stock shall be increased, reduced or otherwise changed, the Performance Units shall, subject to Section 409A of the Code, be properly adjusted.

13.         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.

14.         Restrictions on Transfer. Except as provided in Paragraph 6 above, this award and the rights and privileges conferred hereby shall not be transferred, assigned, pledged or 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, assign, pledge, hypothecate or otherwise dispose of this award, or of any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this award and the rights and privileges conferred hereby immediately shall become null and void. Regardless of whether the transfer or issuance of the Shares to be issued pursuant to this Agreement has been registered under the Securities Act of 1933, as amended (the "1933 Act") or has been registered or qualified under the securities laws of any state, the Company may impose additional restrictions upon the sale, pledge, or other transfer of the Shares (including the placement of appropriate legends on stock certificates and the issuance of stop-transfer instructions to the Company’s transfer agent) if, in the judgment of the Company and the Company’s counsel, such restrictions are necessary in order to achieve compliance with the provisions of the 1933 Act, the securities laws of any state, or any other law. Stock certificates evidencing the Shares issued pursuant to this Agreement, if any, may bear such restrictive legends as the Company and the Company’s counsel deem necessary under applicable laws or pursuant to this Agreement.

15.         Binding Agreement. Subject to the limitation on the transferability of this award 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 for Issuance of Certificates for Stock. The Shares deliverable to the Employee upon settlement of vested Performance Units may be either previously authorized but unissued Shares or issued Shares which have been reacquired by the Company. Subject to Section 409A of the Code, the Company shall not be required to issue any certificate or certificates for Shares hereunder prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such class of stock is then listed; (b) the completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable; (c) the approval or other clearance from any state or federal governmental regulatory body, which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and (d) the lapse of such reasonable period of time following the Settlement Date as the Committee may establish from time to time for reasons of administrative convenience.

17.         Plan Governs. This Agreement is subject to all 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.

18.         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.

19.         Committee Authority. The Committee shall have the power to interpret the Plan and this Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Employee, the Company and all other interested persons. 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. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement.

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

21.         Severability. 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.

22.         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.

23.         Amendment, Suspension or Termination of the Plan. By accepting this award, the Employee expressly warrants that he or she has received a right to an equity based award under the Plan, and has received, read, and understood a description of the Plan. The Employee understands that the Plan is discretionary in nature and may be modified, suspended, or terminated by the Company at any time.

24.         Authorization to Release and Transfer Necessary Personal Information. The Employee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of his or her personal data by and among, as applicable, the Company and the Affiliates for the exclusive purpose of implementing, administering and managing the Employee’s participation in the Plan. The Employee understands that the Company and the Affiliates may hold certain personal information about the Employee including, but not limited to, the Employee’s name, home address and telephone number, date of birth, social security number (or any other social or national identification number), salary, nationality, job title, number of Shares held and the details of all Performance Units or any other entitlement to Shares awarded, cancelled, vested, unvested or outstanding for the purpose of implementing, administering and managing the Employee’s participation in the Plan (the “Data”). The Employee understands that the Data may be transferred to the Company or any of the Affiliates, or to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Employee’s country or elsewhere, and that the recipients’ country may have different data privacy laws and protections than the Employee’s country. The Employee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Employee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan, including any requisite transfer of such Data to a broker or other third party assisting with the administration of Performance Units under the Plan or with whom Shares acquired pursuant to the Performance Units or cash from the sale of such Shares may be deposited. Furthermore, the Employee acknowledges and understands that the transfer of the Data to the Company or the Affiliates or to any third parties is necessary for his or her participation in the Plan. The Employee understands that Data will be held only as long as is necessary to implement, administer and manage his or her participation in the Plan. The Employee understands that he or she may, at any time, view the Data, request additional information about the storage and processing of the Data, require any necessary amendments to the Data or refuse or withdraw the consents herein by contacting his or her local human resources representative in writing. The Employee further acknowledges that withdrawal of consent may affect his or her ability to vest in or realize benefits from the Performance Units, and his or her ability to participate in the Plan. For more information on the consequences of refusal to consent or withdrawal of consent, the Employee understands that he or she may contact his or her local human resources representative.

25.         [Electronic Delivery: By executing this Agreement Employee consents to the electronic delivery of the Plan documents and this Agreement.]

26.         [Execution of this Agreement: Execution of this Agreement, whether in writing or electronic, shall have the same binding effect and shall fully bind Employee and the Company to all of the terms and conditions set forth in this Agreement and the Plan.]

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