Varex Imaging Corp (Form: 10-12B/A, Received: 12/08/2016 17:12:06)

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on December 8, 2016

File No. 001-37860

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2

Form 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of

the Securities Exchange Act of 1934

Varex Imaging Corporation

(Exact name of registrant as specified in its charter)


Delaware		81-3434516
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

1678 S. Pioneer Road, Salt Lake City, Utah		84104
(Address of principal executive offices)		(Zip code)

800-432-4422

(Registrant’s telephone number, including area code)

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class

to be so registered

Name of each exchange on which

each class is to be registered

Common stock, par value $0.01 per share

The Nasdaq Stock Market LLC

Securities to be registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

VAREX IMAGING CORPORATION

INFORMATION REQUIRED IN REGISTRATION STATEMENT

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT

AND ITEMS OF FORM 10

This Registration Statement on Form 10 incorporates by reference information contained in the information statement filed herewith as Exhibit 99.1. The cross-reference sheet below identifies where the items required by Form 10 can be found in the information statement.

Item 1.

Business .

The information required by this item is contained under the sections of the information statement entitled “Information Statement Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Relationships with Varian Following Separation and Distribution” and “Where You Can Find More Information.” Those sections are incorporated herein by reference.

Item 1A.

Risk Factors .

The information required by this item is contained under the section of the information statement entitled “Risk Factors.” That section is incorporated herein by reference.

Item 2.

Financial Information .

The information required by this item is contained under the sections of the information statement entitled “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Those sections are incorporated herein by reference.

Item 3.

Properties .

The information required by this item is contained under the section of the information statement entitled “Business—Properties.” That section is incorporated herein by reference.

Item 4.

Security Ownership of Certain Beneficial Owners and Management .

The information required by this item is contained under the section of the information statement entitled “Security Ownership of Certain Beneficial Owners and Management.” That section is incorporated herein by reference.

Item 5.

Directors and Executive Officers .

The information required by this item is contained under the section of the information statement entitled “Management.” That section is incorporated herein by reference.

Item 6.

Executive Compensation .

The information required by this item is contained under the sections of the information statement entitled “Executive Compensation,” “Management—Compensation and Management Development Committee Interlocks and Insider Participation” and “Director Compensation.” Those sections are incorporated herein by reference.

Item 7.

Certain Relationships and Related Transactions .

The information required by this item is contained under the sections of the information statement entitled “Management” and “Relationships with Varian Following Separation and Distribution.” Those sections are incorporated herein by reference.

Item 8.

Legal Proceedings .

The information required by this item is contained under the section of the information statement entitled “Business—Legal Proceedings.” That section is incorporated herein by reference.

Item 9.

Market Price of, and Dividends on, the Registrant’s Common Equity and Related Stockholder Matters .

The information required by this item is contained under the sections of the information statement entitled “Dividend Policy,” “Capitalization,” “The Separation and Distribution” and “Description of Varex’s Capital Stock.” Those sections are incorporated herein by reference.

Item 10.

Recent Sales of Unregistered Securities .

The information required by this item is contained under the sections of the information statement entitled “Description of Material Indebtedness” and “Description of Varex’s Capital Stock—Sale of Unregistered Securities.” Those sections are incorporated herein by reference.

Item 11.

Description of Registrant’s Securities to Be Registered .

The information required by this item is contained under the sections of the information statement entitled “Dividend Policy,” “The Separation and Distribution” and “Description of Varex’s Capital Stock.” Those sections are incorporated herein by reference.

Item 12.

Indemnification of Directors and Officers .

The information required by this item is contained under the section of the information statement entitled “Description of Varex’s Capital Stock—Limitations on Liability, Indemnification of Officers and Directors, and Insurance.” That section is incorporated herein by reference.

Item 13.

Financial Statements and Supplementary Data .

The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” and the financial statements referenced therein. That section is incorporated herein by reference.

Item 14.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .

None.

Item 15.

Financial Statements and Exhibits .

(a) Financial Statements

(b) Exhibits

The following documents are filed as exhibits hereto:


Exhibit Number		Exhibit Description

2.1		Form of Separation and Distribution Agreement*

3.1		Form of Amended and Restated Certificate of Incorporation*

3.2		Form of Amended and Restated Bylaws*

10.1		Form of Transition Services Agreement*

10.2		Form of Tax Matters Agreement*

10.3		Form of Employee Matters Agreement*

10.4		Form of Intellectual Property Matters Agreement*

10.5		Form of Trademark License Agreement*

10.6		Varex Imaging Corporation 2016 Deferred Compensation Plan, Plan Document Effective November 1, 2016*

10.7		Frozen Deferred Compensation Plan Varex Imaging Corporation, Master Plan Document*

10.8		Form of Varex Imaging Corporation 2017 Omnibus Stock Plan*

10.9		Form of Varex Imaging Corporation 2017 Employee Stock Purchase Plan*

10.10		Form of Varex Imaging Corporation Management Incentive Plan*

10.11		Form of Change in Control Agreement*

10.12		Form of Indemnification Agreement*

21.1		List of subsidiaries*

99.1		Information Statement of Varex Imaging Corporation, preliminary and subject to completion, dated December 8, 2016*

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.


VAREX IMAGING CORPORATION

By:		/s/ Sunny S. Sanyal
		Name: Sunny S. Sanyal
		Title: President and Chief Executive Officer

Date: December 8, 2016

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

DATED AS OF [●], 2017

TABLE OF CONTENTS


		Page

ARTICLE I DEFINITIONS			2

ARTICLE II THE SEPARATION			17

2.1	Transfer of Assets and Assumption of Liabilities		17
2.2	Varex Assets; Parent Assets		19
2.3	Varex Liabilities; Parent Liabilities		22
2.4	Approvals and Notifications		23
2.5	Assignment and Novation of Liabilities		27
2.6	Release of Guarantees		28
2.7	Termination of Agreements		29
2.8	Treatment of Shared Contracts		30
2.9	Bank Accounts; Cash Balances		31
2.10	Varex Financing Arrangements; Cash Transfer.		33
2.11	Ancillary Agreements		33
2.12	Disclaimer of Representations and Warranties		33
2.13	Financial Information Certifications		34

ARTICLE III THE DISTRIBUTION			34

3.1	Sole and Absolute Discretion; Cooperation		34
3.2	Actions Prior to the Distribution		35
3.3	Conditions to the Distribution		36
3.4	The Distribution		37

ARTICLE IV MUTUAL RELEASES; INDEMNIFICATION			39

4.1	Release of Pre-Distribution Claims		39
4.2	Indemnification by Varex		41
4.3	Indemnification by Parent		42
4.4	Indemnification Obligations Net of Insurance Proceeds and Other Amounts		43
4.5	Procedures for Indemnification of Third-Party Claims		44
4.6	Additional Matters		46
4.7	Right of Contribution		47
4.8	Covenant Not to Sue		48
4.9	Remedies Cumulative		48
4.10	Survival of Indemnities		48

ARTICLE V CERTAIN OTHER MATTERS			48

5.1	Insurance Matters		48
5.2	Late Payments		50
5.3	Inducement		51
5.4	Post-Effective Time Conduct		51
5.5	Environmental Remediation Activities		51
5.6	Environmental Deed Restrictions on Varex Real Property		51
5.7	Residential Land Use and Remediation Standards on Varex Real Property		52
5.8	Non-Competition; Non-Solicitation		53

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ARTICLE VI EXCHANGE OF INFORMATION; CONFIDENTIALITY		55

6.1	Agreement for Exchange of Information	55
6.2	Ownership of Information	56
6.3	Compensation for Providing Information	56
6.4	Record Retention	56
6.5	Limitations of Liability	56
6.6	Other Agreements Providing for Exchange of Information	57
6.7	Production of Witnesses; Records; Cooperation	57
6.8	Privileged Matters	58
6.9	Confidentiality	60
6.10	Protective Arrangements	61

ARTICLE VII DISPUTE RESOLUTION		62

7.1	Good Faith Officer Negotiation	62
7.2	Good-Faith Negotiation	62
7.3	Arbitration	62
7.4	Litigation and Unilateral Commencement of Arbitration	63
7.5	Conduct During Dispute Resolution Process	64

ARTICLE VIII FURTHER ASSURANCES AND ADDITIONAL COVENANTS		64

8.1	Further Assurances	64

ARTICLE IX TERMINATION		65

9.1	Termination	65
9.2	Effect of Termination	65

ARTICLE X MISCELLANEOUS		65

10.1	Counterparts; Entire Agreement; Corporate Power	65
10.2	Governing Law	66
10.3	Assignability	66
10.4	Third-Party Beneficiaries	67
10.5	Notices	67
10.6	Severability	68
10.7	Force Majeure	68
10.8	No Set-Off	69
10.9	Expenses	69
10.10	Headings	69
10.11	Survival of Covenants	69
10.12	Waivers of Default	69
10.13	Specific Performance	69
10.14	Amendments	70
10.15	Interpretation	70
10.16	Limitations of Liability	70
10.17	Performance	70
10.18	Mutual Drafting	71

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SCHEDULES


Schedule 1.1(a)		Commercial Agreements
Schedule 1.1(b)		Delayed Asset Transfer Agreements
Schedule 1.2		Parent Information Technology
Schedule 1.3		Parent Invention Disclosures
Schedule 1.4		Parent Other IP
Schedule 1.5		Parent Patents
Schedule 1.6		Parent Registered IP
Schedule 1.7		Parent Software
Schedule 1.8		Transferred Entities
Schedule 1.9		Varex Other Business
Schedule 1.10		Varex Contracts
Schedule 1.11		Varex Information Technology
Schedule 1.12		Varex Invention Disclosures
Schedule 1.13		Certain Varex Operating Activities
Schedule 1.14		Varex Other IP
Schedule 1.15		Varex Patents
Schedule 1.16(a)		Varex Real Property (Owned)
Schedule 1.16(b)		Varex Real Property (Leases)
Schedule 1.17		Varex Registered IP
Schedule 1.18		Varex Software
Schedule 2.1(a)		Plan of Reorganization
Schedule 2.2(a)		Varex Assets
Schedule 2.2(b)(viii)		Parent Assets
Schedule 2.3(a)		Varex Liabilities
Schedule 2.3(b)		Parent Liabilities
Schedule 2.6(a)		Guarantee Exception
Schedule 2.7(b)(ii)		Intercompany Agreements (Non-Termination)
Schedule 2.10		Varex Financing Arrangements
Schedule 4.3(e)		Specified Parent Information
Schedule 5.6(a)		Pending Controls
Schedule 5.6(b)		Environmental Restrictions
Schedule 10.9		Allocation of Certain Costs and Expenses

EXHIBITS


Exhibit A		Amended and Restated Certificate of Incorporation of Varex Imaging Corporation

Exhibit B		Amended and Restated Bylaws of Varex Imaging Corporation

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SEPARATION AND DISTRIBUTION AGREEMENT

This SEPARATION AND DISTRIBUTION AGREEMENT, dated as of [●], 2017 (this “ Agreement ”), is by and between Varian Medical Systems, Inc., a Delaware corporation (“ Parent ”), and Varex Imaging Corporation, a Delaware corporation (“ Varex ”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I .

R E C I T A L S

WHEREAS, the board of directors of Parent (the “ Parent Board ”) has determined that it is in the best interests of Parent and its stockholders to create a new publicly traded company that shall operate the Varex Business;

WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the Varex Business from the Parent Business (the “ Separation ”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of all of the outstanding Varex Shares owned by Parent (the “ Distribution ”);

WHEREAS, Varex has been incorporated solely for these purposes and has not engaged in activities except in connection with the Separation and the Distribution;

WHEREAS, for U.S. federal income tax purposes, the transfer by Parent of the Varex Assets and the Varex Liabilities to Varex in actual or constructive exchange for (i) the issuance by Varex to Parent of Varex Shares and (ii) the Cash Transfer (the “ Contribution ”) and the Distribution, taken together, are intended to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, and this Agreement is intended to be, and is hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulation Section 1.368-2(g);

WHEREAS, Varex and Parent have prepared, and Varex has filed with the SEC, the Form 10, which includes the Information Statement, and which sets forth disclosure concerning Varex, the Separation and the Distribution; and

WHEREAS, each of Parent and Varex has determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect the Separation and the Distribution and certain other agreements that will govern certain matters relating to the Separation and the Distribution and the relationship of Parent, Varex and the members of their respective Groups following the Distribution.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement, the following terms shall have the following meanings:

“ 1999 Spin Agreement ” shall mean the Amended and Restated Distribution Agreement, dated as of January 14, 1999, by and among Varian Associates, Inc. (which has been renamed Varian Medical Systems, Inc.), Varian, Inc. and Varian Semiconductor Equipment Associates, Inc.

“ Accelerator Technology ” shall mean Technology related to beam center lines of linear accelerators, including accelerating cavities, buncher designs, internal field shapes and field ratios, coupler and coupling irises (including iris shapes), side cavities, energy-switch designs, electron guns and targets.

“ Action ” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“ Affiliate ” shall mean, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “ control ” (including, with correlative meanings, “ controlled by ” and “ under common control with ”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, prior to, at and after the Effective Time, for purposes of this Agreement and the Ancillary Agreements, (a) no member of the Varex Group shall be deemed to be an Affiliate of any member of the Parent Group and (b) no member of the Parent Group shall be deemed to be an Affiliate of any member of the Varex Group.

“ Agent ” shall mean the trust company or bank duly appointed by Parent to act as distribution agent, transfer agent and registrar for the Varex Shares in connection with the Distribution.

“ Agreement ” shall have the meaning set forth in the Preamble.

“ Ancillary Agreements ” shall mean all agreements (other than this Agreement) entered into by the Parties or the members of their respective Groups (but as to which no Third Party is a party) in connection with the Separation, the Distribution, or the other transactions contemplated by this Agreement, including the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Intellectual Property Matters Agreement, the Trademark License Agreement and the Transfer Documents; provided , that no Commercial Agreement shall be an Ancillary Agreement.

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“ Approvals or Notifications ” shall mean any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.

“ Arbitration Request ” shall have the meaning set forth in Section 7.3(a) .

“ Assets ” shall mean, with respect to any Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other third Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.

“ Balance Sheet ” shall have the meaning set forth in Section 2.9(g) .

“ Cash Transfer ” shall have the meaning set forth in Section 2.10(a) .

“ CEO Negotiation Request ” shall have the meaning set forth in Section 7.2 .

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Commercial Agreements ” shall mean the agreements entered into by the Parties or the members of their respective Groups (but as to which no Third Party is a party) set forth on Schedule 1.1(a) .

“ Contribution ” shall have the meaning set forth in the Recitals.

“ Copyrights ” shall mean all copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, in each case whether or not registered, and all registrations and applications for registration of any of the foregoing, and all rights in and to any of the foregoing provided by international treaties or conventions.

“ CPR ” shall have the meaning set forth in Section 7.3(a) .

“ Delayed Parent Asset ” shall have the meaning set forth in Section 2.4(h) .

“ Delayed Parent Liability ” shall have the meaning set forth in Section 2.4(h) .

“ Delayed Varex Asset ” shall have the meaning set forth in Section 2.4(c) .

“ Delayed Varex Asset Consideration ” shall mean an amount of cash necessary for the applicable member of the Varex Group to pay to the applicable members of the Parent Group in full pursuant to the agreements set forth on Schedule 1.1(b) .

“ Delayed Varex Liability ” shall have the meaning set forth in Section 2.4(c) .

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“ Disclosure Document ” shall mean any registration statement (including the Form 10) filed with the SEC by or on behalf of any Party or any member of its Group, and also includes any information statement (including the Information Statement), prospectus, offering memorandum, offering circular, periodic report or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, in each case that describes the Separation or the Distribution or the Varex Group or primarily relates to the transactions contemplated hereby.

“ Dispute ” shall have the meaning set forth in Section 7.1 .

“ Distribution ” shall have the meaning set forth in the Recitals.

“ Distribution Date ” shall mean the date of the consummation of the Distribution, which shall be determined by the Parent Board in its sole and absolute discretion.

“ Distribution Ratio ” shall mean a number equal to [●].

“ Effective Time ” shall mean [●] time, on the Distribution Date.

“ Employee Matters Agreement ” shall mean the Employee Matters Agreement to be entered into by and between Parent and Varex or the members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as it may be amended from time to time.

“ Environmental Law ” shall mean any Law relating to pollution, protection or restoration of or prevention of harm to the environment or natural resources, including the use, handling, transportation, treatment, storage, disposal, Release or discharge of Hazardous Materials or the protection of or prevention of harm to human health and safety.

“ Environmental Liabilities ” shall mean all Liabilities relating to, arising out of or resulting from any Hazardous Materials, Environmental Law or contract or agreement relating to environmental, health or safety matters (including all removal, remediation or cleanup costs, investigatory costs, response costs, natural resources damages, property damages, personal injury damages, costs of compliance with any product take back requirements or with any settlement, judgment or other determination of Liability and indemnity, contribution or similar obligations) and all costs and expenses, interest, fines, penalties or other monetary sanctions in connection therewith.

“ Exchange Act ” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“ Existing Deed Notice ” shall have the meaning set forth in Section 5.6 .

“ Final Cash Balance ” shall have the meaning set forth in Section 2.9(g) .

“ Force Majeure ” shall mean, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and

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(b) by its nature would not reasonably have been foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any significant and prolonged failure in electrical or air conditioning equipment. Notwithstanding the foregoing, the receipt by a Party of an unsolicited takeover offer or other acquisition proposal, even if unforeseen or unavoidable, and such Party’s response thereto shall not be deemed an event of Force Majeure .

“ Form 10 ” shall mean the registration statement on Form 10 filed by Varex with the SEC to effect the registration of Varex Shares pursuant to the Exchange Act in connection with the Distribution, as such registration statement may be amended or supplemented from time to time prior to the Distribution.

“ GAAP ” means United States generally accepted accounting principles, consistently applied.

“ Governmental Approvals ” shall mean any Approvals or Notifications to be made to, or obtained from, any Governmental Authority.

“ Governmental Authority ” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, a government and any executive official thereof.

“ Group ” shall mean either the Varex Group or the Parent Group, as the context requires.

“ Hazardous Materials ” shall mean any chemical, material, substance, waste, pollutant, emission, discharge, release or contaminant that could result in Liability under, or that is prohibited, limited or regulated by or pursuant to, any Environmental Law, and any natural or artificial substance (whether solid, liquid or gas, noise, ion, vapor or electromagnetic) that could cause harm to human health or the environment, including petroleum, petroleum products and byproducts, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, electronic, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting substances.

“ Indemnifying Party ” shall have the meaning set forth in Section 4.4(a) .

“ Indemnitee ” shall have the meaning set forth in Section 4.4(a) .

“ Indemnity Payment ” shall have the meaning set forth in Section 4.4(a) .

“ Information Statement ” shall mean the information statement to be made available to the holders of Parent Shares in connection with the Distribution, as such information statement may be amended or supplemented from time to time prior to the Distribution.

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“ Information Technology ” shall mean all hardware, computers, servers, workstations, routers, hubs, switches, data communication lines, network and telecommunications equipment, Internet-related information technology infrastructure, and other information technology equipment, in each case, other than Software.

“ Insurance Proceeds ” shall mean those monies:

(a) received by an insured from an insurance carrier; or

(b) paid by an insurance carrier on behalf of the insured;

in any such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof; provided , however , that with respect to a captive insurance arrangement, Insurance Proceeds shall only include amounts received by the captive insurer in respect of any reinsurance arrangement.

“ Intellectual Property ” shall mean all of the following whether arising under the Laws of the United States (or any state or other jurisdiction thereof) or of any other foreign or multinational jurisdiction: (a) Patents, (b) Trademarks, (c) Copyrights, (d) any other intellectual property rights arising from or in respect of any Technology or Software, and (e) any claims for damages by reason of past infringement, misappropriation, or other unauthorized use of any of the foregoing, with the right to sue for and collect the same.

“ Intellectual Property Matters Agreement ” shall mean the Intellectual Property Matters Agreement to be entered into by and between Parent and Varex or any members of their respective Groups in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement, as it may be amended from time to time.

“ Law ” shall mean any national, supranational, federal, state, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any Tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

“ Liabilities ” shall mean all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs, expenses, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.

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“ Linked ” shall have the meaning set forth in Section 2.9(a) .

“ Losses ” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.

“ Maximum Cash Amount ” shall mean five million ($5,000,000) U.S. dollars.

“ Nasdaq ” shall mean the Nasdaq Global Select Market.

“ NYSE ” shall mean the New York Stock Exchange.

“ Officer Negotiation Request ” shall have the meaning set forth in Section 7.1 .

“ Other IP ” shall mean all Technology or Intellectual Property other than (a) any Software or intellectual property rights arising from or in respect of Software, (b) any Parent Patent or Varex Patent, (c) any Technology disclosed by a published Parent Patent or published Varex Parent, (d) any Parent Invention Disclosure or Varex Invention Disclosure and (e) any Parent Registered IP or Varex Registered IP.

“ Parent ” shall have the meaning set forth in the Preamble.

“ Parent Accounts ” shall have the meaning set forth in Section 2.9(a) .

“ Parent Assets ” shall have the meaning set forth in Section 2.2(b) .

“ Parent Board ” shall have the meaning set forth in the Recitals.

“ Parent Business ” shall mean all businesses, operations and activities conducted at any time prior to the Effective Time by either Party or any member of its Group, other than the Varex Business.

“ Parent Group ” shall mean Parent and each Person that is a Subsidiary of Parent (other than Varex and any other member of the Varex Group).

“ Parent Indemnitees ” shall have the meaning set forth in Section 4.2 .

“ Parent Information Technology ” shall mean all Information Technology, other than Varex Information Technology, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the Information Technology set forth on Schedule 1.2.

“ Parent Intellectual Property ” shall mean: (a) the Parent Patents; (b) the Parent Registered IP, (c) the Parent Other IP, (d) the Parent Name and Parent Marks (to the extent not included in clause (b) or (c) above), (e) the Parent Invention Disclosures, (f) the Parent Software and (g) all Intellectual Property of either Party or any member of its Group with respect to any of the foregoing.

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“ Parent Invention Disclosures ” shall mean all invention disclosures, other than Varex Invention Disclosures, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the invention disclosures set forth on Schedule 1.3 , and any Technology disclosed by such invention disclosures.

“ Parent Liabilities ” shall have the meaning set forth in Section 2.3(b) .

“ Parent Name and Parent Marks ” shall mean the names, marks, trade dress, logos, monograms, domain names and other source or business identifiers of either Party or any member of its Group that (a) use or contain “VARIAN” or “A PARTNER FOR LIFE” (including any stylized versions or design elements thereof) or (b) otherwise identify Parent as a whole, either alone or in combination with other words or elements, and all names, marks, trade dress, logos, monograms, domain names and other source or business identifiers confusingly similar to or embodying any of the foregoing, either alone or in combination with other words or elements, together with (x) any common law rights in and to any of the foregoing, any registrations or applications for registration of any of the foregoing, any rights in and to any of the foregoing provided by international treaties or conventions, and any reissues, extensions or renewals of any of the foregoing and (y) the goodwill associated with any of the foregoing.

“ Parent Other IP ” shall mean all Other IP, other than Varex Other IP, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the Other IP set forth on Schedule 1.4, provided , however , that Parent Other IP shall not include the Varex Name and Varex Marks.

“ Parent Patents ” shall mean: (a) all Patents, other than Varex Patents, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the Patents set forth on Schedule 1.5 ; (b) any patent issuing on any patent application included in clause (a) above; (c) any patent claims issuing on any patent application that claims priority from, and that cover exclusively subject matter that is entitled to priority to, any patent or patent application included in clause (a) above (including any divisional, continuation, continuation-in-part, reissue, reexamination, or extension) with a priority date that is on or before the Distribution Date; (d) any foreign counterpart of any of the foregoing patents and patent applications with a priority date that is on or before the Distribution Date; and (e) any patent issuing and originating from any submitted Parent Invention Disclosure.

“ Parent Registered IP ” shall mean all Registered IP, other than Varex Registered IP, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the Registered IP set forth on Schedule 1.6 .

“ Parent Restricted Activities ” shall have the meaning set forth in Section 5.8(b) .

“ Parent Shares ” shall mean the shares of common stock, par value $1.00 per share, of Parent.

“ Parent Software ” shall mean all Software, other than Varex Software, owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time, including the Software set forth on Schedule 1.7 .

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“ Parties ” shall mean the parties to this Agreement.

“ Patents ” shall mean all patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, substitutions, renewals, extensions and reexaminations of any of the foregoing, and all rights in any of the foregoing provided by international treaties or conventions.

“ Pending Controls ” shall have the meaning set forth in Section 5.6 .

“ Permits ” shall mean permits, approvals, authorizations, consents, licenses or certificates issued by any Governmental Authority.

“ Person ” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“ Plan of Reorganization ” shall have the meaning set forth in Section 2.1(a) .

“ Policies ” shall mean insurance policies and insurance contracts of any kind, including but not limited to property, excess and umbrella, commercial general liability, director and officer liability, fiduciary liability, cyber technology professional liability, libel liability, employment practices liability, automobile, aircraft, marine, workers’ compensation and employers’ liability, employee dishonesty/crime/fidelity, foreign, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits, privileges and obligations thereunder.

“ Prime Rate ” shall mean the rate that Bloomberg displays as “Prime Rate by Country United States” or “Prime Rate By Country US-BB Comp” at http://www.bloomberg.com/quote/PRIME:IND or on a Bloomberg terminal at PRIMBB Index.

“ Privileged Information ” shall mean any information, in written, oral, electronic or other tangible or intangible forms, including without limitation any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials protected by the work product doctrine, as to which a Party or any member of its Group would be entitled to assert or have asserted a privilege or other protection, including the attorney-client and work product privileges.

“ Real Property ” shall mean land together with all easements, rights and interests arising out of the ownership thereof or appurtenant thereto and all buildings, structures, improvements and fixtures located thereon.

“ Real Property Leases ” shall mean all leases to Real Property and, to the extent covered by such leases, any and all buildings, structures, improvements and fixtures located thereon.

“ Record Date ” shall mean the close of business on the date to be determined by the Parent Board as the record date for determining holders of Parent Shares entitled to receive Varex Shares pursuant to the Distribution.

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“ Record Holders ” shall mean the holders of record of Parent Shares as of the Record Date.

“ Registered IP ” shall mean all Intellectual Property, other than Patents, that is registered, filed, issued or granted under the authority of, with or by, any Governmental Authority, including all registered copyrights, registered trademarks, registered service marks, registered trade secrets, registered Internet domain names, and all applications for any of the foregoing.

“ Release ” shall mean any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, leaching or migration of Hazardous Materials into the environment (including, ambient air, surface water, groundwater and surface or subsurface strata).

“ Remedial Activities ” shall have the meaning set forth in Section 5.5 .

“ Remediation Systems ” shall have the meaning set forth in Section 5.5 .

“ Representatives ” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

“ Salt Lake Property ” shall have the meaning set forth in Section 5.5 .

“ SEC ” shall mean the U.S. Securities and Exchange Commission.

“ Section 1542 ” shall have the meaning set forth in Section 4.1(c) .

“ Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.

“ Sensitive Use Standards ” shall have the meaning set forth in Section 5.7 .

“ Separation ” shall have the meaning set forth in the Recitals.

“ Shared Contract ” shall have the meaning set forth in Section 2.8(a) .

“ Shared Liabilities ” shall have the meaning set forth in the 1999 Spin Agreement.

“ Software ” shall mean any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow charts and other work products used to design, plan, organize and develop any of the foregoing, (d) screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and (e) documentation, including user manuals and other training documentation, relating to any of the foregoing.

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“ Straddle Period ” shall have the meaning set forth in Section 2.13 .

“ Subsidiary ” shall mean, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

“ Tangible Information ” shall mean information that is contained in written, electronic or other tangible forms.

“ Tax ” shall have the meaning set forth in the Tax Matters Agreement.

“ Tax Matters Agreement ” shall mean the Tax Matters Agreement to be entered into by and between Parent and Varex in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement, as it may be amended from time to time.

“ Tax Return ” shall have the meaning set forth in the Tax Matters Agreement.

“ Technology ” shall mean all technology, know-how and information, including sales methodologies and processes, training protocols and similar methods and processes, algorithms, APIs, apparatus, circuit designs and assemblies, gate arrays, net lists, test vectors, diagrams, models, formulae, inventions, discoveries, innovations, products, services, ideas, concepts, designs, drawings, methods, network configurations and architectures, processes, confidential or proprietary information, trade secrets, protocols, schematics, specifications, subroutines, techniques, URLs, web sites, works of authorship and other forms of technology, in each case whether or not patentable, copyrightable or otherwise registerable, whether or not embodied in any tangible form and including all tangible embodiments of any of the foregoing, including documents, reports, records, instruction manuals, laboratory notebooks, prototypes, samples, surveys, studies and summaries; provided , however , that Technology shall not include any Software.

“ Third Party ” shall mean any Person other than the Parties or any members of their respective Groups.

“ Third-Party Claim ” shall have the meaning set forth in Section 4.5(a) .

“ Trademark License Agreement ” shall mean the Trademark License Agreement to be entered into by and between Parent and Varex or any members of their respective Groups in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement, as it may be amended from time to time.

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“ Trademarks ” shall mean all trademarks, service marks, trade names, service names, trade dress, logos, Internet domain names, and other source or business identifiers, including all goodwill associated with any of the foregoing, and any and all common law rights in and to any of the foregoing, registrations and applications for registration of any of the foregoing, all rights in and to any of the foregoing provided by international treaties or conventions, and all reissues, extensions and renewals of any of the foregoing.

“ Transaction Accounting Principles ” means GAAP applied on a basis consistent with the accounting principles, practices, methodologies and policies used in preparing the Varex Balance Sheet.

“ Transfer Documents ” shall have the meaning set forth in Section 2.1(b) .

“ Transferred Entities ” shall mean the entities set forth on Schedule 1.8 .

“ Transition Services Agreement ” shall mean the Transition Services Agreement to be entered into by and between Parent and Varex or any members of their respective Groups in connection with the Separation, the Distribution or the other transactions contemplated by this Agreement, as it may be amended from time to time.

“ Unreleased Parent Liability ” shall have the meaning set forth in Section 2.5(b)(ii) .

“ Unreleased Varex Liability ” shall have the meaning set forth in Section 2.5(a)(ii) .

“ Varex ” shall have the meaning set forth in the Preamble.

“ Varex Accounts ” shall have the meaning set forth in Section 2.9(a) .

“ Varex Assets ” shall have the meaning set forth in Section 2.2(a) .

“ Varex Balance Sheet ” shall mean the pro forma combined balance sheet of the Varex Business, including any notes and subledgers thereto, as of September 30, 2016, as presented in the Information Statement mailed to the Record Holders.

“ Varex Business ” shall mean (a) the business, operations and activities of the imaging components segment of Parent conducted at any time prior to the Effective Time by either Party or any member of its Group and (b) any activities of the Ginzton Technology Center conducted at any time prior to the Effective Time by either Party or any member of its Group that are (i) related to Accelerator Technology and exclusively for the benefit of the business, operations or activities described in clause (a) above or (ii) not related to Accelerator Technology and primarily for the benefit of the business, operations or activities described in clause (a) above. The Varex Business shall also include any business, operations and activities set forth on Schedule 1.9 .

“ Varex Bylaws ” shall mean the Amended and Restated Bylaws of Varex, substantially in the form of Exhibit B .

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“ Varex Certificate of Incorporation ” shall mean the Amended and Restated Certificate of Incorporation of Varex, substantially in the form of Exhibit A .

“ Varex Contracts ” shall mean the following contracts and agreements to which either Party or any member of its Group is a party or by which it or any member of its Group or any of their respective Assets is bound, whether or not in writing; provided that Varex Contracts shall not include any contract or agreement that is contemplated to be retained by Parent or any member of the Parent Group from and after the Effective Time pursuant to any provision of this Agreement or any Ancillary Agreement or the Commercial Agreements:

(a) (i) any customer, reseller, distributor or development contract or agreement entered into prior to the Effective Time exclusively related to the Varex Business and (ii) with respect to any customer, reseller, distributor or development contract or agreement entered into prior to the Effective Time that relates to the Varex Business but is not exclusively related to the Varex Business, that portion of any such contract or agreement that primarily relates to the Varex Business;

(b) (i) any supply or vendor contract or agreement entered into prior to the Effective Time exclusively related to the Varex Business and (ii) with respect to any supply or vendor contract or agreement entered into prior to the Effective Time that relates to the Varex Business but is not exclusively related to the Varex Business, that portion of any such contract or agreement that primarily relates to the Varex Business;

(c) (i) any license agreement or other agreement conferring rights to Intellectual Property entered into prior to the Effective Time that is exclusively related to the Varex Intellectual Property and (ii) with respect to any license agreement or other agreement conferring rights with respect to Intellectual Property entered into prior to the Effective Time but not exclusively related to the Varex Intellectual Property, that portion of such license agreement or other agreement that confers rights to Varex Intellectual Property;

(d) any joint venture or partnership contract or agreement that relates primarily to the Varex Business as of the Effective Time;

(e) any guarantee, indemnity, representation, covenant, warranty or other Liability of either Party or any member of its Group in respect of any other Varex Contract, any Varex Liability or the Varex Business;

(f) any proprietary information and inventions agreement or similar Intellectual Property assignment or license agreement with any current or former Varex Group employee, Parent Group employee, consultant of the Varex Group or consultant of the Parent Group, in each case entered into prior to the Effective Time (i) that is exclusively related to the Varex Business or (ii) if not exclusively related to the Varex Business, that portion of any such agreement that primarily relates to the Varex Business;

(g) any contract or agreement that is expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements to be assigned to, or be a contract or agreement in the name of, Varex or any member of the Varex Group;

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(h) any interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements exclusively related to the Varex Business;

(i) any credit or other financing agreement entered into by Varex and/or any member of the Varex Group in connection with the Separation;

(j) any contract or agreement entered into in the name of, or expressly on behalf of, any division, business unit or member of the Varex Group;

(k) any other contract or agreement exclusively related to the Varex Business or Varex Assets;

(l) Varex Leases; and

(m) any contracts, agreements or settlements set forth on Schedule 1.10 , including the right to recover any amounts under such contracts, agreements, leases or settlements.

“ Varex Designees ” shall mean any and all entities (including corporations, general or limited partnerships, trusts, joint ventures, unincorporated organizations, limited liability entities or other entities) designated by Parent that will be members of the Varex Group as of immediately prior to the Effective Time.

“ Varex Financing Arrangements ” shall have the meaning set forth in Section 2.10(a) .

“ Varex Group ” shall mean (a) prior to the Effective Time, Varex and each Person that will be a Subsidiary of Varex as of immediately after the Effective Time, including the Transferred Entities, even if, prior to the Effective Time, such Person is not a Subsidiary of Varex; and (b) on and after the Effective Time, Varex and each Person that is a Subsidiary of Varex.

“ Varex Indemnitees ” shall have the meaning set forth in Section 4.3 .

“ Varex Information Technology ” shall mean (a) all Information Technology owned or licensed by either Party or any member of its Group primarily used or primarily held for use in the Varex Business as of the Effective Time, and (b) the Information Technology set forth on Schedule 1.11; provided , however , that Varex Information Technology shall not include the Information Technology set forth on Schedule 1.2 .

“ Varex Intellectual Property ” shall mean: (a) the Varex Patents, (b) the Varex Registered IP, (c) the Varex Other IP, (d) the Varex Name and Varex Marks (to the extent not included in clause (b) or (c) above), (e) the Varex Invention Disclosures, (f) the Varex Software and (g) all Intellectual Property of either Party or any member of its Group with respect to any of the foregoing.

“ Varex Invention Disclosures ” shall mean all invention disclosures owned or licensed by either Party or any member of its Group as of immediately prior to the Effective

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Time that are primarily used or primarily held for use in the Varex Business, including the invention disclosures set forth on Schedule 1.12 and any Technology disclosed by such invention disclosures, but excluding the invention disclosures set forth on Schedule 1.3 and any Technology disclosed by such invention disclosures.

“ Varex Leases ” shall have the meaning set forth in the definition of Varex Real Property.

“ Varex Liabilities ” shall have the meaning set forth in Section 2.3(a) .

“ Varex Name and Varex Marks ” shall mean the names, marks, trade dress, logos, monograms, domain names and other source or business identifiers of either Party or any member of its Group that (a) use or contain “VAREX” (including any stylized versions or design elements thereof) or (b) otherwise identify Varex as a whole, either alone or in combination with other words or elements, and all names, marks, trade dress, logos, monograms, domain names and other source or business identifiers confusingly similar to or embodying any of the foregoing, either alone or in combination with other words or elements, together with (x) any common law rights in and to any of the foregoing, any registrations or applications for registration of any of the foregoing, any rights in and to any of the foregoing provided by international treaties or conventions, and any reissues, extensions or renewals of any of the foregoing and (y) the goodwill associated with any of the foregoing.

“ Varex Operating Activities ” shall mean (a) the design, development, manufacture, marketing, sale, distribution and service of (i) X-ray imaging components and subsystems, including X-ray tubes, flat panel digital image detectors and accessories, high voltage power supplies and generators, high voltage connectors, imaging processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices and systems, klystrons, high radio frequency amplifiers, ionization chambers, and buckys, but not linear accelerators, in each case for medical and medical research applications and in each case for sale, directly or indirectly, to medical imaging and therapeutic original equipment manufacturers; independent service companies and distributors; and medical end-users for replacement purposes, and (ii) X-ray imaging components, subsystems and systems, including X-ray tubes, flat panel digital image detectors and accessories, high voltage power supplies and generators, high voltage connectors, imaging processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices and systems, klystrons, high radio frequency amplifiers, ionization chambers, buckys, and linear accelerators, in each case for cargo screening, security and industrial applications, including scientific and research applications related thereto; and (b) the activities set forth on Schedule 1.13 .

“ Varex Other IP ” shall mean (a) all Other IP that is (x) not Accelerator Technology, (y) owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time and (z) primarily used or primarily held for use in the Varex Business; (b) all Other IP that is (x) Accelerator Technology, (y) owned or licensed by either Party or any member of its Group as of immediately prior to the Effective Time and (z) exclusively used or exclusively held for use in the Varex Business; and (c) the Other IP set forth on Schedule 1.14 ; provided , however , that Varex Other IP shall not include (1) the Other IP set forth on Schedule 1.4 or (2) the Parent Name and Parent Marks.

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“ Varex Panel Permitted Third Party ” shall mean (a) any Third Party that, during the eighteen (18) month period ending on the Distribution Date, purchased from the Varex Business a flat panel digital image detector in the Varian Field, but excluding (b) any Third Party that acquires or is acquired by (whether structured as an acquisition of assets, stock, merger or otherwise) a Third Party described in clause (a) above (unless such acquiring or acquired Third Party independently meets the description in clause (a) above).

“ Varex Patents ” shall mean: (a) the Patents set forth on Schedule 1.15 ; (b) any patent issuing on any patent application set forth on Schedule 1.15 ; (c) any patent claims issuing on any patent application that claims priority from, and that cover exclusively subject matter that is entitled to priority to, any patent or patent application set forth on Schedule 1.15 (including, but not limited to, any divisional, continuation, continuation-in-part, reissue, reexamination, or extension) with a priority date that is on or before the Distribution Date; (d) any foreign counterpart of any of the foregoing patents and patent applications with a priority date that is on or before the Distribution Date; and (e) any patent issuing and originating from any submitted Varex Invention Disclosure.

“ Varex Permits ” shall mean all Permits owned or licensed by either Party or any member of its Group primarily used or primarily held for use in the Varex Business as of the Effective Time.

“ Varex Real Property ” shall mean (a) all of the Real Property owned by either Party or member of its Group as of the Effective Time listed or described on Schedule 1.16(a) , (b) the Real Property Leases to which either Party or member of its Group is party as of the Effective Time set forth on Schedule 1.16(b) (“ Varex Leases ”), and (c) all recorded Real Property notices, easements, and obligations with respect to the Real Property and/or Real Property leases described in clauses (a) and (b) of this paragraph.

“ Varex Registered IP ” shall mean the Registered IP set forth on Schedule 1.17 .

“ Varex Restricted Activities ” shall have the meaning set forth in Section 5.8(a) .

“ Varex Shares ” shall mean the shares of common stock, par value $0.01 per share, of Varex.

“ Varex Software ” shall mean (a) all Software owned or licensed by either Party or member of its Group exclusively used or exclusively held for use in the Varex Business as of immediately prior to the Effective Time, and (b) the Software set forth on Schedule 1.18 ; provided , however , that Varex Software shall not include the Software set forth on Schedule 1.7 .

“ Varian Field ” has the meaning set forth in the Intellectual Property Matters Agreement.

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ARTICLE II

THE SEPARATION

2.1 Transfer of Assets and Assumption of Liabilities .

(a) On or prior to the Effective Time, but in any case prior to the Distribution, in accordance with the plan and structure set forth on Schedule 2.1(a) (the “ Plan of Reorganization ”):

(i) Transfer and Assignment of Varex Assets . Parent shall, and shall cause the applicable members of its Group to, contribute, assign, transfer, convey and deliver to Varex, or the applicable Varex Designees, and Varex or such Varex Designees shall accept from Parent and the applicable members of the Parent Group, all of Parent’s and such Parent Group member’s respective direct or indirect right, title and interest in and to all of the Varex Assets (it being understood that if any Varex Asset shall be held by a Transferred Entity or a wholly owned Subsidiary of a Transferred Entity, such Varex Asset may be assigned, transferred, conveyed and delivered to Varex as a result of the transfer of all of the equity interests in such Transferred Entity from Parent or the applicable members of the Parent Group to Varex or the applicable Varex Designee);

(ii) Acceptance and Assumption of Varex Liabilities . Varex and the applicable Varex Designees shall accept, assume and agree faithfully to perform, discharge and fulfill all the Varex Liabilities in accordance with their respective terms (it being understood that if any Varex Liability is a liability of a Transferred Entity or a wholly owned Subsidiary of a Transferred Entity, such Varex Liability may be assumed by Varex as a result of the transfer of all of the equity interests in such Transferred Entity from Parent or the applicable members of the Parent Group to Varex or the applicable Varex Designee). Varex and such Varex Designees shall be responsible for all Varex Liabilities, regardless of when or where such Varex Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Varex Liabilities are asserted or determined (including any Varex Liabilities arising out of claims made by Parent’s or Varex’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the Varex Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the Varex Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates;

(iii) Transfer and Assignment of Parent Assets . Parent and Varex shall cause Varex and the Varex Designees to contribute, assign, transfer, convey and deliver to Parent or certain members of the Parent Group designated by Parent, and Parent or such other members of the Parent Group shall accept from Varex and the Varex Designees, all of Varex’s and such Varex Designees’ respective direct or indirect right, title and interest in and to all Parent Assets held by Varex or a Varex Designee; and

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(iv) Acceptance and Assumption of Parent Liabilities . Parent and certain of members of the Parent Group designated by Parent shall accept and assume and agree faithfully to perform, discharge and fulfill all of the Parent Liabilities held by Varex or any Varex Designee and Parent and the applicable members of the Parent Group shall be responsible for all Parent Liabilities in accordance with their respective terms, regardless of when or where such Parent Liabilities arose or arise, whether the facts on which they are based occurred prior to or subsequent to the Effective Time, where or against whom such Parent Liabilities are asserted or determined (including any such Parent Liabilities arising out of claims made by Parent’s or Varex’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the Varex Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the Varex Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates.

(b) Transfer Documents . In furtherance of the contribution, assignment, transfer, conveyance and delivery of the Assets and the assumption of the Liabilities in accordance with Section 2.1(a) , (i) each Party shall execute and deliver, and shall cause the applicable members of its Group to execute and deliver, to the other Party, such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of such Party’s and the applicable members of its Group’s right, title and interest in and to such Assets to the other Party and the applicable members of its Group in accordance with Section 2.1(a) , and (ii) each Party shall execute and deliver, and shall cause the applicable members of its Group to execute and deliver, to the other Party, such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Liabilities by such Party and the applicable members of its Group in accordance with Section 2.1(a) . All of the foregoing documents contemplated by this Section 2.1(b) shall be referred to collectively herein as the “ Transfer Documents .”

(c) Misallocations . In the event that at any time or from time to time (whether prior to, at or after the Effective Time), one Party (or any member of such Party’s Group) shall receive or otherwise possess any Asset that is allocated to the other Party (or any member of such Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such Party shall promptly transfer, or cause to be transferred, such Asset to the Party so entitled thereto (or to any member of such Party’s Group), and such Party (or member of such Party’s Group) shall accept such Asset. Prior to any such transfer, the Person receiving or possessing such Asset shall hold such Asset in trust for such other Person. In the event that at any time or from time to time (whether prior to, at or after the Effective Time), one Party hereto (or any member of such Party’s Group) shall be liable for or otherwise assume any Liability that is allocated to the other Party (or any member of such Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such other Party shall promptly assume, or cause to be assumed, such Liability and agree to faithfully perform such Liability.

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(d) Waiver of Bulk-Sale and Bulk-Transfer Laws . Varex hereby waives compliance by each and every member of the Parent Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Varex Assets to any member of the Varex Group. Parent hereby waives compliance by each and every member of the Varex Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Parent Assets to any member of the Parent Group.

(e) Intellectual Property Rights .

(i) If and to the extent that, as a matter of Law in any jurisdiction, Parent or the applicable members of its Group cannot assign, transfer or convey any of Parent’s or such Parent Group members’ respective direct or indirect right, title and interest in and to any Technology, Software or Intellectual Property included in the Varex Assets, then, to the extent possible, Parent shall, and shall cause the applicable members of its Group to, irrevocably grant to Varex, or the applicable Varex Designees, an exclusive, irrevocable, assignable, transferable, sublicenseable, worldwide, perpetual, royalty-free license to use, exploit and commercialize in any manner now known or in the future discovered and for whatever purpose, any such right, title or interest.

(ii) If and to the extent that, as a matter of Law in any jurisdiction, Varex or the applicable members of its Group cannot assign, transfer or convey any of Varex’s or such Varex Group members’ respective direct or indirect right, title and interest in and to any Technology, Software or Intellectual Property included in the Parent Assets, then, to the extent possible, Varex shall, and shall cause the applicable members of its Group to, irrevocably grant to Parent, or the applicable Parent Designees, an exclusive, irrevocable, assignable, transferable, sublicenseable, worldwide, perpetual, royalty-free license to use, exploit and commercialize in any manner now known or in the future discovered and for whatever purpose, any such right, title or interest.

2.2 Varex Assets; Parent Assets .

(a) Varex Assets . For purposes of this Agreement, “ Varex Assets ” shall mean:

(i) all issued and outstanding capital stock or other equity interests of the Transferred Entities that are owned by either Party or any members of its Group as of the Effective Time;

(ii) all Assets of either Party or any members of its Group included or reflected as assets of the Varex Group on the Varex Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the Varex Balance Sheet; provided that the amounts set forth on the Varex Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Varex Assets pursuant to this clause (ii);

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(iii) all Assets of either Party or any of the members of its Group as of the Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets of Varex or members of the Varex Group on a pro forma combined balance sheet of the Varex Group or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Assets included on the Varex Balance Sheet), it being understood that (x) the Varex Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of Varex Assets pursuant to this clause (iii); and (y) the amounts set forth on the Varex Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Varex Assets pursuant to this clause (iii);

(iv) all Assets of either Party or any of the members of its Group as of the Effective Time that are expressly provided by any provision of this Agreement or any Ancillary Agreement as Assets to be transferred to or owned by Varex or any other member of the Varex Group;

(v) all Varex Contracts as of the Effective Time and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(vi) all Varex Intellectual Property and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(vii) all Varex Information Technology and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(viii) all rights of Varex and any member of the Varex Group under any license or sublicense of Technology, Software or Intellectual Property granted by Parent or any member of the Parent Group pursuant to the terms of the Intellectual Property Matters Agreement or the Trademark License Agreement; provided , for clarity, that this clause (viii) is not intended and shall not be construed to grant to Varex or any member of the Varex Group any rights in addition to those otherwise granted to them under the Intellectual Property Matters Agreement and the Trademark License Agreement;

(ix) all Varex Permits as of the Effective Time and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(x) all Varex Real Property as of the Effective Time;

(xi) to the extent not already identified in clauses (i) through (xi) of this Section 2.2(a) , all Assets of either Party or any of the members of its Group as of the Effective Time that are exclusively used or exclusively held for use in the Varex Business; and

(xii) any and all Assets set forth on Schedule 2.2(a) .

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Notwithstanding the foregoing, the Varex Assets shall not in any event include any Asset referred to in clauses (i) through (ix) of Section 2.2(b) .

(b) Parent Assets . For the purposes of this Agreement, “ Parent Assets ” shall mean all Assets of either Party or the members of its Group as of the Effective Time, other than the Varex Assets. Notwithstanding anything herein to the contrary, the Parent Assets shall include:

(i) all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by Parent or any other member of the Parent Group;

(ii) all contracts and agreements of either Party or any of the members of its Group as of the Effective Time (other than the Varex Contracts);

(iii) all Parent Intellectual Property and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(iv) all Parent Information Technology and all rights, interests or claims of either Party or any of the members of its Group thereunder as of the Effective Time;

(v) all rights of Parent and any member of the Parent Group under any license or sublicense of Technology, Software or Intellectual Property granted by Varex or any member of the Varex Group pursuant to the terms of the Intellectual Property Matters Agreement; provided, for clarity, that this clause (v) is not intended and shall not be construed to grant to Parent or any member of the Parent Group any rights in addition to those otherwise granted to them under the Intellectual Property Matters Agreement;

(vi) all Permits of either Party or any of the members of its Group as of the Effective Time (other than the Varex Permits);

(vii) all Real Property of either Party or any of the members of its Group as of the Effective Time (other than the Varex Real Property);

(viii) all cash and cash equivalents of either Party or any of the members of its Group as of the Effective Time (other than (x) cash and cash equivalents of Varex or any other member of the Varex Group (other than MeVis Medical Solutions AG) as of the Effective Time in an aggregate amount that does not exceed the Maximum Cash Amount), (y) cash and cash equivalents of MeVis Medical Solutions AG and (z) subject to 2.4(e), the Delayed Varex Asset Consideration);and

(ix) any and all Assets set forth on Schedule 2.2(b)(viii) .

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2.3 Varex Liabilities; Parent Liabilities .

(a) Varex Liabilities . For the purposes of this Agreement, “ Varex Liabilities ” shall mean the following Liabilities of either Party or any of the members of its Group:

(i) all Liabilities included or reflected as liabilities or obligations of Varex or the members of the Varex Group on the Varex Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Varex Balance Sheet; provided that the amounts set forth on the Varex Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Varex Liabilities pursuant to this clause (i);

(ii) all Liabilities as of the Effective Time that are of a nature or type that would have resulted in such Liabilities being included or reflected as liabilities or obligations of Varex or the members of the Varex Group on a pro forma combined balance sheet of the Varex Group or any notes or subledgers thereto as of the Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Liabilities included on the Varex Balance Sheet ), it being understood that (x) the Varex Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of Varex Liabilities pursuant to this clause (ii); and (y) the amounts set forth on the Varex Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Varex Liabilities pursuant to this clause (ii);

(iii) all Liabilities, including any Environmental Liabilities, relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent that such Liabilities relate to, arise out of or result from the Varex Business or a Varex Asset, other than Shared Liabilities;

(iv) any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by Varex or any other member of the Varex Group, and all agreements, obligations and Liabilities of any member of the Varex Group under this Agreement or any of the Ancillary Agreements;

(v) all Liabilities relating to, arising out of or resulting from the Varex Contracts, the Varex Financing Arrangements, the Varex Intellectual Property, the Varex Information Technology, the Varex Permits, or the Varex Real Property, other than Shared Liabilities;

(vi) twenty percent (20%) of the Shared Liabilities that are allocated to Parent pursuant to the 1999 Spin Agreement;

(vii) any and all Liabilities set forth on Schedule 2.3(a) ; and

(viii) all Liabilities arising out of claims made by any Third Party (including Parent’s or Varex’s respective directors, officers, stockholders, employees and agents) against any member of the Parent Group or the Varex Group to the extent relating to, arising out of or resulting from the Varex Business or the Varex Assets, other than Shared Liabilities, or the other business, operations, activities or Liabilities referred to in clauses (i) through (vii) above;

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provided that, notwithstanding the foregoing, the Parties agree that the Liabilities set forth on Schedule 2.3(b) shall not be Varex Liabilities but instead shall be Parent Liabilities.

(b) Parent Liabilities . For the purposes of this Agreement, “ Parent Liabilities ” shall mean the following Liabilities of either Party or any of the members of its Group:

(i) all Liabilities, including any Environmental Liabilities, relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time) of any member of the Parent Group and, prior to the Effective Time, any member of the Varex Group, in each case, to the extent that such Liabilities are not Varex Liabilities or Shared Liabilities;

(ii) all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by Parent or any other member of the Parent Group, and all agreements, obligations and Liabilities of any member of the Parent Group under this Agreement or any of the Ancillary Agreements;

(iii) eighty percent (80%) of the Shared Liabilities that are allocated to Parent pursuant to the 1999 Spin Agreement;

(iv) all Liabilities set forth on Schedule 2.3(b) ;

(v) all Liabilities arising out of claims made by any Third Party (including Parent’s or Varex’s respective directors, officers, stockholders, employees and agents) against any member of the Parent Group or the Varex Group to the extent relating to, arising out of or resulting from the Parent Business or the Parent Assets, other than Shared Liabilities, or the other business, operations, activities or Liabilities referred to in clauses (i) through (iv) above.

2.4 Approvals and Notifications .

(a) Approvals and Notifications for Varex Assets . To the extent that the transfer or assignment of any Varex Asset, the assumption of any Varex Liability, the Separation, or the Distribution requires any Approvals or Notifications, the Parties shall use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided , however , that, except to the extent expressly provided in this

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Agreement or any of the Ancillary Agreements or as otherwise agreed between Parent and Varex, neither Parent nor Varex shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.

(b) Delayed Varex Transfers . If and to the extent that the valid, complete and perfected transfer or assignment to the Varex Group of any Varex Asset or assumption by the Varex Group of any Varex Liability in connection with the Separation or the Distribution would be a violation of applicable Law or require any Approvals or Notifications that have not been obtained or made by the Effective Time then, unless the Parties mutually shall otherwise determine, the transfer or assignment to the Varex Group of such Varex Assets or the assumption by the Varex Group of such Varex Liabilities, as the case may be, shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such Varex Assets or Varex Liabilities shall continue to constitute Varex Assets and Varex Liabilities for all other purposes of this Agreement.

(c) Treatment of Delayed Varex Assets and Delayed Varex Liabilities . If any transfer or assignment of any Varex Asset (or a portion thereof) or any assumption of any Varex Liability (or a portion thereof) intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated on or prior to the Effective Time, whether as a result of the provisions of Section 2.4(b) or for any other reason (any such Varex Asset (or a portion thereof), a “ Delayed Varex Asset ” and any such Varex Liability (or a portion thereof), a “ Delayed Varex Liability ”), then, insofar as reasonably possible and subject to applicable Law, the member of the Parent Group retaining such Delayed Varex Asset or such Delayed Varex Liability, as the case may be, shall thereafter hold such Delayed Varex Asset or Delayed Varex Liability, as the case may be, for the use and benefit (or the performance and obligation, in the case of a Liability) of the member of the Varex Group entitled thereto (at the expense of the member of the Varex Group entitled thereto). In addition, the member of the Parent Group retaining such Delayed Varex Asset or such Delayed Varex Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed Varex Asset or Delayed Varex Liability in the ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the member of the Varex Group to whom such Delayed Varex Asset is to be transferred or assigned, or which will assume such Delayed Varex Liability, as the case may be, in order to place such member of the Varex Group in a substantially similar position as if such Delayed Varex Asset or Delayed Varex Liability had been transferred, assigned or assumed as contemplated hereby and so that all the benefits and burdens relating to such Delayed Varex Asset or Delayed Varex Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such Delayed Varex Asset or Delayed Varex Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Effective Time to the Varex Group.

(d) Transfer of Delayed Varex Assets and Delayed Varex Liabilities . If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Delayed Varex Asset or the deferral of assumption of any Delayed Varex Liability pursuant to Section 2.4(b) , are obtained or made, and, if and when any other legal

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impediments for the transfer or assignment of any Delayed Varex Asset or the assumption of any Delayed Varex Liability have been removed, the transfer or assignment of the applicable Delayed Varex Asset or the assumption of the applicable Delayed Varex Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.

(e) Costs for Delayed Varex Assets and Delayed Varex Liabilities; Payment of the Delayed Varex Asset Consideration . Except as otherwise agreed in writing between the Parties, any member of the Parent Group retaining a Delayed Varex Asset or Delayed Varex Liability due to the deferral of the transfer or assignment of such Delayed Varex Asset or the deferral of the assumption of such Delayed Varex Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by Varex or the member of the Varex Group entitled to the Delayed Varex Asset or Delayed Varex Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by Varex or the member of the Varex Group entitled to such Delayed Varex Asset or Delayed Varex Liability. Notwithstanding the foregoing, with respect to the Delayed Varex Assets subject to the agreements or arrangements set forth on Schedule 1.1(b) , no member of the Parent Group shall have any obligation to transfer or convey such Delayed Varex Asset to any member of the Varex Group unless and until Varex or another member of the Varex Group pays to Parent or another member of the Parent Group the portion of the Delayed Varex Asset Consideration that is required to be paid for such Delayed Varex Asset pursuant to the applicable agreement or arrangement set forth on Schedule 1.1(b) . If a Delayed Varex Asset is not transferred or conveyed to the relevant member of the Varex Group in the time period specified pursuant to the agreements or arrangements set forth on Schedule 1.1(b) , then Varex shall pay or cause to be paid an amount in cash equal to the portion of Varex Delayed Asset Consideration that relates to such Delayed Varex Asset to Parent by wire transfer of immediately available funds to an account or accounts designated in writing by Parent to Varex within five (5) Business Days after the expiration of such time period.

(f) Approvals and Notifications for Parent Assets . To the extent that the transfer or assignment of any Parent Asset, the assumption of any Parent Liability, the Separation or the Distribution requires any Approvals or Notifications, the Parties shall use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable; provided , however , that, except to the extent expressly provided in this Agreement or any of the Ancillary Agreements or as otherwise agreed between Parent and Varex, neither Parent nor Varex shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any Person in order to obtain or make such Approvals or Notifications.

(g) Delayed Parent Transfers . If and to the extent that the valid, complete and perfected transfer or assignment to the Parent Group of any Parent Asset or assumption by the Parent Group of any Parent Liability in connection with the Separation or the Distribution would be a violation of applicable Law or require any Approvals or Notifications that have not been obtained or made by the Effective Time then, unless the Parties mutually shall otherwise determine, the transfer or assignment to the Parent Group of such Parent Assets or the assumption by the Parent Group of such Parent Liabilities, as the case may be, shall be

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automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such Parent Assets or Parent Liabilities shall continue to constitute Parent Assets and Parent Liabilities for all other purposes of this Agreement.

(h) Treatment of Delayed Parent Assets and Delayed Parent Liabilities . If any transfer or assignment of any Parent Asset (or a portion thereof) or any assumption of any Parent Liability (or a portion thereof) intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated on or prior to the Effective Time whether as a result of the provisions of Section 2.4(g) or for any other reason (any such Parent Asset (or a portion thereof), a “ Delayed Parent Asset ” and any such Parent Liability (or a portion thereof), a “ Delayed Parent Liability ”), then, insofar as reasonably possible and subject to applicable Law, the member of the Varex Group retaining such Delayed Parent Asset or such Delayed Parent Liability, as the case may be, shall thereafter hold such Delayed Parent Asset or Delayed Parent Liability, as the case may be, for the use and benefit (or the performance or obligation, in the case of a Liability) of the member of the Parent Group entitled thereto (at the expense of the member of the Parent Group entitled thereto). In addition, the member of the Varex Group retaining such Delayed Parent Asset or such Delayed Parent Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed Parent Asset or Delayed Parent Liability in the ordinary course of business in accordance with past practice. Such member of the Varex Group shall also take such other actions as may be reasonably requested by the member of the Parent Group to which such Delayed Parent Asset is to be transferred or assigned, or which will assume such Delayed Parent Liability, as the case may be, in order to place such member of the Parent Group in a substantially similar position as if such Delayed Parent Asset or Delayed Parent Liability had been transferred, assigned or assumed and so that all the benefits and burdens relating to such Delayed Parent Asset or Delayed Parent Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such Delayed Parent Asset or Delayed Parent Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Effective Time to the Parent Group.

(i) Transfer of Delayed Parent Assets and Delayed Parent Liabilities . If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Delayed Parent Asset or the deferral of assumption of any Delayed Parent Liability pursuant to Section 2.4(g) , are obtained or made, and, if and when any other legal impediments for the transfer or assignment of any Delayed Parent Asset or the assumption of any Delayed Parent Liability have been removed, the transfer or assignment of the applicable Delayed Parent Asset or the assumption of the applicable Delayed Parent Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.

(j) Costs for Delayed Parent Assets and Delayed Parent Liabilities . Except as otherwise agreed in writing between the Parties, any member of the Varex Group retaining a Delayed Parent Asset or Delayed Parent Liability due to the deferral of the transfer or assignment of such Delayed Parent Asset or the deferral of the assumption of such Delayed Parent Liability, as the case may be, shall not be obligated, in connection with the foregoing, to

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expend any money unless the necessary funds are advanced (or otherwise made available) by Parent or the member of the Parent Group entitled to the Delayed Parent Asset or Delayed Parent Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by Parent or the member of the Parent Group entitled to such Delayed Parent Asset or Delayed Parent Liability.

2.5 Assignment and Novation of Liabilities .

(a) Assignment and Novation of Varex Liabilities.

(i) Each of Parent and Varex, at the request of the other, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all Varex Liabilities and obtain in writing the unconditional release of each member of the Parent Group that is a party to any such arrangements, so that, in any such case, the members of the Varex Group shall be solely responsible for such Varex Liabilities; provided , however , that, except as otherwise expressly provided in this Agreement or any of the Ancillary Agreements, neither Parent nor Varex shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any third Person from whom any such consent, substitution, approval, amendment or release is requested.

(ii) If Parent or Varex is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release and the applicable member of the Parent Group continues to be bound by such agreement, lease, license or other obligation or Liability (each, an “ Unreleased Varex Liability ”), Varex shall, to the extent not prohibited by Law, as indemnitor, guarantor, agent or subcontractor for such member of the Parent Group, as the case may be, (A) pay, perform and discharge fully all the obligations or other Liabilities of such member of the Parent Group that constitute Unreleased Varex Liabilities from and after the Effective Time and (B) use its commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the Parent Group. If and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased Varex Liabilities shall otherwise become assignable or able to be novated, Parent shall promptly assign, or cause to be assigned, and Varex or the applicable Varex Group member shall assume, such Unreleased Varex Liabilities without exchange of further consideration.

(b) Assignment and Novation of Parent Liabilities.

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such case, the members of the Parent Group shall be solely responsible for such Parent Liabilities; provided , however , that, except as otherwise expressly provided in this Agreement or any of the Ancillary Agreements, neither Parent nor Varex shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation) to any third Person from whom any such consent, substitution, approval, amendment or release is requested.

(ii) If Parent or Varex is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release and the applicable member of the Varex Group continues to be bound by such agreement, lease, license or other obligation or Liability (each, an “ Unreleased Parent Liability ”), Parent shall, to the extent not prohibited by Law, as indemnitor, guarantor, agent or subcontractor for such member of the Varex Group, as the case may be, (i) pay, perform and discharge fully all the obligations or other Liabilities of such member of the Varex Group that constitute Unreleased Parent Liabilities from and after the Effective Time and (ii) use its commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the Varex Group. If and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased Parent Liabilities shall otherwise become assignable or able to be novated, Varex shall promptly assign, or cause to be assigned, and Parent or the applicable Parent Group member shall assume, such Unreleased Parent Liabilities without exchange of further consideration.

2.6 Release of Guarantees . In furtherance of, and not in limitation of, the obligations set forth in Section 2.5 :

(a) On or prior to the Effective Time or as soon as practicable thereafter, each of Parent and Varex shall, with the reasonable cooperation of such other Party and the applicable member(s) of such other Party’s Group, use commercially reasonable efforts to (i) have any member(s) of the Parent Group removed as guarantor of or obligor for any Varex Liability, other than any Varex Liability set forth on Schedule 2.6(a) , including the removal of any Security Interest on or in any Parent Asset that may serve as collateral or security for any such Varex Liability; and (ii) have any member(s) of the Varex Group removed as guarantor of or obligor for any Parent Liability, including the removal of any Security Interest on or in any Varex Asset that may serve as collateral or security for any such Parent Liability.

(b) To the extent required to obtain a release from a guarantee of:

(i) any member of the Parent Group, Varex shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any Parent Asset that may serve as collateral or security for any such Varex Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (i) with which Varex would be reasonably unable to comply or (ii) which Varex would not reasonably be able to avoid breaching; and

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(ii) any member of the Varex Group, Parent shall execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any Varex Asset that may serve as collateral or security for any such Parent Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (i) with which Parent would be reasonably unable to comply or (ii) which Parent would not reasonably be able to avoid breaching.

(c) If Parent or Varex is unable to obtain, or to cause to be obtained, any such required removal or release, or is expressly not required to do so, in each case as set forth in clauses (a) and (b) of this Section 2.6 , (i) the Party or the relevant member of its Group that is responsible pursuant to this Agreement for the Liability associated with such guarantee shall indemnify, defend and hold harmless the guarantor or obligor, as applicable, against or from any Liability arising from or relating thereto in accordance with the provisions of Article IV and shall, as agent or subcontractor for such guarantor or obligor, pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder; and (ii) each of Parent and Varex, on behalf of itself and the other members of their respective Group, agree not to renew or extend the term of, increase any obligations under, or transfer to a Third Party, any loan, guarantee, lease, contract or other obligation for which the other Party or a member of its Group is or may be liable unless all obligations of such other Party and the members of such other Party’s Group with respect thereto are thereupon terminated by documentation satisfactory in form and substance to such other Party.

2.7 Termination of Agreements .

(a) Except as set forth in Section 2.7(b) , in furtherance of the releases and other provisions of Section 4.1 , Varex and each member of the Varex Group, on the one hand, and Parent and each member of the Parent Group, on the other hand, hereby terminate any and all agreements, arrangements, commitments or understandings, whether or not in writing, between or among Varex and/or any member of the Varex Group, on the one hand, and Parent and/or any member of the Parent Group, on the other hand, effective as of the Effective Time. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time. Each Party shall, at the reasonable request of the other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) The provisions of Section 2.7(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement, the Ancillary Agreements and the Commercial Agreements (and each other agreement or instrument expressly contemplated by this Agreement, any Ancillary Agreement or any Commercial Agreement to be entered into by any of the Parties or any of the members of their respective Groups or to be continued from and after the Effective Time); (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.7(b)(ii) ;

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(iii) any agreements, arrangements, commitments or understandings to which any Third Party is a party thereto; (iv) any intercompany accounts payable or accounts receivable accrued as of the Effective Time that are reflected in the books and records of the Parties or otherwise documented in writing in accordance with past practices, which shall be settled in the manner contemplated by Section 2.7(c) ; (v) any agreements, arrangements, commitments or understandings to which any non-wholly owned Subsidiary of Parent or Varex, as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests will be disregarded for purposes of determining whether a Subsidiary is wholly owned); and (vi) any Shared Contracts.

(c) All of the intercompany accounts receivable and accounts payable between any member of the Parent Group, on the one hand, and any member of the Varex Group, on the other hand, outstanding as of the Effective Time and arising out of the contracts or agreements described in Section 2.7(b) or out of the provision, prior to the Effective Time, of the services to be provided following the Effective Time pursuant to the Ancillary Agreements or the Commercial Agreements shall be repaid or settled following the Effective Time in the ordinary course of business or, if otherwise mutually agreed prior to the Effective Time by duly authorized representatives of Parent and Varex, cancelled. All other intercompany accounts receivable and accounts payable between any member of the Parent Group, on the one hand, and any member of the Varex Group, on the other hand, outstanding as of the Effective Time shall be repaid or settled immediately prior to or as promptly as practicable after the Effective Time.

2.8 Treatment of Shared Contracts .

(a) Subject to applicable Law and without limiting the generality of the obligations set forth in Section 2.1 , unless the Parties otherwise agree or the benefits of any contract, agreement, arrangement, commitment or understanding described in this Section 2.8 are expressly conveyed to the applicable Party pursuant to this Agreement or an Ancillary Agreement, any contract or agreement, a portion of which is a Varex Contract, but the remainder of which is a Parent Asset (any such contract or agreement, a “ Shared Contract ”), shall be assigned in relevant part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to, on or after the Effective Time, so that each Party or the member of its Group shall, as of the Effective Time, be entitled to the rights and benefits, and shall assume the related portion of any Liabilities, inuring to its respective businesses; provided , however , that (i) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a portion of any Shared Contract which is not assignable (or cannot be amended) by its terms (including any terms imposing consents or conditions on an assignment where such consents or conditions have not been obtained or fulfilled) and (ii) if any Shared Contract cannot be so partially assigned by its terms or otherwise, or cannot be amended or if such assignment or amendment would impair the benefit the parties thereto derive from such Shared Contract, then the Parties shall, and shall cause each of the members of their respective Groups to, take such other reasonable and permissible actions (including by providing prompt notice to the other Party with respect to any relevant claim of Liability or other relevant matters arising in connection with a Shared Contract so as to allow such other Party the ability to exercise any applicable rights under such Shared Contract) to cause a member of the Varex Group or the Parent Group, as the case may be, to receive the rights and benefits of that portion of each Shared Contract that relates to the Varex Business or

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the Parent Business, as the case may be (in each case, to the extent so related), as if such Shared Contract had been assigned to a member of the applicable Group (or amended to allow a member of the applicable Group to exercise applicable rights under such Shared Contract) pursuant to this Section 2.8 , and to bear the burden of the corresponding Liabilities (including any Liabilities that may arise by reason of such arrangement), as if such Liabilities had been assumed by a member of the applicable Group pursuant to this Section 2.8 .

(b) Each of Parent and Varex shall, and shall cause the members of its Group to, (i) treat for all Tax purposes the portion of each Shared Contract inuring to its respective businesses as an Asset owned by, and/or a Liability of, as applicable, such Party, or the members of its Group, as applicable, not later than the Effective Time, and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by applicable Law).

(c) Nothing in this Section 2.8 shall require any member of any Group to make any non- de minimis payment (except to the extent advanced, assumed or agreed in advance to be reimbursed by any member of the other Group), incur any non- de minimis obligation or grant any non- de minimis concession for the benefit of any member of any other Group in order to effect any transaction contemplated by this Section 2.8 .

2.9 Bank Accounts; Cash Balances .

(a) Each Party agrees to take, or cause the members of its Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by Varex or any other member of the Varex Group (collectively, the “ Varex Accounts ”) and all contracts or agreements governing each bank or brokerage account owned by Parent or any other member of the Parent Group (collectively, the “ Parent Accounts ”) so that each such Varex Account and Parent Account, if currently Linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “ Linked ”) to any Parent Account or Varex Account, respectively, is de-Linked from such Parent Account or Varex Account, respectively.

(b) It is intended that, following consummation of the actions contemplated by Section 2.9(a) , there will be in place a cash management process pursuant to which the Varex Accounts will be managed and funds collected will be transferred into one (1) or more accounts maintained by Varex or a member of the Varex Group.

(c) It is intended that, following consummation of the actions contemplated by Section 2.9(a) , there will continue to be in place a cash management process pursuant to which the Parent Accounts will be managed and funds collected will be transferred into one (1) or more accounts maintained by Parent or a member of the Parent Group.

(d) With respect to any outstanding checks issued or payments initiated by Parent, Varex, or any of the members of their respective Groups prior to the Effective Time, such outstanding checks and payments shall be honored following the Effective Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated, respectively.

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(e) As between Parent and Varex (and the members of their respective Groups), all payments made and reimbursements received after the Effective Time by either Party (or member of its Group) that relate to a business, Asset or Liability of the other Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, promptly following receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement without right of set-off.

(f) It is understood and agreed that, effective as of the Effective Time, Varex and members of the Varex Group shall not have cash and cash equivalents in an aggregate amount that exceeds the Maximum Cash Amount; provided that cash and cash equivalents of MeVis Medical Solutions AG shall not be included in the calculation of Maximum Cash Amount; provided, further, that, subject to 2.4(e), the Varex Delayed Asset Consideration shall not be included in the Maximum Cash Amount.

(g) Within thirty (30) days after the Distribution Date, Varex shall cause to be prepared in good faith and delivered to Parent a balance sheet (the “ Balance Sheet ”) setting forth cash and cash equivalents held by each member of the Varex Group as of the Effective Time (the aggregate amount of such cash and cash equivalents (other than the Delayed Varex Asset Consideration and cash and cash equivalents held by MeVis Medical Solutions AG as of the Effective Time), the “ Final Cash Balance ”). For a period of sixty (60) days following delivery by Varex of the Balance Sheet or such longer period as Parent is disputing the amount of cash and/or cash equivalents reflected in the Balance Sheet, Parent may review and analyze the Balance Sheet and Varex shall cooperate with and make available to Parent and its Representatives all information, records, data and working papers, in each case, to the extent related to the determination of the amount of cash and cash equivalents held by the members of the Varex Group as of the Effective Time, and Varex shall permit access to its facilities and personnel, as may be reasonably required in connection with the review and analysis of the Balance Sheet.

(h) If the Final Cash Balance exceeds the Maximum Cash Amount, then Varex shall pay or cause to be paid an amount in cash equal to such difference to Parent by wire transfer of immediately available funds to an account or accounts designated in writing by Parent to Varex within five (5) Business Days after the date of delivery of the Balance Sheet. Any such payment shall be treated by the Parties for all purposes as an adjustment to the Cash Transfer. For the avoidance of doubt, if the Maximum Cash Amount is equal to or less than the Final Cash Balance, then Parent or any member of the Parent Group shall not have any obligation to pay or provide any cash or cash equivalents to any member of the Varex Group.

(i) If Parent disagrees with the amount of cash and/or cash equivalents reflected in the Balance Sheet, Parent and Varex shall attempt to resolve the dispute in good faith for thirty (30) days following the delivery to Parent of the Balance Sheet. Following such thirty (30) day period, Parent shall be entitled to dispute such amount or amounts pursuant to Article VII and shall be entitled to make an Arbitration Request without first complying with Section 7.1 or Section 7.2 .

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2.10 Varex Financing Arrangements; Cash Transfer .

(a) Prior to the Effective Time, (i) Varex and/or other members of the Varex Group will enter into one or more financing arrangements and agreements, as set forth on Schedule 2.10 (the “ Varex Financing Arrangements ”), pursuant to which they shall borrow prior to the Effective Time a principal amount of not less than $[●], and (ii) in connection with the Separation, the Contribution and Distribution, and in partial consideration for the assets to be transferred to Varex pursuant to the Contribution, Varex shall transfer to Parent a portion of the proceeds from the Varex Financing Arrangements (in an amount equal to $[●]) (the “ Cash Transfer ”). Parent shall hold the proceeds of the Cash Transfer in a segregated bank account and, as promptly as practicable following the receipt of the Cash Transfer (and in any event within 12 months following the Distribution), Parent shall use the proceeds from the Cash Transfer to make payments to third-party creditors or stockholders of Parent. Parent and Varex agree to take all necessary actions to assure the full release and discharge of Parent and the other members of the Parent Group from any and all obligations pursuant to the Varex Financing Arrangements as of no later than the Effective Time. The Parties agree that Varex or another member of the Varex Group, as the case may be, and not Parent or any member of the Parent Group, are and shall be responsible for all costs and expenses incurred in connection with the Varex Financing Arrangements.

(b) Prior to the Effective Time, Parent and Varex shall cooperate in the preparation of all materials as may be necessary or advisable to execute the Varex Financing Arrangements.

2.11 Ancillary Agreements . Effective on or prior to the Effective Time, each of Parent and Varex will, or will cause the applicable members of their Groups to, execute and deliver all Ancillary Agreements to which it is a party.

2.12 Disclaimer of Representations and Warranties . EACH OF PARENT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE PARENT GROUP) AND VAREX (ON BEHALF OF ITSELF AND EACH MEMBER OF THE VAREX GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT OR COMMERCIAL AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT, COMMERCIAL AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT, COMMERCIAL AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH (INCLUDING WITHOUT LIMITATION GOVERNMENTAL APPROVALS OR PERMITS OF ANY KIND), AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR

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OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT OR COMMERCIAL AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

2.13 Financial Information Certifications . Parent’s disclosure controls and procedures and internal control over financial reporting (as each is contemplated by the Exchange Act) are currently applicable to Varex as its Subsidiary. In order to enable the principal executive officer and principal financial officer of Varex to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002, following the Distribution in respect of any quarterly or annual fiscal period of Varex that begins on or prior to the Distribution Date in respect of which financial statements are not included in the Form 10 (a “ Straddle Period ”), Parent, on or before the date that is ten (10) days prior to the latest date on which Varex may file the periodic report pursuant to Section 13 of the Exchange Act for any such Straddle Period (not taking into account any possible extensions), shall provide Varex with one or more certifications with respect to such disclosure controls and procedures and the effectiveness thereof and whether there were any changes in the internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the internal control over financing reporting, which certification(s) shall be (a) with respect to the applicable Straddle Period (it being understood that no certification need be provided with respect to any period or portion of any period after the Distribution Date) and (b) in substantially the same form as those that had been provided by officers or employees of Parent in similar certifications delivered prior to the Distribution Date, with such changes thereto as Parent may reasonably determine. Such certification(s) shall be provided by Parent (and not by any officer or employee in their individual capacity).

ARTICLE III

THE DISTRIBUTION

3.1 Sole and Absolute Discretion; Cooperation .

(a) Parent shall, in its sole and absolute discretion, determine the terms of the Distribution, including the form, structure and terms of any transaction(s) and/or offering(s) to effect the Distribution and the timing and conditions to the consummation of the Distribution. In addition, Parent may, at any time and from time to time until the consummation of the Distribution, modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. Nothing shall in any way limit Parent’s right to terminate this Agreement or the Distribution as set forth in Article IX or alter the consequences of any such termination from those specified in Article IX .

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(b) Varex shall cooperate with Parent to accomplish the Distribution and shall, at Parent’s direction, promptly take any and all actions necessary or desirable to effect the Distribution, including in respect of the registration under the Exchange Act of Varex Shares on the Form 10. Parent shall select any investment bank or manager in connection with the Distribution, as well as any financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for Parent. Varex and Parent, as the case may be, will provide to the Agent any information required in order to complete the Distribution.

3.2 Actions Prior to the Distribution . Prior to the Effective Time and subject to the terms and conditions set forth herein, the Parties shall take, or cause to be taken, the following actions in connection with the Distribution:

(a) Notice to NYSE . Parent shall, to the extent possible, give the NYSE not less than ten (10) days’ advance notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

(b) Varex Certificate of Incorporation and Varex Bylaws . On or prior to the Distribution Date, Parent and Varex shall take all necessary actions so that, as of the Effective Time, the Varex Certificate of Incorporation and the Varex Bylaws shall become the certificate of incorporation and bylaws of Varex, respectively.

(c) Varex Directors and Officers . On or prior to the Distribution Date, Parent and Varex shall take all necessary actions so that as of the Effective Time: (i) the directors and executive officers of Varex shall be those set forth in the Information Statement made available to the Record Holders prior to the Distribution Date, unless otherwise agreed by the Parties; and (ii) Varex shall have such other officers as Varex shall appoint.

(d) Nasdaq Listing . Varex shall prepare and file, and shall use its reasonable best efforts to have approved, an application for the listing of the Varex Shares to be distributed in the Distribution on Nasdaq, subject to official notice of distribution.

(e) Securities Law Matters . Varex shall file any amendments or supplements to the Form 10 as may be necessary or advisable in order to cause the Form 10 to become and remain effective as required by the SEC or federal, state or other applicable securities Laws. Parent and Varex shall cooperate in preparing, filing with the SEC and causing to become effective registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or advisable in connection with the transactions contemplated by this Agreement and the Ancillary Agreements. Parent and Varex will prepare, and Varex will, to the extent required under applicable Law, file with the SEC any such documentation and any requisite no-action letters which Parent determines are necessary or desirable to effectuate the Distribution, and Parent and Varex shall each use its reasonable best efforts to obtain all necessary approvals from the SEC with respect thereto as soon as practicable. Parent and Varex shall take all such action as may be necessary or appropriate under the securities or blue sky laws of the United States (and any comparable Laws under any foreign jurisdiction) in connection with the Distribution.

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(f) Availability of Information Statement . Parent shall, as soon as is reasonably practicable after the Form 10 is declared effective under the Exchange Act and the Parent Board has approved the Distribution, cause the Information Statement to be mailed to the Record Holders.

(g) The Distribution Agent . Parent shall enter into a distribution agent agreement with the Agent or otherwise provide instructions to the Agent regarding the Distribution.

(h) Stock-Based Employee Benefit Plans . Parent and Varex shall take all actions as may be necessary to approve the grants of adjusted equity awards by Parent (in respect of Parent shares) and Varex (in respect of Varex shares) in connection with the Distribution in order to satisfy the requirements of Rule 16b-3 under the Exchange Act.

3.3 Conditions to the Distribution .

(a) The consummation of the Distribution will be subject to the satisfaction, or waiver by Parent in its sole and absolute discretion, of the following conditions:

(i) The SEC shall have declared effective the Form 10; no order suspending the effectiveness of the Form 10 shall be in effect; and no proceedings for such purposes shall have been instituted or threatened by the SEC.

(ii) The Information Statement shall have been made mailed to Record Holders.

(iii) Parent shall have received an opinion from its outside counsel regarding the qualification of the Contribution and the Distribution, taken together, as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355(a) and 368(a)(1)(D) of the Code.

(iv) An independent appraisal firm acceptable to Parent shall have delivered one or more opinions to the Parent Board confirming the solvency and financial viability of Parent prior to the Distribution and of Parent and Varex after consummation of the Distribution, and such opinions shall be acceptable to Parent in form and substance in Parent’s sole discretion and such opinions shall not have been withdrawn or rescinded;

(v) The transfer of the Varex Assets (other than any Delayed Varex Asset) and Varex Liabilities (other than any Delayed Varex Liability) contemplated to be transferred from Parent to Varex on or prior to the Distribution shall have occurred as contemplated by Section 2.1 , and the transfer of the Parent Assets (other than any Delayed Parent Asset) and Parent Liabilities (other than any Delayed Parent Liability) contemplated to be transferred from Varex to Parent on or prior to the Distribution Date shall have occurred as contemplated by Section 2.1 , in each case pursuant to the Plan of Reorganization.

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(vi) Varex and other members of the Varex Group shall have assumed or entered into, as applicable, the Varex Financing Arrangements and incurred at least $[●] of new indebtedness pursuant thereto.

(vii) Parent shall have received the proceeds from the Cash Transfer, and Parent shall be satisfied in its sole and absolute discretion that, as of the Effective Time, it shall have no further Liability whatsoever under the Varex Financing Arrangements.

(viii) The actions and filings necessary or appropriate under applicable U.S. federal, U.S. state or other securities Laws or blue sky Laws and the rules and regulations thereunder shall have been taken or made, and, where applicable, have become effective or been accepted by the applicable Governmental Authority.

(ix) Each of the Ancillary Agreements, the Commercial Agreements and the agreements set forth on Schedule 1.1(b) shall have been duly executed and delivered by the applicable parties thereto.

(x) No order, injunction or decree issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Separation, the Distribution or any of the transactions related thereto shall be in effect.

(xi) The Varex Shares to be distributed to the Parent stockholders in the Distribution shall have been accepted for listing on Nasdaq, subject to official notice of distribution.

(xii) No other events or developments shall exist or shall have occurred that, in the judgment of the Parent Board, in its sole and absolute discretion, makes it inadvisable to effect the Separation, the Distribution or the transactions contemplated by this Agreement or any Ancillary Agreement.

(b) The foregoing conditions are for the sole benefit of Parent and shall not give rise to or create any duty on the part of Parent or the Parent Board to waive or not waive any such condition or in any way limit Parent’s right to terminate this Agreement as set forth in Article IX or alter the consequences of any such termination from those specified in Article IX . Any determination made by the Parent Board prior to the Distribution concerning the satisfaction or waiver of any or all of the conditions set forth in Section 3.3(a) shall be conclusive and binding on the Parties. If Parent waives any material condition, it shall promptly issue a press release disclosing such fact and file a Current Report on Form 8-K with the SEC describing such waiver.

3.4 The Distribution .

(a) Subject to Section 3.3 , on or prior to the Effective Time, Varex will deliver to the Agent, for the benefit of the Record Holders, book-entry transfer authorizations for such number of the outstanding Varex Shares as is necessary to effect the Distribution, and shall cause the transfer agent for the Parent Shares to instruct the Agent to distribute at the Effective

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Time the appropriate number of Varex Shares to each such holder or designated transferee or transferees of such holder by way of direct registration in book-entry form. Varex will not issue paper stock certificates in respect of the Varex Shares. The Distribution shall be effective at the Effective Time.

(b) Subject to Sections 3.3 and 3.4(c) , each Record Holder will be entitled to receive in the Distribution a number of whole Varex Shares equal to the number of Parent Shares held by such Record Holder on the Record Date multiplied by the Distribution Ratio, rounded down to the nearest whole number.

(c) No fractional shares will be distributed or credited to book-entry accounts in connection with the Distribution, and any such fractional share interests to which a Record Holder would otherwise be entitled shall not entitle such Record Holder to vote or to any other rights as a stockholder of Varex. In lieu of any such fractional shares, each Record Holder who, but for the provisions of this Section 3.4(c) , would be entitled to receive a fractional share interest of a Varex Share pursuant to the Distribution, shall be paid cash, without any interest thereon, as hereinafter provided. As soon as practicable after the Effective Time, Parent shall direct the Agent to determine the number of whole and fractional Varex Shares allocable to each Record Holder, to aggregate all such fractional shares into whole shares, and to sell the whole shares obtained thereby in the open market at the then-prevailing prices on behalf of each Record Holder who otherwise would be entitled to receive fractional share interests (with the Agent, in its sole and absolute discretion, determining when, how and through which broker-dealer and at what price to make such sales), and to cause to be distributed to each such Record Holder, in lieu of any fractional share, such Record Holder’s or owner’s ratable share of the total proceeds of such sale, after deducting any Taxes required to be withheld and applicable transfer Taxes, and after deducting the costs and expenses of such sale and distribution, including brokers fees and commissions. None of Parent, Varex or the Agent will be required to guarantee any minimum sale price for the fractional Varex Shares sold in accordance with this Section 3.4(c) . Neither Parent nor Varex will be required to pay any interest on the proceeds from the sale of fractional shares. Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold shall be Affiliates of Parent or Varex. Solely for purposes of computing fractional share interests pursuant to this Section 3.4(c) and Section 3.4(d) , the beneficial owner of Parent Shares held of record in the name of a nominee in any nominee account shall be treated as the Record Holder with respect to such shares.

(d) Any Varex Shares or cash in lieu of fractional shares with respect to Varex Shares that remain unclaimed by any Record Holder one hundred and eighty (180) days after the Distribution Date shall be delivered to Varex, and Varex or its transfer agent on its behalf shall hold such Varex Shares and cash for the account of such Record Holder, and the Parties agree that all obligations to provide such Varex Shares and cash, if any, in lieu of fractional share interests shall be obligations of Varex, subject in each case to applicable escheat or other abandoned property Laws, and Parent shall have no Liability with respect thereto.

(e) Until the Varex Shares are duly transferred in accordance with this Section 3.4 and applicable Law, from and after the Effective Time, Varex will regard the Persons entitled to receive such Varex Shares as record holders of Varex Shares in accordance with the terms of the Distribution without requiring any action on the part of such Persons. Varex agrees that,

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subject to any transfers of such shares, from and after the Effective Time (i) each such holder will be entitled to receive all dividends, if any, payable on, and exercise voting rights and all other rights and privileges with respect to, the Varex Shares then held by such holder, and (ii) each such holder will be entitled, without any action on the part of such holder, to receive evidence of ownership of the Varex Shares then held by such holder.

ARTICLE IV

MUTUAL RELEASES; INDEMNIFICATION

4.1 Release of Pre-Distribution Claims .

(a) Varex Release of Parent. Except as provided in Sections 4.1(c) and 4.1(e) , effective as of the Effective Time, Varex does hereby, for itself and each other member of the Varex Group, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the Varex Group (in each case, in their respective capacities as such), remise, release and forever discharge (i) Parent and the members of the Parent Group, and their respective successors and assigns, (ii) all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the Parent Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, and (iii) all Persons who at any time prior to the Effective Time are or have been stockholders, directors, officers, agents or employees of a Transferred Entity and who are not, as of immediately following the Effective Time, directors, officers or employees of Varex or a member of the Varex Group, in each case from: (A) all Varex Liabilities, (B) all Liabilities arising from or in connection with the transactions and all other activities to implement the Separation and the Distribution (for the avoidance of doubt this clause (B) shall not limit or affect indemnification obligations of the Parties set forth in this Agreement or any Ancillary Agreement) and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances (including, for the avoidance of doubt, the presence of Hazardous Materials on the Varex Real Property) occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the Varex Business, the Varex Assets or the Varex Liabilities.

(b) Parent Release of Varex. Except as provided in Sections 4.1(c) and 4.1(e) , effective as of the Effective Time, Parent does hereby, for itself and each other member of the Parent Group and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the Parent Group (in each case, in their respective capacities as such), remise, release and forever discharge (i) Varex and the members of the Varex Group and their respective successors and assigns, and (ii) all Persons who at any time prior to the Effective Time have been stockholders, directors, officers, agents or employees of any member of the Varex Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from (A) all Parent Liabilities, (B) all Liabilities arising from or in connection with the transactions and all other activities to implement the Separation and the Distribution (for the avoidance of doubt this clause

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(B) shall not limit or affect indemnification obligations of the Parties set forth in this Agreement or any Ancillary Agreement) and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Effective Time), in each case to the extent relating to, arising out of or resulting from the Parent Business, the Parent Assets or the Parent Liabilities.

(c) Acknowledgment of Unknown Losses or Claims . The Parties expressly understand and acknowledge that it is possible that unknown losses or claims exist or might come to exist or that present losses may have been underestimated in amount, severity, or both. Accordingly, the Parties are deemed expressly to understand provisions and principles of law such as Section 1542 of the Civil Code of the State of California (“ Section 1542 ”) (as well as any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar or comparable to Section 1542), which provides: GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. The Parties are hereby deemed to agree that the provisions of Section 1542 and all similar federal or state laws, rights, rules, or legal principles of California or any other jurisdiction that may be applicable herein, are hereby knowingly and voluntarily waived and relinquished with respect to the releases in Section 4.1(a) and Section 4.1(b) .

(d) Obligations Not Affected. Nothing contained in Section 4.1(a) or 4.1(b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.7(b) or the applicable Schedules thereto as not to terminate as of the Effective Time, in each case in accordance with its terms. Nothing contained in Section 4.1(a) or 4.1(b) shall release any Person from:

(i) any Liability provided in or resulting from any agreement among any members of the Parent Group or any members of the Varex Group that is specified in Section 2.7(b) or the applicable Schedules thereto as not to terminate as of the Effective Time, or any other Liability specified in Section 2.7(b) as not to terminate as of the Effective Time;

(ii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

(iii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of the other Group prior to the Effective Time;

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(iv) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

(v) any Liability provided in or resulting from any Contract or understanding that is entered into after the Effective Time between any Party (and/or a member of such Party’s Group), on the one hand, and any other Party (and/or a member of the other Party’s Group), on the other hand;

(vi) any Liability that the Parties may have with respect to any indemnification or contribution or other obligation pursuant to this Agreement, any Ancillary Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article IV and Article V and, if applicable, the appropriate provisions of the Ancillary Agreements; or

(vii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.1 .

In addition, nothing contained in Section 4.1(a) shall release any member of the Parent Group from honoring its existing obligations to indemnify any director, officer or employee of Varex who was a director, officer or employee of any member of the Parent Group on or prior to the Effective Time, to the extent such director, officer or employee becomes a named defendant in any Action with respect to which such director, officer or employee was entitled to such indemnification pursuant to such existing obligations; it being understood that, if the underlying obligation giving rise to such Action is a Varex Liability, Varex shall indemnify Parent for such Liability (including Parent’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article IV .

(e) No Claims. Varex shall not make, and shall not permit any other member of the Varex Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Parent or any other member of the Parent Group, or any other Person released pursuant to Section 4.1(a) , with respect to any Liabilities released pursuant to Section 4.1(a) . Parent shall not make, and shall not permit any other member of the Parent Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Varex or any other member of the Varex Group, or any other Person released pursuant to Section 4.1(b) , with respect to any Liabilities released pursuant to Section 4.1(b) .

(f) Execution of Further Releases. At any time at or after the Effective Time, at the request of either Party, the other Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions of this Section 4.1 .

4.2 Indemnification by Varex . Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, Varex shall, and shall cause the other members of the Varex Group to, indemnify, defend and hold harmless Parent, each member of the Parent Group and each of their respective past, present and

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future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Parent Indemnitees ”), from and against any and all Liabilities of the Parent Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any Varex Liability;

(b) any failure of Varex, any other member of the Varex Group or any other Person to pay, perform or otherwise promptly discharge any Varex Liabilities in accordance with their terms, whether prior to, on or after the Effective Time;

(d) except to the extent it relates to a Parent Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the Varex Group by any member of the Parent Group that survives following the Distribution; and

4.3 Indemnification by Parent . Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, Parent shall, and shall cause the other members of the Parent Group to, indemnify, defend and hold harmless Varex, each member of the Varex Group and each of their respective past, present and future directors, officers, employees or agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Varex Indemnitees ”), from and against any and all Liabilities of the Varex Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any Parent Liability;

(b) any failure of Parent, any other member of the Parent Group or any other Person to pay, perform or otherwise promptly discharge any Parent Liabilities in accordance with their terms, whether prior to, on or after the Effective Time;

(d) except to the extent it relates to a Varex Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the Parent Group by any member of the Varex Group that survives following the Distribution; and

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(e) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to statements made explicitly in Parent’s name in the Form 10, the Information Statement (as amended or supplemented if Varex shall have furnished any amendments or supplements thereto) or any other Disclosure Document; it being agreed that the statements set forth on Schedule 4.3(e) shall be the only statements made explicitly in Parent’s name in the Form 10, the Information Statement or any other Disclosure Document, and all other information contained in the Form 10, the Information Statement or any other Disclosure Document shall be deemed to be information supplied by Varex.

4.4 Indemnification Obligations Net of Insurance Proceeds and Other Amounts .

(a) The Parties intend that any Liability subject to indemnification, contribution or reimbursement pursuant to this Article IV or Article V will be net of Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Liability. Accordingly, the amount which either Party (an “ Indemnifying Party ”) is required to pay to any Person entitled to indemnification or contribution hereunder (an “ Indemnitee ”) will be reduced by any Insurance Proceeds or other amounts actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “ Indemnity Payment ”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds or any other amounts in respect of such Liability, then within ten (10) calendar days of receipt of such Insurance Proceeds, the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or expenses incurred in the collection thereof) had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties agree that an insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of any provision contained in this Agreement or any Ancillary Agreement, have any subrogation rights with respect thereto, it being understood that no insurer or any other Third Party shall be entitled to a “windfall” ( i.e. , a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification and contribution provisions hereof. Each Party shall, and shall cause the members of its Group to, use commercially reasonable efforts (taking into account the probability of success on the merits and the cost of expending such efforts, including attorneys’ fees and expenses) to collect or recover any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification or contribution may be available under this Article IV . Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required under the terms

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of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Action to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or contribution or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.

4.5 Procedures for Indemnification of Third-Party Claims .

(a) Notice of Claims. If, at or following the Effective Time, an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the Parent Group or the Varex Group of any claim or of the commencement by any such Person of any Action (collectively, a “ Third-Party Claim ”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 4.2 or 4.3 , or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof as soon as practicable, but in any event within fourteen (14) days (or sooner if the nature of the Third-Party Claim so requires) after becoming aware of such Third-Party Claim. Any such notice shall describe the Third-Party Claim in reasonable detail, including the facts and circumstances giving rise to such claim for indemnification, and include copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim. Notwithstanding the foregoing, the failure of an Indemnitee to provide notice in accordance with this Section 4.5(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party is actually prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 4.5(a) .

(b) Control of Defense. An Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third-Party Claim; provided that, prior to the Indemnifying Party assuming and controlling defense of such Third-Party Claim, it shall first confirm to the Indemnitee in writing that, assuming the facts presented to the Indemnifying Party by the Indemnitee being true, the Indemnifying Party shall indemnify the Indemnitee for any such damages to the extent resulting from, or arising out of, such Third-Party-Claim. Notwithstanding the foregoing, if the Indemnifying Party assumes such defense and, in the course of defending such Third-Party Claim, (i) the Indemnifying Party discovers that the facts presented at the time the Indemnifying Party acknowledged its indemnification obligation in respect of such Third-Party Claim were not true in all material respects and (ii) such untruth provides a reasonable basis for asserting that the Indemnifying Party does not have an indemnification obligation in respect of such Third-Party Claim, then (A) the Indemnifying Party shall not be bound by such acknowledgment, (B) the Indemnifying Party shall promptly thereafter provide the Indemnitee written notice of its assertion that it does not have an indemnification obligation in respect of such Third-Party Claim and (C) the Indemnitee shall have the right to assume the defense of such Third-Party Claim. Within thirty (30) days after the receipt of a notice from an Indemnitee in accordance with Section 4.5(a) (or sooner, if the nature of the Third-Party Claim so requires), the Indemnifying Party shall provide written notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third-Party Claim and specifying any reservations or exceptions to its defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of the notice from

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an Indemnitee as provided in Section 4.5(a) , then the Indemnitee that is the subject of such Third-Party Claim shall be entitled to continue to conduct and control the defense of such Third-Party Claim. Notwithstanding anything herein to the contrary, Parent shall have the sole right to defend and control any proceeding related to Shared Liabilities.

(c) Allocation of Defense Costs . If an Indemnifying Party has elected to assume the defense of a Third-Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third-Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred by the Indemnifying Party during the course of the defense of such Third-Party Claim by such Indemnifying Party, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a notice from an Indemnitee as provided in Section 4.5(a) , and the Indemnitee conducts and controls the defense of such Third-Party Claim and the Indemnifying Party has an indemnification obligation with respect to such Third-Party Claim, then the Indemnifying Party shall be liable for all reasonable fees and expenses incurred by the Indemnitee in connection with the defense of such Third-Party Claim.

(d) Right to Monitor and Participate. An Indemnitee that does not conduct and control the defense of any Third-Party Claim, or an Indemnifying Party that has failed to elect to defend any Third-Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third-Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 4.5(c) shall not apply to such fees and expenses. Notwithstanding the foregoing, but subject to Sections 6.7 and 6.8 , such Party shall cooperate with the Party entitled to conduct and control the defense of such Third-Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s control relating thereto as are reasonably required by the controlling Party. In addition to the foregoing, if any Indemnitee shall in good faith determine that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and in such case the Indemnifying Party shall bear the reasonable fees and expenses of such counsel for all Indemnitees.

(e) No Settlement. Neither Party may settle or compromise any Third-Party Claim for which either Party is seeking to be indemnified hereunder without the prior written consent of the other Party, which consent may not be unreasonably withheld, unless such settlement or compromise is solely for monetary damages that are fully payable by the settling or compromising Party, does not involve any admission, finding or determination of wrongdoing or violation of Law by the other Party and provides for a full, unconditional and irrevocable release

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of the other Party from all Liability in connection with the Third-Party Claim. The Parties hereby agree that if a Party presents the other Party with a written notice containing a proposal to settle or compromise a Third-Party Claim for which either Party is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within thirty (30) days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal.

(f) Tax Matters Agreement Coordination. The provisions of Section 4.2 through Section 4.10 hereof do not apply with respect to Taxes or Tax matters (it being understood and agreed that Taxes and Tax matters, including the control of Tax-related proceedings, shall be governed by the Tax Matters Agreement). In the case of any conflict between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.

4.6 Additional Matters .

(a) Timing of Payments. Indemnification or contribution payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification or contribution under this Article IV shall be paid reasonably promptly (but in any event within forty-five (45) days of the final determination of the amount that the Indemnitee is entitled to indemnification or contribution under this Article IV ) by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification or contribution payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity and contribution provisions contained in this Article IV shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee, and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification hereunder.

(b) Notice of Direct Claims. Any claim for indemnification or contribution under this Agreement or any Ancillary Agreement that does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the applicable Indemnifying Party; provided , that the failure by an Indemnitee to so assert any such claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is prejudiced thereby. Such Indemnifying Party shall have a period of thirty (30) days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty (30)-day period, such specified claim shall be conclusively deemed a Liability of the Indemnifying Party under this Section 4.6(b) or, in the case of any written notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of the claim (or such portion thereof) becomes finally determined. If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnitee shall, subject to the provisions of Article VII , be free to pursue such remedies as may be available to such party as contemplated by this Agreement and the Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.

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(c) Pursuit of Claims Against Third Parties. If (i) a Party incurs any Liability arising out of this Agreement or any Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available for any reason against the other Party to satisfy the Liability incurred by the incurring Party; and (iii) a legal or equitable remedy may be available to the other Party against a Third Party for such Liability, then the other Party shall use its commercially reasonable efforts to cooperate with the incurring Party, at the incurring Party’s expense, to permit the incurring Party to obtain the benefits of such legal or equitable remedy against the Third Party.

(d) Subrogation. In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third-Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(e) Substitution. In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in Section 4.5 and this Section 4.6 , and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement and the cost of any interest or penalties relating to any judgment or settlement.

4.7 Right of Contribution .

(a) Contribution. If any right of indemnification contained in Section 4.2 or Section 4.3 is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the members of its Group, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

(b) Allocation of Relative Fault. Solely for purposes of determining relative fault pursuant to this Section 4.7 : (i) any fault associated with the business conducted with the Delayed Varex Assets or Delayed Varex Liabilities (except for the gross negligence or intentional misconduct of a member of the Parent Group) or with the ownership, operation or activities of the Varex Business prior to the Effective Time shall be deemed to be the fault of Varex and the other members of the Varex Group, and no such fault shall be deemed to be the fault of Parent or any other member of the Parent Group; (ii) any fault associated with the business conducted with Delayed Parent Assets or Delayed Parent Liabilities (except for the

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gross negligence or intentional misconduct of a member of the Varex Group) shall be deemed to be the fault of Parent and the other members of the Parent Group, and no such fault shall be deemed to be the fault of Varex or any other member of the Varex Group; and (iii) any fault associated with the ownership, operation or activities of the Parent Business prior to the Effective Time shall be deemed to be the fault of Parent and the other members of the Parent Group, and no such fault shall be deemed to be the fault of Varex or any other member of the Varex Group.

4.8 Covenant Not to Sue . Each Party hereby covenants and agrees that none of it, the members of such Party’s Group or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, mediator or administrative agency anywhere in the world, alleging that: (a) the assumption of any Varex Liabilities by Varex or a member of the Varex Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; (b) the retention of any Parent Liabilities by Parent or a member of the Parent Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; or (c) the provisions of this Article IV are void or unenforceable for any reason.

4.9 Remedies Cumulative . The remedies provided in this Article IV shall be cumulative and, subject to the provisions of Article VIII , shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

4.10 Survival of Indemnities . The rights and obligations of each of Parent and Varex and their respective Indemnitees under this Article IV shall survive (a) the sale or other transfer by either Party or any member of its Group of any assets or businesses or the assignment by it of any liabilities; or (b) any merger, consolidation, business combination, sale of all or substantially all of its Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any of the members of its Group.

ARTICLE V

CERTAIN OTHER MATTERS

5.1 Insurance Matters .

(a) Parent and Varex agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Effective Time. In no event shall Parent, any other member of the Parent Group or any Parent Indemnitee have Liability or obligation whatsoever to any member of the Varex Group in the event that any insurance policy or insurance policy related contract shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the Varex Group for any reason whatsoever or shall not be renewed or extended beyond the current expiration date.

(b) From and after the Effective Time, with respect to any losses, damages and Liability incurred by any member of the Varex Group prior to the Effective Time, Parent

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will pursue claims, at Varex’s sole cost and expense on behalf of Varex under (with Varex entitled to all Insurance Proceeds resulting from or arising out of any such claims) Parent’s insurance policies in place immediately prior to the Effective Time (and any extended reporting periods for claims made policies) and Parent’s historical insurance policies, but solely to the extent that such policies provided coverage for members of the Varex Group or the Varex Business prior to the Effective Time; provided that such right to require Parent to make claims on behalf of Varex under such insurance policies, shall be subject to the terms, conditions and exclusions of such insurance policies, including but not limited to any limits on coverage or scope, any deductibles, self-insured retentions and other fees and expenses, and shall be subject to the following additional conditions:

(i) Varex shall provide written notification to Parent of any request for Parent to pursue a claim on behalf Varex pursuant to this Section 5.1(b) , and Parent shall use commercially reasonable efforts to pursue such claim, at the Varex’s sole cost and expense, as promptly as is reasonably practicable;

(ii) Varex and the members of the Varex Group shall indemnify, hold harmless and reimburse Parent and the members of the Parent Group for any deductibles, self-insured retention, fees, indemnity payments, settlements, judgments, legal fees, allocated claims expenses and claim handling fees, and other expenses incurred by Parent or any members of the Parent Group to the extent resulting from any pursuit of claims on behalf of Varex or any other members of the Varex Group under any insurance provided pursuant to this Section 5.1(b) , whether such claims are pursued on behalf of Varex, its employees or third Persons; and

(iii) Varex shall exclusively bear (and neither Parent nor any members of the Parent Group shall have any obligation to repay or reimburse Varex or any member of the Varex Group for) and shall be liable for all excluded, uninsured, uncovered, unavailable or uncollectible amounts of all such claims pursued on behalf of Varex or any member of the Varex Group under the policies as provided for in this Section 5.1(b) .

In the event that any member of the Parent Group incurs any losses, damages or Liability prior to or in respect of the period prior to the Effective Time for which such member of the Parent Group is entitled to coverage under Varex’s third-party insurance policies, the same process pursuant to this Section 5.1(b) shall apply, substituting “Parent” for “Varex” and “Varex” for “Parent”, including for purposes of the first sentence of Section 5.1(e) .

(c) Except as provided in Section 5.1(b) , from and after the Effective Time, neither Varex nor any member of the Varex Group shall have any rights to or under any of the insurance policies of Parent or any other member of the Parent Group. At the Effective Time, Varex shall have in effect all insurance programs required to comply with Varex’s contractual obligations and such other Policies required by Law or as reasonably necessary or appropriate for companies operating a business similar to Varex’s.

(d) In connection with Parent’s pursuit of a claim on behalf of Varex or a member of the Varex Group under any insurance policy of Parent or any member of the Parent

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Group pursuant to this Section 5.1 , Parent shall not be required to take any action that would be reasonably likely to (i) have a material and adverse impact on the then-current relationship between Parent or any member of the Parent Group, on the one hand, and the applicable insurance company, on the other hand; (ii) result in the applicable insurance company terminating or materially reducing coverage, or materially increasing the amount of any premium owed by Parent or any member of the Parent Group under the applicable insurance policy; or (iii) otherwise compromise, jeopardize or interfere in any material respect with the rights of Parent or any member of the Parent Group under the applicable insurance policy.

(e) All payments and reimbursements by Varex pursuant to this Section 5.1 will be made within forty-five (45) days after Varex’s receipt of an invoice therefor from Parent. Parent shall retain the exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any Varex Liabilities and/or claims Varex has made or could make in the future, and no member of the Varex Group shall erode, exhaust, settle, release, commute, buyback or otherwise resolve disputes with Parent’s insurers with respect to any of Parent’s insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. Varex shall cooperate with Parent and share such information as is reasonably necessary in order to permit Parent to manage and conduct its insurance matters as Parent deems appropriate. Neither Parent nor any member of the Parent Group shall have any obligation to secure extended reporting for any claims under any Policies of Parent or any member of the Parent Group for any acts or omissions by any member of the Varex Group incurred prior to the Effective Time. For the avoidance of doubt, each Party and any member of its applicable Group has the sole right to settle or otherwise resolve third party claims made against it or any member of its applicable Group covered under an applicable insurance Policy.

(f) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the Parent Group in respect of any insurance policy or any other contract or policy of insurance.

(g) Varex does hereby, for itself and each other member of the Varex Group, agree that no member of the Parent Group shall have any Liability whatsoever as a result of the insurance policies and practices of Parent and the members of the Parent Group as in effect at any time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, or the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

5.2 Late Payments . Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within forty-five (45) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus two (2%) percent, provided that notice of any such late payment has been provided and the other Party has been provided fifteen (15) days to cure any such late payment.

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5.3 Inducement . Varex acknowledges and agrees that Parent’s willingness to cause, effect and consummate the Separation and the Distribution has been conditioned upon and induced by Varex’s covenants and agreements in this Agreement and the Ancillary Agreements, including Varex’s assumption of the Varex Liabilities pursuant to the Separation and the provisions of this Agreement and Varex’s covenants and agreements contained in Article IV .

5.4 Post-Effective Time Conduct . The Parties acknowledge that, after the Effective Time, each Party shall be independent of the other Party, with responsibility for its own actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its business, operations and activities following the Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Article IV ) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.

5.5 Environmental Remediation Activities . The Parties acknowledge that Parent is conducting environmental remediation activities (the “ Remedial Activities ”) at the Varex Real Property located at 1678 S. Pioneer Road, Salt Lake City, Utah 84104 (the “ Salt Lake Property ”) and potentially at other Varex Real Property, which Remedial Activities include investigation of site conditions, soil excavation, groundwater extraction and treatment, and soil vapor extraction and treatment. Varex acknowledges and agrees that certain remediation equipment and fixtures (e.g., monitoring wells, soil vapor extraction and groundwater treatment systems) used in the Remedial Activities (“ Remediation Systems ”) will be present on the Varex Real Property as of the Effective Time, and Remediation Systems may be installed on Varex Real Property following the Effective Time. Subject to the terms of any applicable Ancillary Agreement or Commercial Agreement, Varex agrees to allow for the installation and operation, in each case on the Varex Real Property, of any Remediation Systems determined by Parent to be necessary or advisable, without payment of rent or fees. Parent agrees to install and operate future Remediation Systems in a manner that reasonably minimizes conflicts with Varex’s use of the Varex Real Property, and shall consult with Varex prior to, and Varex shall have the right to approve, which approval shall not be unreasonably withheld, conditioned or delayed, such future installation and operation. Parent shall retain ownership and control over Remediation Systems. Varex agrees that it will not disrupt or alter any Remediation Systems without prior written consent of Parent and the applicable Government Authorities, which consent by Parent shall not be unreasonably withheld. Varex agrees to pay all the costs associated with any request it makes to move or redesign installed Remediation Systems.

5.6 Environmental Deed Restrictions on Varex Real Property . The Parties acknowledge that there is a certain deed notice, recorded on January 29, 2001 (the “ Existing Deed Notice ”) that limits land uses at the Salt Lake Property to commercial and industrial purposes and places other environmental–based limitations on the current and future land use of the Salt Lake Property. The Parties further acknowledge that additional pending institutional controls may be imposed on the Varex Real Property, including pursuant to the matters identified on Schedule 5.6(a) (the “ Pending Controls ”). Varex agrees that it shall execute and record any environmental deed restriction(s) with respect to the Pending Controls (i) within thirty (30) days following the approval of such deed restriction(s) by the applicable Governmental Authority, and (ii) in the form finally approved by such Governmental Authority as such form is supplemented by the additional restrictions set forth on Schedule 5.6(b) . Varex further agrees that it shall

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promptly execute and record any other new environmental deed restrictions with respect to the Salt Lake Property to the extent necessary to comply with any additional controls imposed by an applicable Governmental Authority. Notwithstanding any other provision of this Agreement, Varex agrees that it shall be solely responsible and liable for all costs arising from or related to its compliance with the terms of the Existing Deed Notice and any new environmental deed restriction.

5.7 Residential Land Use and Remediation Standards on Varex Real Property . Varex agrees that it will not authorize or allow any use or activity on the Salt Lake Property requiring remediation of the property to residential, hospital, school or other sensitive use clean-up levels (“ Sensitive Use Standards ”). Notwithstanding any other provision of this Agreement, Varex agrees to indemnify, defend and hold harmless the Parent Indemnitees from any and all Liabilities arising from or relating to such uses or activities occurring on the Salt Lake Property from and after the Effective Time. Notwithstanding any other provision of this Agreement, Varex agrees that it is solely responsible for all costs associated with environmental remediation of any Varex Real Property undertaken from and after the Effective Time to achieve Sensitive Use Standards at the Varex Real Property. Varex further agrees to indemnify, defend and hold harmless the Parent Indemnitees from any Liabilities arising from or relating to any failure to remediate Varex Real Property to Sensitive Use Standards to the extent such failure occurred from and after the Effective Time.

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5.8 Non-Competition ; Non-Solicitation .

(a) For a period of three (3) years after the Distribution Date, without the written consent of Parent, neither Varex nor any member of the Varex Group, nor any of their Affiliates, shall directly or indirectly, (i) develop, commercialize, manufacture or distribute, or license, authorize or otherwise enable or assist any Third Party to, directly or indirectly, develop, commercialize, manufacture or distribute, any product or service that competes with the Parent Business anywhere in the world, in each case other than the conduct by Varex or any member of its Group of the Varex Operating Activities; or (ii) sell any flat panel digital image detectors in the Varian Field other than to any Varex Panel Permitted Third Party where such sale contemplates delivery of any such product during such three (3) year period (clauses (i) and (ii), the “ Varex Restricted Activities ”). For the avoidance of doubt, the design or development of a product for a third party, or delivery of a prototype in connection therewith, that does not otherwise violate Section 5.8(a) shall not be a violation of Section 5.8(a) .

(b) For a period of three (3) years after the Distribution Date, without the written consent of Varex, neither Parent nor any member of the Parent Group, nor any of their Affiliates, shall directly or indirectly, develop, commercialize, manufacture or distribute, or license, authorize or otherwise enable or assist any Third Party to, directly or indirectly, develop, commercialize, manufacture or distribute, any product or service that competes with the Varex Business anywhere in the world (in each case other than the marketing, sale, distribution and service of imaging components and subsystems to medical end-users and distributors thereto in conjunction with, or as replacement parts for purposes of servicing and repair of, Parent’s systems) (the “ Parent Restricted Activities ”).

(i) the purchase (whether structured as an acquisition of assets, stock, merger or otherwise) or ownership by Varex or Parent or any member of their respective Groups of a Person or business that derives less than the greater of (A) 20% of its total annual revenues or (B) $25,000,000 in annual revenues from Varex Restricted Activities or Parent Restricted Activities, as applicable, measured for the fiscal year ended immediately prior to the date of such purchase;

(ii) the purchase (whether structured as an acquisition of assets, stock, merger or otherwise) or ownership by Varex or Parent or any member of their respective Groups of a Person or business that derives an amount equal to or greater than the greater of (A) 20% or more of its total annual revenues or (B) $25,000,000 in annual revenues from the Varex Restricted Activities or Parent Restricted Activities, as applicable, measured for the fiscal year ended immediately prior to the date of such purchase, as long as Varex or Parent, as applicable, shall (1) cease any business that engages in Varex Restricted Activities or Parent Restricted Activities, as applicable, or (2) divest that portion of such Person or business that engages in Varex Restricted Activities or Parent Restricted Activities, as applicable, on commercially reasonable terms, in either case, as soon as reasonably practicable following the acquisition of such ownership interest;

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(iii) the matters set forth on Schedule 5.8(c);

(iv) the direct or indirect ownership by Varex or Parent or any member of their respective Groups of securities of any Person engaged in Varex Restricted Activities or Parent Restricted Activities to the extent that such investment does not, directly or indirectly, confer on Varex or Parent or any member of their respective Groups, as applicable, more than 10% of the voting power and 20% of the economic interests of such Person; or

(v) Varex or Parent’s or any member of their respective Groups’ entrance into or participation in a joint venture, partnership or other strategic business relationship with any Person engaged in Varex Restricted Activities or Parent Restricted Activities, as applicable, if such joint venture, partnership or other strategic business relationship does not engage, directly or indirectly, in Varex Restricted Activities or Parent Restricted Activities (as applicable).

(d) In the event that (i) Varex or any member of its Group desires to purchase (whether structured as an acquisition of assets, stock, merger or otherwise) a Person or business that conducts any activities related to linear accelerators for medical or medical research applications and (ii) such purchase or the ownership by Varex or any member of its Group of such Person or business would result in a breach of Section 5.8(a) solely due to the conduct of such incidental activities, then, upon Varex’s written request to Parent, the Parties shall enter into good faith discussions regarding a potential agreement that would include terms, conditions and restrictions pursuant to which Varex or such member would be permitted to complete such purchase without breaching Section 5.8(a) (provided, however, that neither Party shall have any obligation hereunder to enter into any such agreement). For the purposes of clarity, nothing herein shall prevent Varex or any member of its Group from negotiating and completing the activities set forth in Schedule 5.8(c).

(e) For a period of one (1) year after the Distribution Date, neither Party nor any member of its Group shall directly or indirectly solicit or recruit for employment any current or former employees of the other Party or any member of its Group without the written consent of such other Party; provided that an individual shall not be deemed to have been solicited in violation of this Section 5.8(e) if such individual ceased to be employed by such other Party or any member of its Group or if such individual voluntarily contacts such other Party or any member of its Group. This prohibition on solicitation shall not apply to a public solicitation or a general solicitation (including through a bona fide search firm), so long as it is not targeted toward employees of the applicable Group.

(f) Each Party acknowledges and agrees that the restrictions in this Section 5.8 are reasonable, valid and necessary in light of the Parties’ circumstances and for the adequate protection of the Parties’ businesses and that the Parties would not have entered into this Agreement without such restrictions. If, notwithstanding the foregoing, a competent court or arbitrator determines that such restrictions are too broad or otherwise unreasonable under applicable Law, then, notwithstanding anything to the contrary in Section 10.6 , such court or arbitrator is hereby requested and authorized by the Parties to modify such restrictions so that, after such modification, they reflect the maximum restrictions allowable under applicable Laws.

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ARTICLE VI

EXCHANGE OF INFORMATION; CONFIDENTIALITY

6.1 Agreement for Exchange of Information .

(a) Subject to Section 6.9 and any other applicable confidentiality obligations, each of Parent and Varex, on behalf of itself and each member of its Group, agrees to use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party and the members of such other Party’s Group, at any time before, on or after the Effective Time, as soon as reasonably practicable after written request therefor, any information (or a copy thereof) in the possession or under the control of such Party or its Group which the requesting Party or its Group requests to the extent that (i) such information relates to the Varex Business, or any Varex Asset or Varex Liability, if Varex is the requesting Party, or to the Parent Business, or any Parent Asset or Parent Liability, if Parent is the requesting Party; (ii) such information is required by the requesting Party to comply with its obligations under this Agreement or any Ancillary Agreement; or (iii) such information is required by the requesting Party to comply with any obligation imposed by any Governmental Authority; provided , however , that, in the event that the Party to whom the request has been made determines that any such provision of information could be detrimental to the Party providing the information, violate any Law or agreement, or waive any privilege available under applicable Law, including any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence. The Party providing information pursuant to this Section 6.1 shall only be obligated to provide such information in the form, condition and format in which it then exists, and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such information, and nothing in this Section 6.1 shall expand the obligations of a Party under Section 6.4 .

(b) Without limiting the generality of the foregoing, until the end of Varex’s 2017 fiscal year (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for such fiscal year), each Party shall use its commercially reasonable efforts to cooperate with the other Party’s information requests to enable (i) the other Party to meet its timetable for dissemination of its earnings releases, financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act; and (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other applicable Laws.

(c) Subject to the Transition Services Agreement, promptly after the conclusion of the planned migration of the patent database maintained by Parent’s legal department to its new service provider, Parent shall deliver or cause to be delivered to Varex, in the form, condition and format in which it then exists, (i) a complete and accurate in all material

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respects additional instance of such patent database solely as it relates to the Varex Patents and Varex Invention Disclosures and (ii) the Parent Invention Disclosures set forth on Schedule 6.1(c) , so long as Varex has entered an agreement with the new service provider to allow Varex to obtain such additional instance; provided , however , that if such planned migration is not concluded by the one year anniversary of the Distribution Date, then Parent shall deliver or cause to be delivered to Varex, in the form, condition and format in which it exists as of such anniversary, (x) a complete and accurate in all material respects copy of the patent database maintained by Parent’s legal department solely as it relates to the Varex Patents and Varex Invention Disclosures and (y) the Parent Invention Disclosures set forth on Schedule 6.1(c) , so long as Varex has secured the rights from Parent’s then current service provider to maintain such a copy; and upon either such delivery Parent shall have no further obligations under this sentence. In addition, promptly after request of Varex at any time after such delivery, Parent shall, in accordance with Section 6.9(b), destroy any information in the patent database maintained by Parent’s legal department that relates to the Varex Patents or Varex Invention Disclosures. For the avoidance of doubt, this Section 6.1(c) is not intended to limit Parent’s obligation to respond to a reasonable information request under Section 6.1(a).

6.2 Ownership of Information . The provision of any information pursuant to Section 6.1 or Section 6.7 shall not affect the ownership of such information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute a grant of rights in or to any such information.

6.3 Compensation for Providing Information . The Party requesting information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering, copying, transporting and otherwise complying with the request with respect to such information (including any reasonable costs and expenses incurred in any review of information for purposes of protecting the Privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested information). Except as may be otherwise specifically provided elsewhere in this Agreement, any Ancillary Agreement or any other agreement between the Parties, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

6.4 Record Retention . To facilitate the possible exchange of information pursuant to this Article VI and other provisions of this Agreement after the Effective Time, the Parties agree to use their commercially reasonable efforts, which shall be no less rigorous than those used for retention of such Party’s own information, to retain all information in their respective possession or control on the Effective Time in accordance with their respective policies regarding retention of records; provided , however , that in the case of any information relating to Taxes, such retention period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof). Notwithstanding anything in Article VI to the contrary, the Tax Matters Agreement exclusively governs the retention of Tax related records and the exchange of Tax-related information, and Section 9.01 of the Employee Matters Agreement will govern the retention of employment and benefits related records.

6.5 Limitations of Liability . Neither Party shall have any Liability to the other Party in the event that any information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of gross negligence, bad faith or willful misconduct by the

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Party providing such information. Neither Party shall have any Liability to any other Party if any information is destroyed after commercially reasonable efforts by such Party to comply with the provisions of Section 6.4 .

6.6 Other Agreements Providing for Exchange of Information .

(a) The rights and obligations granted under this Article VI are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention, destruction or confidential treatment of information set forth in any Ancillary Agreement, including Sections 2.04 and 3.03 of the Intellectual Property Matters Agreement.

(b) Any party that receives, pursuant to a request for information in accordance with this Article VI , Tangible Information that is not relevant to its request shall, at the request of the providing Party, (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information; and (ii) deliver to the providing Party written confirmation that such Tangible Information was returned or destroyed, as the case may be, which confirmation shall be signed by an authorized representative of the requesting Party.

6.7 Production of Witnesses; Records; Cooperation .

(a) After the Effective Time, except in the case of a Dispute between Parent and Varex, or any members of their respective Groups, each Party shall use its commercially reasonable efforts to make available to the other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available without undue burden, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting Party (or member of its Group) may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all costs and expenses in connection therewith.

(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third-Party Claim, the other Party shall make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available without undue burden, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

(c) Without limiting the foregoing, the Parties shall cooperate and consult to the extent reasonably necessary with respect to any Actions.

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(d) Without limiting any provision of this Section 6.7 , each of the Parties agrees to cooperate, and to cause each member of its respective Group to cooperate, with each other in the defense of any infringement or similar claim with respect to any Intellectual Property and shall not claim to acknowledge, or permit any member of its respective Group to claim to acknowledge, the validity or infringing use of any Intellectual Property of a third Person in a manner that would hamper or undermine the defense of such infringement or similar claim.

(e) The obligation of the Parties to provide witnesses pursuant to this Section 6.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses directors, officers, employees, other personnel and agents without regard to whether such person could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 6.7(a) ).

6.8 Privileged Matters .

(a) The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the Parent Group and the Varex Group, and that each of the members of the Parent Group and the Varex Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges which may be asserted under applicable Law in connection therewith. The Parties recognize that legal and other professional services will be provided following the Effective Time, which services will be rendered solely for the benefit of the Parent Group or the Varex Group, as the case may be. In furtherance of the foregoing, each Party shall authorize the delivery to and/or retention by the other Party of materials existing as of the Effective Time that are necessary for such other Party to perform such services.

(b) The Parties agree as follows:

(i) Parent shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Parent Business and not to the Varex Business, whether or not the Privileged Information is in the possession or under the control of any member of the Parent Group or any member of the Varex Group. Parent shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Parent Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of any member of the Parent Group or any member of the Varex Group;

(ii) Varex shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Varex Business and not to the Parent Business, whether or not the Privileged Information is in the possession or under the control of any member of the Varex Group or any member of the Parent Group. Varex shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Varex Liabilities

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resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of any member of the Varex Group or any member of the Parent Group; and

(iii) if the Parties do not agree as to whether certain information is Privileged Information, then such information shall be treated as Privileged Information, and the Party that believes that such information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information unless the Parties otherwise agree. The Parties shall use the procedures set forth in Article VII to resolve any disputes as to whether any information relates solely to the Parent Business, solely to the Varex Business, or to both the Parent Business and the Varex Business.

(c) Subject to the remaining provisions of this Section 6.8 , the Parties agree that they shall have a shared privilege or immunity with respect to all privileges and immunities not allocated pursuant to Section 6.8(b) and all privileges and immunities relating to any Actions or other matters that involve both Parties (or one or more members of their respective Groups) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by either Party without the consent of the other Party.

(d) If any Dispute arises between the Parties or any members of their respective Groups regarding whether a privilege or immunity should be waived to protect or advance the interests of either Party and/or any member of their respective Groups, each Party agrees that it shall (i) negotiate with the other Party in good faith; (ii) endeavor to minimize any prejudice to the rights of the other Party; and (iii) not unreasonably withhold consent to any request for waiver by the other Party. Further, each Party specifically agrees that it shall not withhold its consent to the waiver of a privilege or immunity for any purpose except in good faith to protect its own legitimate interests.

(e) In the event of any Dispute between Parent and Varex, or any members of their respective Groups, either Party may waive a privilege in which the other Party or member of such other Party’s Group has a shared privilege, without obtaining consent pursuant to Section 6.8(c) ; provided that the Parties intend such waiver of a shared privilege to be effective only as to the use of information with respect to the Action between the Parties and/or the applicable members of their respective Groups, and is not intended to operate as a waiver of the shared privilege with respect to any Third Party.

(f) Upon receipt by either Party, or by any member of its respective Group, of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Privileged Information subject to a shared privilege or immunity or as to which another Party has the sole right hereunder to assert a privilege or immunity, or if either Party obtains knowledge that any of its, or any member of its respective Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, such Party shall promptly notify the other Party of the existence of the request (which notice shall be delivered to such other Party no later than five (5) business days

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following the receipt of any such subpoena, discovery or other request) and shall provide the other Party a reasonable opportunity to review the Privileged Information and to assert any rights it or they may have under this Section 6.8 or otherwise, to prevent the production or disclosure of such Privileged Information.

(g) Any furnishing of, or access or transfer of, any information pursuant to this Agreement is made in reliance on the agreement of Parent and Varex set forth in this Section 6.8 and in Section 6.9 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Groups as needed pursuant to this Agreement, is not intended to be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

(h) In connection with any matter contemplated by Section 6.7 or this Section 6.8 , the Parties agree to, and to cause the applicable members of their Group to, use commercially reasonable efforts to maintain their respective separate and joint privileges and immunities, including by executing joint defense and/or common interest agreements where necessary or useful for this purpose.

6.9 Confidentiality .

(a) Confidentiality. Subject to Section 6.10 , from and after the Effective Time each of Parent and Varex, on behalf of itself and each member of its respective Group, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to Parent’s confidential and proprietary information pursuant to policies in effect as of the Effective Time, all confidential and proprietary information concerning the other Party or any member of the other Party’s Group or their respective businesses (giving effect to the Separation and Distribution) that is either in its possession (including confidential and proprietary information in its possession prior to the date hereof) or furnished by any such other Party or any member of such Party’s Group or their respective Representatives at any time pursuant to this Agreement, any Ancillary Agreement or otherwise, and shall not use any such confidential and proprietary information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential and proprietary information has been (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any member of such Party’s Group or any of their respective Representatives in violation of this Agreement, (ii) later lawfully acquired from other sources by such Party (or any member of such Party’s Group) which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information, or (iii) independently developed or generated without reference to or use of any proprietary or confidential information of the other Party or any member of such Party’s Group. If any confidential and proprietary information of one Party or any member of its Group is disclosed to the other Party or any member of such other Party’s Group in connection with providing services to such first Party or any member of such first Party’s Group under this Agreement or any Ancillary Agreement, then such disclosed confidential and proprietary information shall be used only as required to perform such services.

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(b) No Release; Return or Destruction. Each Party agrees not to release or disclose, or permit to be released or disclosed, any information addressed in Section 6.9(a) to any other Person, except its Representatives who need to know such information in their capacities as such (who shall be advised of their obligations hereunder with respect to such information), and except in compliance with Section 6.10 . Without limiting the foregoing, when any such information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, and is no longer subject to any legal hold or other document preservation obligation, each Party will promptly after request of the other Party either return to the other Party all such information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or notify the other Party in writing that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon); provided , that the Parties may retain electronic back-up versions of such information maintained on routine computer system backup tapes, disks or other backup storage devices; provided further , that any such information so retained shall remain subject to the confidentiality provisions of this Agreement or any Ancillary Agreement.

(c) Third-Party Information; Privacy or Data Protection Laws. Each Party acknowledges that it and members of its Group may presently have and, following the Effective Time, may gain access to or possession of confidential or proprietary information of, or legally-protected personal information relating to, Third Parties (i) that was received under privacy policies and/or confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or members of such other Party’s Group, on the other hand, prior to the Effective Time; or (ii) that, as between the two Parties, was originally collected by the other Party or members of such other Party’s Group and that may be subject to and protected by privacy policies, as well as privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause the members of its Group and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or legally-protected personal information relating to, Third Parties in accordance with privacy policies and privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Effective Time or affirmative commitments or representations that were made before the Effective Time by, between or among the other Party or members of the other Party’s Group, on the one hand, and such Third Parties, on the other hand. With respect to legally-protected personal information received from consumers before the Effective Time, each Party agrees that it will not use data in a manner that is materially inconsistent with promises made at the time the data was collected unless it first obtains affirmative express consent from the relevant consumer.

6.10 Protective Arrangements . In the event that a Party or any member of its Group either determines on the advice of its counsel that it is required to disclose any information pursuant to applicable Law or receives any request or demand under lawful process or from any Governmental Authority to disclose or provide information of the other Party (or any member of the other Party’s Group) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party (to the extent legally permitted) as promptly as practicable under the circumstances prior to disclosing or providing such information and shall cooperate, at

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the expense of the other Party, in seeking any appropriate protective order requested by the other Party. In the event that such other Party fails to receive such appropriate protective order in a timely manner, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.

ARTICLE VII

DISPUTE RESOLUTION

7.1 Good Faith Officer Negotiation . Subject to Section 7.4 , either Party seeking resolution of any dispute, controversy or claim arising out of or relating to this Agreement or any Ancillary Agreement (including regarding whether any Assets are Varex Assets, any Liabilities are Varex Liabilities or the validity, interpretation, breach or termination of this Agreement or any Ancillary Agreement) (a “ Dispute ”), shall provide written notice thereof to the other Party (the “ Officer Negotiation Request ”). Within fifteen (15) days of the delivery of the Officer Negotiation Request, the Parties shall attempt to resolve the Dispute through good faith negotiation. All such negotiations shall be conducted by executives who hold, at a minimum, the title of Senior Vice President and who have authority to settle the Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the Parties are unable for any reason to resolve a Dispute within thirty (30) days of receipt of the Officer Negotiation Request, and such thirty (30) day period is not extended by mutual written consent of the Parties, the Chief Executive Officers of the Parties shall enter into good faith negotiations in accordance with Section 7.2 .

7.2 Good-Faith Negotiation . If any Dispute is not resolved pursuant to Section 7.1 , the Party that delivered the Officer Negotiation Request shall provide written notice of such Dispute to the Chief Executive Officer of each Party (a “ CEO Negotiation Request ”). As soon as reasonably practicable following receipt of a CEO Negotiation Request, the Chief Executive Officers of the Parties shall begin conducting good-faith negotiations with respect to such Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the Chief Executive Officers of the Parties are unable for any reason to resolve a Dispute within thirty (30) days of receipt of a CEO Negotiation Request, and such thirty (30) day period is not extended by mutual written consent of the Parties, the Dispute shall be submitted to arbitration in accordance with Section 7.3 .

7.3 Arbitration .

(a) In the event that a Dispute has not been resolved within thirty (30) days of the receipt of a CEO Negotiation Request in accordance with Section 7.2 , or within such longer period as the Parties may agree to in writing, then such Dispute shall, upon the written request of a Party (the “ Arbitration Request ”) be submitted to be finally resolved by binding arbitration in accordance with the then current International Institute for Conflict Prevention and Resolution

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(“ CPR ”) arbitration procedure, except as modified herein. The arbitration shall be held in (i) New York City, New York, or (ii) such other place as the Parties may mutually agree in writing. Unless otherwise agreed by the Parties in writing, any Dispute to be decided pursuant to this Section 7.3 will be decided (i) before a sole arbitrator if the amount in dispute, inclusive of all claims and counterclaims, totals less than $3 million; or (ii) by a panel of three (3) arbitrators if the amount in dispute, inclusive of all claims and counterclaims, totals $3 million or more.

(b) The panel of three (3) arbitrators will be chosen as follows: (i) within fifteen (15) days from the date of the receipt of the Arbitration Request, each Party will name an arbitrator; and (ii) the two (2) Party-appointed arbitrators will thereafter, within thirty (30) days from the date on which the second of the two (2) arbitrators was named, name a third, independent arbitrator who will act as chairperson of the arbitral tribunal. In the event that either Party fails to name an arbitrator within fifteen (15) days from the date of receipt of the Arbitration Request, then upon written application by either Party, that arbitrator shall be appointed pursuant to the CPR arbitration procedure. In the event that the two (2) Party-appointed arbitrators fail to appoint the third, then the third, independent arbitrator will be appointed pursuant to the CPR arbitration procedure. If the arbitration will be before a sole independent arbitrator, then the sole independent arbitrator will be appointed by agreement of the Parties within fifteen (15) days of the date of receipt of the Arbitration Request. If the Parties cannot agree to a sole independent arbitrator during such fifteen (15) day period, then upon written application by either party, the sole independent arbitrator will be appointed pursuant to the CPR arbitration procedure.

(c) The arbitrator(s) will have the right to award, on an interim basis, or include in the final award, any relief which it deems proper in the circumstances, including money damages (with interest on unpaid amounts from the due date), injunctive relief (including specific performance) and attorneys’ fees and costs; provided that the arbitrator(s) will not award any relief not specifically requested by the Parties and, in any event, will not award any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim). Upon selection of the arbitrator(s) following any grant of interim relief by a special arbitrator or court pursuant to Section 7.4 , the arbitrator(s) may affirm or disaffirm that relief, and the Parties will seek modification or rescission of the order entered by the court as necessary to accord with the decision of the arbitrator(s). The award of the arbitrator(s) shall be final and binding on the Parties, and may be enforced in any court of competent jurisdiction. The initiation of arbitration pursuant to this Article VII will toll the applicable statute of limitations for the duration of any such proceedings.

7.4 Litigation and Unilateral Commencement of Arbitration . Notwithstanding the foregoing provisions of this Article VII , (a) a Party may seek preliminary provisional or injunctive judicial relief with respect to a Dispute without first complying with the procedures set forth in Section 7.1 , Section 7.2 and Section 7.3 if such action is reasonably necessary to avoid irreparable damage and (b) either Party may initiate arbitration before the expiration of the periods specified in Section 7.1 , Section 7.2 and/or Section 7.3 if such Party has submitted an Officer Negotiation Request, a CEO Negotiation Request and/or an Arbitration Request and the other Party has failed to comply with Section 7.1 , Section 7.2 and/or Section 7.3 in good faith with respect to such negotiation and/or the commencement and engagement in arbitration. In such event, the other Party may commence and prosecute such arbitration unilaterally in accordance with the CPR arbitration procedure.

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7.5 Conduct During Dispute Resolution Process . Unless otherwise agreed in writing, the Parties shall, and shall cause the respective members of their Groups to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such agreements during the course of dispute resolution pursuant to the provisions of this Article VII , unless such commitments are the specific subject of the Dispute at issue.

ARTICLE VIII

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

8.1 Further Assurances .

(a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the Parties shall use its reasonable best efforts, prior to, on and after the Effective Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, prior to, on and after the Effective Time, each Party hereto shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all Approvals or Notifications of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the Varex Assets and the Parent Assets and the assignment and assumption of the Varex Liabilities and the Parent Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, cost and expense of the other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.

(c) On or prior to the Effective Time, Parent and Varex, in their respective capacities as direct and indirect stockholders of the members of their Groups, shall each ratify any actions which are reasonably necessary or desirable to be taken by Parent, Varex or any of the members of their respective Groups, as the case may be, to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements.

(d) Parent and Varex, and each of the members of their respective Groups, waive (and agree not to assert against any of the others) any claim or demand that any of them

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may have against any of the others for any Liabilities or other claims relating to or arising out of: (i) the failure of Varex or any other member of the Varex Group, on the one hand, or of Parent or any other member of the Parent Group, on the other hand, to provide any notification or disclosure required under any state Environmental Law in connection with the Separation or the other transactions contemplated by this Agreement, including the transfer by any member of any Group to any member of the other Group of ownership or operational control of any Assets not previously owned or operated by such transferee; or (ii) any inadequate, incorrect or incomplete notification or disclosure under any such state Environmental Law by the applicable transferor. To the extent any Liability to any Governmental Authority or any third Person arises out of any action or inaction described in clause (i) or (ii) above, the transferee of the applicable Asset hereby assumes and agrees to pay any such Liability.

ARTICLE IX

TERMINATION

9.1 Termination . This Agreement and all Ancillary Agreements may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by Parent, in its sole and absolute discretion, without the approval or consent of any other Person, including Varex. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by a duly authorized officer of each of the Parties.

9.2 Effect of Termination . In the event of any termination of this Agreement prior to the Effective Time, no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party by reason of this Agreement.

ARTICLE X

MISCELLANEOUS

10.1 Counterparts; Entire Agreement; Corporate Power .

(a) This Agreement and each Ancillary Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b) This Agreement, the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. This Agreement and the Ancillary Agreements together govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

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(c) Parent represents on behalf of itself and each other member of the Parent Group, and Varex represents on behalf of itself and each other member of the Varex Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d) Each Party acknowledges that it and each other Party is executing certain of the Ancillary Agreements by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause each such Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

10.2 Governing Law . This Agreement and, unless expressly provided therein, each Ancillary Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.

10.3 Assignability . Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties and the parties thereto, respectively, and their respective successors and permitted assigns; provided , however , that neither Party nor any such party thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other Party hereto or other parties thereto, as applicable. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement and the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole ( i.e. , the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.

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10.4 Third-Party Beneficiaries . Except for the indemnification rights under this Agreement and each Ancillary Agreement of any Parent Indemnitee or Varex Indemnitee in their respective capacities as such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and are not intended to confer upon any Person except the Parties any rights or remedies hereunder, and (b) there are no third-party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any third person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

10.5 Notices . All notices, requests, claims, demands or other communications under this Agreement and, to the extent, applicable and unless otherwise provided therein, under each of the Ancillary Agreements shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by facsimile with receipt confirmed, to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.5 ):

If to Parent (prior to, on or after the Effective Time), to:

Varian Medical Systems, Inc.

3100 Hansen Way

Palo Alto, California 94304

Attention: General Counsel

Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David C. Karp

Ronald C. Chen

Facsimile: (212) 403-2000

If to Varex (prior to the Effective Time), to:

Varex Imaging Corporation

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Attn: General Counsel

Facsimile: [●]

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with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David C. Karp

Ronald C. Chen

Facsimile: (212) 403-2000

If to Varex (from and after the Effective Time), to:

Varex Imaging Corporation

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Attn: General Counsel

Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David C. Karp

Ronald C. Chen

Facsimile: (212) 403-2000

A Party may, by notice to the other Party, change the address to which such notices are to be given.

10.6 Severability . If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

10.7 Force Majeure . No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

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10.8 No Set-Off . Except as expressly set forth in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any member of such Party’s Group shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any member of its Group arising out of this Agreement or any Ancillary Agreement.

10.9 Expenses . Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all fees, costs and expenses incurred on or prior to the Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement, including the Separation and the Distribution, and any Ancillary Agreement, the Registration Statement, the Plan of Reorganization and the consummation of the transactions contemplated hereby and thereby will be borne by the Party or its applicable Subsidiary incurring such fees, costs or expenses. The Parties agree that certain specified costs and expenses shall be allocated between the Parties as set forth on Schedule 10.9 .

10.10 Headings . The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

10.11 Survival of Covenants . Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and each Ancillary Agreement, and Liability for the breach of any obligations contained herein, shall survive the Separation and the Distribution and shall remain in full force and effect.

10.12 Waivers of Default . Waiver by a Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

10.13 Specific Performance . Subject to the provisions of Article VII , in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

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10.14 Amendments . No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

10.15 Interpretation . In this Agreement and any Ancillary Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement); (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified; (d) unless otherwise stated, all references to any agreement (including this Agreement and each Ancillary Agreement) shall be deemed to include the exhibits, schedules and annexes (including all Schedules, Exhibits and Appendixes) to such agreement; (e) the word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement or in any Ancillary Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [●].

10.16 Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, neither Varex or any member of the Varex Group, on the one hand, nor Parent or any member of the Parent Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim or arising out of or in connection with a breach of Section 5.8 ).

10.17 Performance . Parent will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Parent Group. Varex will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the

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Varex Group. Each Party (including its permitted successors and assigns) further agrees that it will (a) give timely notice of the terms, conditions and continuing obligations contained in this Agreement and any applicable Ancillary Agreement to all of the other members of its Group and (b) cause all of the other members of its Group not to take any action or fail to take any such action inconsistent with such Party’s obligations under this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby.

10.18 Mutual Drafting . This Agreement and the Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution Agreement to be executed by their duly authorized representatives as of the date first written above.


VARIAN MEDICAL SYSTEMS, INC.

By:
		Name:
		Title:

VAREX IMAGING CORPORATION

By:
		Name:
		Title:

[Signature Page to Separation and Distribution Agreement]

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

VAREX IMAGING CORPORATION

Varex Imaging Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), does hereby certify as follows:

The name of the Corporation is Varex Imaging Corporation. The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on July 18, 2016.

This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (as amended, the “DGCL”) and by the written consent of its sole stockholder in accordance with Section 228 of the DGCL, and is to become effective as of [●], Eastern time, on [●].

This Amended and Restated Certificate of Incorporation restates, integrates and amends the provisions of the currently existing Certificate of Incorporation of the Corporation, including as amended or supplemented heretofore. As so restated, integrated and amended, the Amended and Restated Certificate of Incorporation reads as follows:

ARTICLE I.

The name of this corporation is Varex Imaging Corporation (the “Corporation”).

ARTICLE II.

The registered office of the Corporation in the State of Delaware is c/o the Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, County of New Castle, State of Delaware, 19808. The name of the registered agent of the Corporation in the State of Delaware at such address is the Corporation Service Company.

ARTICLE III.

The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware (the “DGCL”).

ARTICLE IV.

Section 1. Authorized Stock . The Corporation shall be authorized to issue two classes of stock to be designated, respectively, “ Common Stock ” and “ Preferred Stock .” The total number of shares of stock which the Corporation shall have authority to issue shall be [●]. The total number of shares of Common Stock which the Corporation shall have authority to issue shall be [●], par value $0.01 per share. The total number of shares of Preferred Stock which the Corporation shall have authority to issue shall be [●], par value $0.01 per share.

Section 2. Common Stock . Except as may otherwise be provided in this Amended and Restated Certificate of Incorporation, in a Preferred Stock Designation (as hereinafter defined), or as required by law, the holders of outstanding shares of Common Stock shall have the right to vote on all questions to the exclusion of all other stockholders, each holder of record of Common Stock being entitled to one vote for each share of Common Stock standing in the name of the stockholder on the books of the Corporation.

Section 3. Preferred Stock . Shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the “Board of Directors”) (or any committee to which it may duly delegate the authority granted in this Article IV) is hereby empowered to authorize the issuance from time to time of shares of Preferred Stock in one or more series, for such consideration and for such corporate purposes as the Board of Directors (or such committee thereof) may from time to time determine, and by filing a certificate (hereinafter referred to as a “Preferred Stock Designation”) pursuant to applicable law of the State of Delaware as it presently exists or may hereafter be amended to establish from time to time for each such series the number of shares to be included in each such series and to fix the designations, powers, rights and preferences of the shares of each such series, and the qualifications, limitations and restrictions thereof to the fullest extent now or hereafter permitted by this Amended and Restated Certificate of Incorporation and the laws of the State of Delaware, including, without limitation, voting rights (if any), dividend rights, dissolution rights, conversion rights, exchange rights and redemption rights thereof, as shall be stated and expressed in a resolution or resolutions adopted by the Board of Directors (or such committee thereof) providing for the issuance of such series of Preferred Stock. Each series of Preferred Stock shall be distinctly designated. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:

(a)

the designation of the series, which may be by distinguishing number, letter or title;

(b)

the number of shares of the series, which number the Board of Directors may thereafter (except where otherwise provided in the Preferred Stock Designation) increase or decrease (but not below the number of shares thereof then outstanding);

(c)

the amounts payable on, and the preferences, if any, of shares of the series in respect of dividends, and whether such dividends, if any, shall be cumulative or noncumulative;

(d)

dates at which dividends, if any, shall be payable;

(e)

the redemption rights and price or prices, if any, for shares of the series;

(f)

the terms and amount of any sinking fund provided for the purchase or redemption of shares of the series;

(g)

the amounts payable on, and the preferences, if any, of shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

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(h)

whether the shares of the series shall be convertible into or exchangeable for shares of any other class or series, or any other security, of the Corporation or any other corporation, and, if so, the specification of such other class or series or such other security, the conversion or exchange price or prices or rate or rates, any adjustments thereof, the date or dates at which such shares shall be convertible or exchangeable and all other terms and conditions upon which such conversion or exchange may be made;

(i)

restrictions on the issuance of shares of the same series or of any other class or series; and

(j)

the voting rights, if any, of the holders of shares of the series.

ARTICLE V.

Section 1. Board of Directors .

(a)

The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors.

(b)

Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies (the “Whole Board”).

(c)

The directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided, with respect to the time for which they severally hold office, into three classes (designated as Class I, Class II and Class III), as nearly equal in number as is reasonably possible, each with a term of office to expire at the third succeeding annual meeting of stockholders after his or her election, with each director to hold office until his or her successor shall have been duly elected and qualified; provided , that the first term of office of the Class I directors shall expire at the 2018 annual meeting of stockholders, the first term of office of the Class II directors shall expire at the 2019 annual meeting of stockholders and the first term of office of the Class III directors shall expire at the 2020 annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the 2018 annual meeting of stockholders, (i) directors elected to succeed those directors whose terms then expire shall be elected to hold office for a three-year term and until the election and qualification of their respective successors in office, and (ii) if authorized by a resolution of the Board, directors may be elected to fill any vacancy on the Board, regardless of how such vacancy shall have been created.

(d)

Unless otherwise required by law, any vacancy on the Board or newly created directorship may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the 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 appointed expires and until their successors are duly elected and qualified, or until their earlier death, resignation, removal or departure from the Board for other cause.

(e)

Notwithstanding the foregoing, whenever the holders of outstanding shares of one or more series of Preferred Stock are entitled to elect a director or directors of the Corporation separately as a series or together with one or more other series pursuant to a resolution of the Board providing for the establishment of such series, such director or directors shall not be subject to the foregoing provisions of this Article V, and the election, term of office, removal and filling of vacancies in respect of such director or directors shall be governed by the resolution of the Board so providing for the establishment of such series and by applicable law.

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Section 2. Removal of Directors . Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board, 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 all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. If one or more directors are so removed, new director(s) may be elected at the same meeting. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect directors of the Corporation pursuant to the provisions applicable in the case of arrearages in the payment of dividends or other defaults contained in the resolution or resolutions of the Board providing for the establishment of any such series, any such director of the Corporation so elected may be removed in accordance with the provisions of such resolution or resolutions.

Section 3. In furtherance, and not in limitation, of the powers conferred by statute:

(a)

The Board is expressly authorized to make, amend, alter, change, add to or repeal the Bylaws, without any action on the part of the stockholders, by resolution passed by a majority of the Whole Board or by written consent, subject to the power of the stockholders of the Corporation to amend, alter, change, add to or repeal any Bylaws made by the Board by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

(b)

Notwithstanding anything herein to the contrary, following the 2019 annual meeting of the stockholders of the Corporation, (i) each of the Class III directors shall be elected at the 2020 annual meeting of the stockholders of the Corporation to a two-year term, with the directors being divided, with respect to the time for which they severally hold office, into two classes following such meeting, (ii) each of the Class I directors shall be elected at the 2021 annual meeting of the stockholders of the Corporation to a one-year term, with the directors being divided, with respect to the time for which they severally hold office, into one class following such meeting and (iii) beginning at the 2022 annual meeting of the stockholders of the Corporation, each of the directors shall be elected to a one-year term with a term of office to expire at the next annual meeting of stockholders after his or her election, with each director to hold office until his or her successor shall have been duly elected and qualified. Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, following the 2022 annual meeting of the stockholders of the Corporation, any director, or the entire Board, may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.

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ARTICLE VI.

Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for any stockholder (including any beneficial owner) to bring: (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provisions of the DGCL or this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation (as either may be amended from time to time), or (d) any action asserting a claim governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware ( provided , that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another court sitting in the State of Delaware). Any person or entity purchasing or otherwise acquiring any interest in shares of stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VI.

If any provision of this Article VI shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision in any other circumstance and of the remaining provisions of this Article VI (including, without limitation, each portion of any sentence of this Article VI containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

ARTICLE VII.

Meetings of stockholders may be held outside the State of Delaware, if the Bylaws so provide. The books of the Corporation may be kept (subject to any provision of law) outside the State of Delaware. Elections of directors need not be by ballot unless the Bylaws of this corporation shall so provide.

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ARTICLE VIII.

To the fullest extent permitted by the DGCL, as the same exists or may hereafter be amended, a director of the Corporation shall not be personally liable either to the Corporation or to any of its stockholders for monetary damages for breach of fiduciary duty as a director. Any amendment or modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, modification or repeal. If the DGCL hereafter is amended to further eliminate or limit the liability of a director, then a director of the Corporation, in addition to the circumstances in which a director is not personally liable as set forth in the preceding sentence, shall not be liable to the fullest extent permitted by the amended DGCL.

ARTICLE IX.

Section 1. Stockholder Action by Written Consent . Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and effective as of the time at which Varian Medical Systems, Inc., a Delaware corporation, shall cease to be the beneficial owner of at least a majority of the then outstanding shares of Common Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing by such stockholders.

Section 2. Meetings of Stockholders . Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, special meetings of stockholders may be called only by (a) the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board, or (b) the Chairman of the Board of Directors with the concurrence of the majority of the Board of Directors, and any power of stockholders to call a special meeting is specifically denied. At any annual or special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting as specified in the Bylaws.

Section 3. No Cumulative Voting . Stockholders of the Corporation shall not be entitled to cumulative voting in elections of directors of this Corporation.

ARTICLE X.

In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware as they presently exist or may hereafter be amended, subject to any limitations contained elsewhere in this Amended and Restated Certificate of Incorporation, the Corporation may from time to time alter, amend, repeal or adopt, in whole or in part, any provisions of this Amended and Restated Certificate of Incorporation, subject to the next sentence. Notwithstanding any other provision of this Amended and Restated Certificate of Incorporation or the Bylaws (and in addition to any other vote that may be required by law), there shall be required to amend, alter, change, or repeal, or adopt any provision inconsistent with, directly or indirectly, Article V, Article VIII, Article IX or this

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Article X of this Amended and Restated Certificate of Incorporation the affirmative vote of at least 66 2/3% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class; provided, however, that the provisions of this sentence shall be of no force and effect effective as of the completion of the 2021 annual meeting of stockholders of the Corporation.

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Exhibit 3.2

AMENDED AND RESTATED BYLAWS

VAREX IMAGING CORPORATION

Incorporated under the Laws of the State of Delaware

These Amended and Restated Bylaws (these “ Bylaws ”) of Varex Imaging Corporation, a Delaware corporation (the “Corporation”), are effective as of [●] and hereby amend and restate the previous bylaws of the Corporation which are hereby deleted in their entirety and replaced with the following:

ARTICLE I

OFFICES AND RECORDS

SECTION 1.1. Delaware Office . The registered office of the Corporation shall be located in the City of Wilmington, County of New Castle, State of Delaware. The name and address of its registered agent is Corporation Service Company, 2711 Centreville Road, Suite 400, Wilmington, County of New Castle, State of Delaware, 19808.

SECTION 1.2. Other Offices . The Corporation may have such other offices, either inside 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 as the business of the Corporation may require.

SECTION 1.3. Books and Records . The books and records of the Corporation may be kept inside or outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors.

ARTICLE II

STOCKHOLDERS

SECTION 2.1. Annual Meeting . The annual meeting of the stockholders of the Corporation shall be held on such date and at such place and time as may be fixed by resolution of the Board of Directors.

SECTION 2.2. Special Meeting .

(A) Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends, voting or upon liquidation (the “Preferred Stock”) with respect to such series of Preferred Stock, special meetings of the stockholders may be called only by or at the direction of (1) the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the “Whole Board”) or (2) the Chairman of the Board of Directors with the concurrence of the majority of the Board of Directors.

(B) The record date for, and the place, date and time of, any special meeting shall be fixed by the Board of Directors.

SECTION 2.3. Place of Meeting . The Board of Directors or the Chairman of the Board of the Board of Directors, as the case may be, may designate the place of meeting for any annual or special meeting of the stockholders or may designate that the meeting be held by means of remote communication. If no designation is so made, the place of meeting shall be the principal office of the Corporation.

SECTION 2.4. Notice of Meeting . Written or printed notice, stating the place, if any, 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, the purpose or purposes for which the meeting is called, shall be given by the Corporation not less than 10 days nor more than 60 days before the date of the meeting, either personally, by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware (except to the extent prohibited by Section 232(e) of the General Corporation Law of the State of Delaware) or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the General Corporation Law of the State of Delaware. Such further notice shall be given as may be required by applicable law. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 7.4 of these Bylaws. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation of the Corporation (as amended, the “Certificate of Incorporation”) otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

SECTION 2.5. Quorum and Adjournment . Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The Chairman of the Board of Directors or the Chief Executive Officer may adjourn the meeting from time to time, whether or not there is a quorum. No notice of the time and place, if any, of adjourned meetings need be given except as required by applicable law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

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SECTION 2.6. Organization . Meetings of stockholders shall be presided over by such person as the Board of Directors may designate as chairman of the meeting, or in the absence of such a person, the Chairman of the Board of the Directors, or if none or in the Chairman of the Board of Directors’ absence or inability to act, the Chief Executive Officer, or if none or in the Chief Executive Officer’s absence or inability to act, the President, or if none or in the President’s absence or inability to act, a Vice President, or, if none of the foregoing is present or able to act, by a chairman to be chosen by the holders of a majority of the shares entitled to vote who are present in person or by proxy at the meeting. The Secretary, or in the Secretary’s absence, an Assistant Secretary, shall act as secretary of every meeting, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall appoint any person present to act as secretary of the meeting. The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot.

SECTION 2.7. Proxies . At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in such manner prescribed by the General Corporation Law of the State of Delaware) by the stockholder, or by such stockholder’s duly authorized attorney in fact.

SECTION 2.8. Order of Business .

(A) Annual Meetings of Stockholders . At any annual meeting of the stockholders, only such nominations of individuals for election to the Board of Directors shall be made, and only such other business shall be conducted or considered, as shall have been properly brought before the meeting. For nominations to be properly made at an annual meeting, and proposals of other business to be properly brought before an annual meeting, nominations and proposals of other business must be: (a) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly made at the annual meeting, by or at the direction of the Board of Directors or (c) otherwise properly requested to be brought before the annual meeting by a stockholder of the Corporation in accordance with these Bylaws. For nominations of individuals for election to the Board of Directors or proposals of other business to be properly requested by a stockholder to be made at an annual meeting, a stockholder must (i) be a stockholder of record at the time of giving of notice of such annual meeting by or at the direction of the Board of Directors and at the time of the annual meeting, (ii) be entitled to vote at such annual meeting and (iii) comply with the procedures set forth in these Bylaws as to such business or nomination. The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations or other business proposals (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

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(B) Special Meetings of Stockholders . At any special meeting of the stockholders, only such business shall be conducted or considered as shall have been properly brought before the meeting pursuant to the Corporation’s notice of meeting. To be properly brought before a special meeting, proposals of business must be (a) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or (b) otherwise properly brought before the special meeting, by or at the direction of the Board of Directors; provided , however , that nothing herein shall prohibit the Board of Directors from submitting additional matters to stockholders at any such special meeting.

Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice of such special meeting and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the procedures set forth in these Bylaws as to such nomination. This Section 2.8(B) shall be the exclusive means for a stockholder to make nominations before a special meeting of stockholders.

(C) General . Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the chairman of any annual or special meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with these Bylaws and, if any proposed nomination or other business is not in compliance with these Bylaws, to declare that no action shall be taken on such nomination or other proposal and such nomination or other proposal shall be disregarded.

SECTION 2.9. Advance Notice of Stockholder Business and Nominations .

(A) Annual Meeting of Stockholders . Without qualification or limitation, subject to Section 2.9(C)(4) of these Bylaws, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.8(A) of these Bylaws, the stockholder must have given timely notice thereof (including, in the case of nominations, the completed and signed questionnaire, representation and agreement required by Section 2.10 of these Bylaws), and timely updates and supplements thereof, in each case in proper form, in writing to the Secretary, and such other business must otherwise be a proper matter for stockholder action.

To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided , however , that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior

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to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall any adjournment or postponement of an annual meeting, or the public announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above.

Notwithstanding anything in the immediately preceding paragraph to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased by the Board of Directors, and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.9(A) 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 principal executive offices of the Corporation 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.

In addition, to be considered timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof. For the avoidance of doubt, the obligation to update and supplement as set forth in this paragraph or any other Section of these Bylaws shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder to amend or update any proposal or to submit any new proposal, including by changing or adding nominees, matters, business and or resolutions proposed to be brought before a meeting of the stockholders.

(B) Special Meetings of Stockholders . Subject to Section 2.9(C)(4) of these Bylaws, in the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any stockholder may nominate an individual or individuals (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, provided that the stockholder gives timely notice thereof (including the completed and signed questionnaire, representation and agreement required by Section 2.10 of these Bylaws), and timely updates and supplements thereof in each case in proper form, in writing, to the Secretary.

To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the

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date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting of stockholders, or the public announcement thereof, commence a new time period for the giving of a stockholder’s notice as described above.

(1) To be in proper form, a stockholder’s notice pursuant to Section 2.8, this Section 2.9 or Section 2.10 of these Bylaws must include the following, as applicable.

(a) As to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal, as applicable, is made, a stockholder’s notice must set forth: (i) the name and address of such stockholder, as they appear on the Corporation’s books, of such beneficial owner, if any, and of their respective affiliates or associates or others acting in concert therewith, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard to whether the stockholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right, or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any affiliates

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or associates or others acting in concert therewith, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith has any right to vote any class or series of shares of the Corporation, (D) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, involving such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, directly or indirectly, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the Corporation (any of the foregoing, a “Short Interest”), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (G) any performance-related fees (other than an asset-based fee) that such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, including without limitation any such interests held by members of the immediate family sharing the same household of such stockholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith, (H) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith and (I) any direct or indirect interest of such stockholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (iii) all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such stockholder, such beneficial owner and their respective affiliates or associates or others acting in concert therewith, if any, and (iv) any other information relating to such stockholder, such beneficial owner or any of their respective affiliates or associates or others acting in concert therewith, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

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(b) If the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, a stockholder’s notice must, in addition to the matters set forth in paragraph (a) above, also set forth: (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder, such beneficial owner and each of their respective affiliates or associates or others acting in concert therewith, if any, in such business, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such proposal or business includes a proposal to amend the Bylaws of the Corporation, the text of the proposed amendment), and (iii) a description of all agreements, arrangements and understandings between such stockholder, such beneficial owner and each of their respective affiliates or associates or others acting in concert therewith, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder;

(c) As to each individual, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors, a stockholder’s notice must, in addition to the matters set forth in paragraph (a) above, also set forth: (i) all information relating to such individual that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such individual’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and

(d) With respect to each individual, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors, a stockholder’s notice must, in addition to the matters set forth in paragraphs (a) and (c) above, also include a completed and signed questionnaire, representation and agreement required by Section 2.10 of these Bylaws. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee. Notwithstanding anything to the contrary, only persons who are nominated in accordance with the procedures set forth in these Bylaws, including without limitation Sections 2.9 and 2.10 hereof, shall be eligible for election as directors.

(2) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

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(3) Notwithstanding the provisions of these Bylaws, 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 Bylaw; provided , however , that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the separate and additional requirements set forth in these Bylaws with respect to nominations or proposals as to any other business to be considered.

(4) Nothing in these Bylaws shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws. Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

SECTION 2.10. Submission of Questionnaire, Representation and Agreement . To be eligible to be a nominee of any stockholder for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.9 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such individual and the background of any other person or entity on whose behalf, directly or indirectly, the nomination is being made (which questionnaire shall be provided by the Secretary upon written request), and a written representation and agreement (in the form provided by the Secretary upon written request) that such individual (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation, and (2) any Voting Commitment that could limit or interfere with such individual’s ability to comply, if elected as a director of the Corporation, with such individual’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such individual’s personal capacity and on behalf of any person or entity on whose behalf, directly or indirectly, the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply, with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation publicly disclosed from time to time, and (D) consents to being named as a nominee in the Corporation’s proxy statement pursuant to Rule 14a-4(d) under the Exchange Act and any associated proxy card of the Corporation and agrees to serve if elected as a director, and (E) will abide by the requirements of Section 2.11 of these Bylaws.

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SECTION 2.11. Procedure for Election of Directors; Required Vote .

(A) Except as set forth below, election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, a majority of the votes cast at any meeting for the election of directors at which a quorum is present shall elect directors. For purposes of this Bylaw, a majority of votes cast shall mean that the number of shares voted “for” a director’s election exceeds 50% of the number of votes cast with respect to that director’s election. Votes cast shall include direction to withhold authority in each case and exclude abstentions with respect to that director’s election. Notwithstanding the foregoing, in the event of a “contested election” of directors, directors shall be elected by the vote of a plurality of the votes cast at any meeting for the election of directors at which a quorum is present. For purposes of this Bylaw, a “contested election” shall mean any election of directors in which the number of candidates for election as directors exceeds the number of directors to be elected, with the determination thereof being made by the Secretary as of the close the applicable notice of nomination period set forth in Section 2.9 of these Bylaws or under applicable law, based on whether one or more notice(s) of nomination were timely filed in accordance with said Section 2.9; provided , however , that the determination that an election is a “contested election” shall be determinative only as to the timeliness of a notice of nomination and not otherwise as to its validity. If, prior to the time the Corporation mails its initial proxy statement in connection with such election of directors, one or more notices of nomination are withdrawn such that the number of candidates for election as director no longer exceeds the number of directors to be elected, the election shall not be considered a contested election, but in all other cases, once an election is determined to be a contested election, directors shall be elected by the vote of a plurality of the votes cast.

(B) If a nominee for director who is an incumbent director is not elected and no successor has been elected at such meeting, the director shall promptly tender his or her resignation to the Board of Directors in accordance with the agreement contemplated by Section 2.10 of these Bylaws. The Nominating and Corporate Governance Committee shall make a recommendation to the Board of Directors as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board of Directors shall act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation, and publicly disclose (by a press release, a filing with the Securities and Exchange Commission or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. The Nominating and Corporate Governance Committee in making its recommendation, and the Board of Directors in making its decision, may each consider any factors or other information that it considers appropriate and relevant. The director who tenders his or her resignation shall not participate in the recommendation of the Nominating and Corporate Governance Committee or the decision of the Board of Directors with respect to his or her resignation. If such incumbent director’s resignation is not accepted by the Board of Directors, such director shall continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal. If a director’s resignation is accepted by the Board of Directors pursuant to this Bylaw, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board of Directors, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Section 3.9 of these Bylaws or may decrease the size of the Board of Directors pursuant to the provisions of Section 3.2 of these Bylaws.

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(C) Except as otherwise provided by law, the Certificate of Incorporation, or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.

(D) Any individual who is nominated for election to the Board of Directors and included in the Corporation’s proxy materials for an annual meeting shall tender an irrevocable resignation in advance of the annual meeting. Such resignation shall become effective upon a determination by the Board of Directors or any committee thereof that (1) the information provided pursuant to the Corporation by such individual was untrue in any material respect or omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading or (2) such individual shall have breached any representations or obligations owed to the Corporation under these Bylaws.

SECTION 2.12. Inspectors of Elections; Opening and Closing the Polls . The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may, but does not need to, include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law.

The Chairman of the meeting shall be appointed by the inspector or inspectors to fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

SECTION 2.13. No Stockholder Action by Written Consent . Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

ARTICLE III

BOARD OF DIRECTORS

SECTION 3.1. General Powers . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, 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 Bylaws required to be exercised or done by the stockholders.

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SECTION 3.2. Number, Tenure and Qualifications . Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board, but in no event shall the number of directors be fewer than three. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

(A)

Except as otherwise provided in the Certificate of Incorporation, the directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided, with respect to the time for which they severally hold office, into three classes (designated as Class I, Class II and Class III), as nearly equal in number as is reasonably possible, each with a term of office to expire at the third succeeding annual meeting of stockholders after his or her election, with each director to hold office until his or her successor shall have been duly elected and qualified; provided , that the first term of office of the Class I directors shall expire at the 2018 annual meeting of stockholders, the first term of office of the Class II directors shall expire at the 2019 annual meeting of stockholders and the first term of office of the Class III directors shall expire at the 2020 annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified. Except as otherwise provided in the Certificate of Incorporation, at each annual meeting of stockholders, commencing with the 2018 annual meeting of stockholders, (i) directors elected to succeed those directors whose terms then expire shall be elected to hold office for a three-year term and until the election and qualification of their respective successors in office, and (ii) if authorized by a resolution of the Board of Directors, directors may be elected to fill any vacancy on the Board of Directors, regardless of how such vacancy shall have been created.

SECTION 3.3. Regular Meetings . A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Stockholders. The Board of Directors may, by resolution, provide the time and place, if any, for the holding of additional regular meetings without other notice than such resolution.

SECTION 3.4. Special Meetings . Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the President or a majority of the Board of Directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place, if any, and time of the meetings.

SECTION 3.5. Notice . Notice of any special meeting of directors shall be given to each director at such person’s business or residence in writing by hand delivery, first-class or overnight mail or courier service, email or facsimile transmission, or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by overnight mail or courier service, such notice shall be deemed adequately delivered when delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by email, facsimile transmission, telephone or by hand, such notice shall be deemed adequately delivered when the

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notice is transmitted at least twelve (12) hours before such meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws, as provided under Section 9.1 of these Bylaws. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 7.4 of these Bylaws.

SECTION 3.6. Action by Consent of Board of Directors . 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 electronic 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 3.7. Conference Telephone 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 3.8. Quorum . Subject to Section 3.9 of these Bylaws, a whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

SECTION 3.9. Vacancies . Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from 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 appointed expires and until such director’s successor shall have been duly elected and qualified.

SECTION 3.10. Committees .

The Board of Directors may designate any such committee as the Board of Directors considers appropriate, which shall consist of one or more directors of the Corporation. The Board 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. Any such committee may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when required.

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A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these Bylaws. The Board of Directors shall have power at any time to fill vacancies in, to change the membership of, or to dissolve, any such committee. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided , however , that no such committee shall have or may exercise any authority of the Board of Directors.

SECTION 3.11. Removal . Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board of Directors, 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 all of the then-outstanding shares of Voting Stock, voting together as a single class, provided , that , following the 2022 annual meeting of stockholders of the Corporation, any director, or the entire Board, may be removed from office at any time, with or without cause, by the affirmative vote of the holders of at least a majority of the voting power of the then-outstanding shares of Voting Stock, voting together as a single class.

ARTICLE IV

OFFICERS

SECTION 4.1. Elected Officers . The elected officers of the Corporation shall be a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer, a Treasurer, a Controller and such other officers as the Board of Directors from time to time may deem proper. Any number of offices may be held by the same person. All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof. The Board of Directors or any committee thereof may from time to time elect, or the Chief Executive Officer may appoint, such other officers (including one or more Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board of Directors or such committee or by the Chief Executive Officer, as the case may be.

SECTION 4.2. Election and Term of Office . The elected officers of the Corporation shall be elected by the Board of Directors. Each officer shall hold office until such officer’s successor shall have been duly elected and shall have qualified or until such officer’s earlier resignation or removal.

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SECTION 4.3. Chairman of the Board . The Chairman of the Board shall be chosen from among the directors and may not be the Chief Executive Officer. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors.

SECTION 4.4. Chief Executive Officer . The Chief Executive Officer shall be responsible for the general management of the affairs of the Corporation and shall perform all duties incidental to his office which may be required by applicable law and all such other duties as are properly required of him by the Board of Directors. The Chief Executive Officer shall make reports to the Board of Directors and the stockholders, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect. The Chief Executive Officer of the Corporation may also serve as President, if so elected by the Board of Directors.

SECTION 4.5. President . The President shall act in a general executive capacity and shall assist the Chief Executive Officer in the administration and operation of the Corporation’s business and general supervision of its policies and affairs.

SECTION 4.6. Vice Presidents . Each Vice President shall have such powers and shall perform such duties as shall be assigned to such Vice President by the Board of Directors, the Chief Executive Officer or the President.

SECTION 4.7. Chief Financial Officer . The Chief Financial Officer shall act in an executive financial capacity. The Chief Financial Officer shall assist the Chief Executive Officer and the President in the general supervision of the Corporation’s financial policies and affairs.

SECTION 4.8. Controller . The Controller shall be responsible for the maintenance of adequate accounting records of all assets, liabilities, capital and transactions of the Corporation. The Controller shall prepare such balance sheets, income statements, budgets and other financial statements and reports as the Board of Directors or the Chief Executive Officer or the Chief Financial Officer may require, and shall perform such other duties as may be prescribed or assigned pursuant to these Bylaws and all other acts incident to the position of Controller.

SECTION 4.9. Treasurer . The Treasurer shall exercise general supervision over the receipt, custody and disbursement of corporate funds. The Treasurer shall cause the funds of the Corporation to be deposited in such banks as may be authorized by the Board of Directors, or in such banks as may be designated as depositaries in the manner provided by resolution of the Board of Directors. The Treasurer shall have such further powers and duties and shall be subject to such directions as may be granted or imposed upon him from time to time by the Board of Directors, the Chief Executive Officer or the President.

SECTION 4.10. Secretary . The Secretary shall keep or cause to be kept in one or more books provided for that purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; the Secretary shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by applicable law; the Secretary shall be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other

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documents to be executed on behalf of the Corporation under its seal; and the Secretary shall see that the books, reports, statements, certificates and other documents and records required by applicable law to be kept and filed are properly kept and filed; and in general, the Secretary shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to such Secretary by the Board of Directors, the Chief Executive Officer or the President.

SECTION 4.11. Removal . Any officer elected, or agent appointed, by the Board of Directors may be removed or suspended from office with or without cause by the affirmative vote of a majority of the Whole Board. Any officer or agent appointed by the Chief Executive Officer or the President may be removed or suspended by the officer that appointed such officer or agent with or without cause. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, his or her death, or his or her resignation or removal or suspension, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan.

SECTION 4.12. Vacancies . A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors. Any vacancy in an office appointed by the Chief Executive Officer or the President because of death, resignation, or removal may be filled by the Chief Executive Officer or the President.

ARTICLE V

STOCK CERTIFICATES AND TRANSFERS

SECTION 5.1. Certificated and Uncertificated Stock; Transfers . The interest of each stockholder of the Corporation may be evidenced by certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe or be uncertificated.

The shares of the stock of the Corporation shall be transferred on the books of the Corporation, in the case of certificated shares of stock, by the holder thereof in person or by such person’s attorney duly authorized in writing, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require; and, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has 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.

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Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in book-entry form. All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue. The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.

SECTION 5.2. Lost, Stolen or Destroyed Certificates . No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or such person’s discretion require.

SECTION 5.3. Record Owners . The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by applicable law.

SECTION 5.4. Transfer and Registry Agents . The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors or by the Chief Executive Officer or the President.

ARTICLE VI

INDEMNIFICATION

SECTION 6.1. Indemnification .

(A) Each person who was or is a party or is otherwise threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “Proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Bylaw is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or advancement of expenses pursuant hereto is sought or at the time any Proceeding relating thereto exists or is brought), a director or executive officer of the

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Corporation or, while serving as a director or executive officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, a “Covered Person”), shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such person in connection with such Proceeding if the person acted in good faith and in a manner 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 his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the 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 reasonable cause to believe that the person’s conduct was unlawful. Such indemnification shall continue as to a person who has ceased to be a director or executive officer of the Corporation or ceased serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, and shall inure to the benefit of his or her heirs, executors and administrators; provided , that except as provided in paragraph (A) of Section 6.3 of these Bylaws, the Corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors. For purposes of this Article VI, the “executive officers” of the Corporation shall be the persons identified in resolutions of the Board of Directors as executive officers of the Corporation, whether for purposes of Section 16 of the Exchange Act or otherwise.

(B) To obtain indemnification under this Bylaw, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (1) by a majority of Disinterested Directors (as hereinafter defined), even though less than a quorum, or (2) by a committee of Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum, or (3) if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Counsel (as hereinafter defined), in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (4) if a majority of the Disinterested Directors so directs, by a majority vote of the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Disinterested Directors unless there shall

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have occurred within two years prior to the date of the commencement of the Proceeding for which indemnification is claimed a “Change of Control” as defined in the [Placeholder for any Severance/Change of Control Agreement for Varex] in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Disinterested Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.

SECTION 6.2. Mandatory Advancement of Expenses . To the fullest extent authorized by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater rights to advancement of expenses than said law permitted the Corporation to provide prior to such amendment or modification), each Covered Person shall have (and shall be deemed to have a contractual right to have) the right, without the need for any action by the Board of Directors, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in connection with any Proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided , that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not, except to the extent specifically required by applicable law, in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “Undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Bylaw or otherwise.

SECTION 6.3. Claims .

(A) (1) If a claim for indemnification under this Article VI is not paid in full by the Corporation within thirty (30) days after a written claim pursuant to Section 6.1(B) of these Bylaws has been received by the Corporation, or (2) if a request for advancement of expenses under this Article VI is not paid in full by the Corporation within twenty (20) days after a statement pursuant to Section 6.2 of these Bylaws and the required Undertaking, if any, have been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim for indemnification or request for advancement of expenses and, if successful in whole or in part, the claimant shall be entitled to also be paid the expense of prosecuting such claim. It shall be a defense to any such action that, under the General Corporation Law of the State of Delaware, the claimant has not met the standard of conduct which makes it permissible for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the requested advancement of expenses, but (except where the required Undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Disinterested Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in

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the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Disinterested Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(B) If a determination shall have been made pursuant to Section 6.1(B) of these Bylaws that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (A) of this Section 6.3.

(C) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (A) of this Section 6.3 that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Bylaw.

SECTION 6.4. Contract Rights; Amendment and Repeal; Non-exclusivity of Rights .

(A) All of the rights conferred in this Article VI, as to indemnification, advancement of expenses and otherwise, shall be contract rights between the Corporation and each Covered Person to whom such rights are extended that vest at the commencement of such Covered Person’s service to or at the request of the Corporation and (x) any amendment or modification of this Article VI that in any way diminishes or adversely affects any such rights shall be prospective only and shall not in any way diminish or adversely affect any such rights with respect to such person and (y) all of such rights shall continue as to any such Covered Person who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of such Covered Person’s heirs, executors and administrators.

(B) All of the rights conferred in this Article VI, as to indemnification, advancement of expenses and otherwise, (i) shall not be exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise both as to action in such person’s official capacity and as to action in another capacity while holding such office and (ii) cannot be terminated or impaired by the Corporation, the Board of Directors or the stockholders of the Corporation with respect to a person’s service prior to the date of such termination.

SECTION 6.5. Insurance, Other Indemnification and Advancement of Expenses

(A) The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

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(B) The Corporation may, to the extent authorized from time to time by the Board of Directors or the Chief Executive Officer, grant rights to indemnification and rights to advancement of expenses incurred in connection with any Proceeding in advance of its final disposition, to any current or former officer, employee or agent of the Corporation to the fullest extent permitted by applicable law.

SECTION 6.6. Definitions . For purposes of these Bylaws:

(1) “Affiliate” and “associate” shall have the meanings ascribed thereto in Rule 405 under the Exchange Act; provided , however , that the term “partner” as used in the definition of “associate” shall not include any limited partner that is not involved in the management of the relevant partnership.

(2) “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(3) “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under these Bylaws.

(4) “Voting Stock” shall mean outstanding shares of capital stock of the Corporation entitled to vote generally for the election of directors.

(5) For purposes of these Bylaws, a stockholder shall be deemed to “own” only those outstanding shares of Voting Stock of the Corporation as to which the stockholder (or any stockholder, fund comprising a Qualifying Fund (as defined below) possesses both (1) the full voting and investment rights pertaining to the shares and (2) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (1) and (2) shall not include any shares (x) sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, including any short sale, (y) borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding capital stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, or if exercised by either party thereto would have, the purpose or effect of (i) reducing in any manner, to any extent or at any time in the future, such stockholder’s or affiliates’ full right to vote or direct the voting of any such shares, and/or (ii) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or affiliate, other than any such arrangements solely involving a national or multi-national market index. A stockholder shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder’s ownership of shares shall be deemed to continue during any period in which the stockholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement which is revocable at any time by the stockholder. The terms “owned,” “owning” and other variations of the word “own” shall have correlative meanings.

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SECTION 6.7. Notices . Any notice, request or other communication required or permitted to be given to the Corporation under this Bylaw shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

SECTION 6.8. Severability . If any provision or provisions of this Bylaw shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Bylaw (including, without limitation, each portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Bylaw (including, without limitation, each such portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1. Fiscal Year . The fiscal year of the Corporation is the 51- to 53-week period that ends on the Friday nearest September 30.

SECTION 7.2. Dividends . The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.

SECTION 7.3. Seal . The corporate seal shall have inscribed thereon the words “Corporate Seal”, the year of incorporation and around the margin thereof the words “Varex Imaging Corporation—Delaware.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

SECTION 7.4. Waiver of Notice . Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such 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 the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.

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SECTION 7.5. Audits . The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors.

SECTION 7.6. Resignations . Any director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the President, or the Secretary, or at such later time as is specified therein. Except to the extent specified in such notice, no formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

ARTICLE VIII

CONTRACTS, PROXIES

SECTION 8.1. Contracts . Except as otherwise required by applicable law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board of Directors may determine. The Chairman of the Board, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed by or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors, the Chairman of the Board, the President or any Vice President of the Corporation may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

SECTION 8.2. Proxies . Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.

ARTICLE IX

AMENDMENTS

SECTION 9.1. By the Stockholders . Subject to the provisions of the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, or new Bylaws enacted, at any special meeting of the stockholders if duly called for that purpose ( provided , that, in the notice of such special meeting, notice of such purpose shall be given), or at any annual meeting, by the affirmative vote of a majority of the Voting Stock.

SECTION 9.2. By the Board of Directors . Subject to the laws of the State of Delaware, the Certificate of Incorporation and these Bylaws, these Bylaws may also be altered, amended or repealed, or new Bylaws enacted, by the Board of Directors.

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Exhibit 10.1

TRANSITION SERVICES AGREEMENT

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

DATED AS OF [●]

TABLE OF CONTENTS


		Page

ARTICLE I DEFINITIONS			1

Section 1.01.	Definitions		1

ARTICLE II SERVICES			5

Section 2.01.	Services		5
Section 2.02.	Performance of Services		6
Section 2.03.	Charges for Services		7
Section 2.04.	Reimbursement for Out-of-Pocket Costs and Expenses		8
Section 2.05.	Changes in the Performance of Services		8
Section 2.06.	Transitional Nature of Services		8
Section 2.07.	Subcontracting		8

ARTICLE III OTHER ARRANGEMENTS			9

Section 3.01.	Access		9

ARTICLE IV BILLING; TAXES			10

Section 4.01.	Procedure		10
Section 4.02.	Late Payments		10
Section 4.03.	Taxes		10
Section 4.04.	No Set-Off		11
Section 4.05.	Audit Rights		11

ARTICLE V TERM AND TERMINATION			11

Section 5.01.	Term		11
Section 5.02.	Early Termination		12
Section 5.03.	Interdependencies		13
Section 5.04.	Effect of Termination		13
Section 5.05.	Information Transmission		13

ARTICLE VI CONFIDENTIALITY; PROTECTIVE ARRANGEMENTS			13

Section 6.01.	Parent and SpinCo Obligations		13
Section 6.02.	No Release; Return or Destruction		14
Section 6.03.	Privacy and Data Protection Laws		14
Section 6.04.	Protective Arrangements		14

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ARTICLE VII LIMITED LIABILITY AND INDEMNIFICATION		15

Section 7.01.	Limitations on Liability	15
Section 7.02.	Obligation to Re-Perform; Liabilities	15
Section 7.03.	Third-Party Claims	16
Section 7.04.	Provider Indemnity	16
Section 7.05.	Indemnification Procedures	16

ARTICLE VIII MISCELLANEOUS		16

Section 8.01.	Mutual Cooperation	16
Section 8.02.	Further Assurances	17
Section 8.03.	Audit Assistance	17
Section 8.04.	Title to Intellectual Property	17
Section 8.05.	Independent Contractors	17
Section 8.06.	Counterparts; Entire Agreement; Corporate Power	18
Section 8.07.	Governing Law	18
Section 8.08.	Assignability	19
Section 8.09.	Third-Party Beneficiaries	19
Section 8.10.	Notices	19
Section 8.11.	Severability	20
Section 8.12.	Force Majeure	20
Section 8.13.	Headings	20
Section 8.14.	Survival of Covenants	20
Section 8.15.	Waivers of Default	20
Section 8.16.	Dispute Resolution	21
Section 8.17.	Specific Performance	21
Section 8.18.	Amendments	21
Section 8.19.	Precedence of Schedules	22
Section 8.20.	Interpretation	22
Section 8.21.	Mutual Drafting	22

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TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT, dated as of [●] (this “ Agreement ”), is by and between Varian Medical Systems, Inc., a Delaware corporation (“ Parent ”), and Varex Imaging Corporation, a Delaware corporation (“ SpinCo ”).

R E C I T A L S:

WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the SpinCo Business from the Parent Business (the “ Separation ”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of all of the outstanding SpinCo Shares owned by Parent (the “ Distribution ”);

WHEREAS, in order to effectuate the Separation and the Distribution, Parent and SpinCo have entered into a Separation and Distribution Agreement, dated as of [●], 2016 (the “ Separation and Distribution Agreement ”);

WHEREAS, in order to facilitate and provide for an orderly transition in connection with the Separation and the Distribution, the Parties desire to enter into this Agreement to set forth the terms and conditions pursuant to which each of the Parties shall provide Services to the other Party for a transitional period; and

WHEREAS, the Parties acknowledge that this Agreement, the Separation and Distribution Agreement, and the other Ancillary Agreements represent the integrated agreement of Parent and SpinCo relating to the Separation and Distribution, are being entered together, and would not have been entered independently.

Article I.

DEFINITIONS

Section 1.01 Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

“ Action ” has the meaning set forth in the Separation and Distribution Agreement.

“ Additional Services ” shall have the meaning set forth in Section 2.01(b) .

“ Affiliate ” has the meaning set forth in the Separation and Distribution Agreement.

“ Agreement ” has the meaning set forth in the Preamble.

“ Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

“ Charge ” and “ Charges ” have the meaning set forth in Section 2.03 .

“ Confidential Information ” means all Information that is either confidential or proprietary.

“ Dispute ” has the meaning set forth in Section 8.16(a) .

“ Distribution ” has the meaning set forth in the Recitals.

“ Distribution Date ” has the meaning set forth in the Separation and Distribution Agreement.

“ Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

“ Expanded Services ” has the meaning set forth in Section 2.01(b) .

“ Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

“ Governmental Authority ” has the meaning set forth in the Separation and Distribution Agreement.

“ Information ” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“ Intellectual Property Matters Agreement ” has the meaning set forth in the Separation and Distribution Agreement.

“ Interest Payment ” has the meaning set forth in Section 4.02 .

“ Law ” has the meaning set forth in the Separation and Distribution Agreement.

“ Level of Service ” has the meaning set forth in Section 2.02(c) .

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“ Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

“ Losses ” has the meaning set forth in the Separation and Distribution Agreement.

“ Minimum Service Period ” means the period commencing on the Distribution Date and ending thirty (30) days after the Distribution Date, unless otherwise specified with respect to a particular service on the Schedules hereto.

“ Parent ” has the meaning set forth in the Preamble.

“ Parent Board ” has the meaning set forth in the Recitals.

“ Parent Business ” has the meaning set forth in the Separation and Distribution Agreement.

“ Parent Shares ” means the shares of common stock, par value $1.00 per share, of Parent.

“ Parties ” and “ Party ” means the parties to this Agreement.

“ Person ” has the meaning set forth in the Separation and Distribution Agreement.

“ Prime Rate ” has the meaning set forth in the Separation and Distribution Agreement.

“ Provider ” means, with respect to any Service, the Party providing such Service hereunder.

“ Provider Indemnitees ” has the meaning set forth in Section 7.03 .

“ Recipient ” means, with respect to any Service, the Party receiving such Service hereunder.

“ Recipient Indemnitees ” has the meaning set forth in Section 7.04 .

“ Record Date ” has the meaning set forth in the Separation and Distribution Agreement.

“ Representatives ” means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

“ Separation ” has the meaning set forth in the Recitals.

“ Separation and Distribution Agreement ” has the meaning set forth in the Recitals.

“ Service Baseline Period ” has the meaning set forth in Section 2.02(c) .

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“ Service Extension ” has the meaning set forth in Section 5.01(b) .

“ Service Period ” means, with respect to any Service, the period commencing on the Distribution Date (or such other date following the Distribution Date as specified in the Schedules hereto) and ending on the earliest of (a) the date that a Party terminates the provision of such Service pursuant to Section 5.02, (b) the date that is the two year anniversary of the Distribution Date and (c) the date specified for termination of such Service in the Schedules hereto.

“ Services ” has the meaning set forth in Section 2.01(a) .

“ SpinCo ” has the meaning set forth in the Preamble.

“ SpinCo Business ” has the meaning ascribed to the term “Varex Business” in the Separation and Distribution Agreement.

“ SpinCo Shares ” means the shares of common stock, par value $0.01 per share, of SpinCo.

“ Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

“ Tax ” shall have the meaning set forth in the Tax Matters Agreement.

“ Tax Matters Agreement ” means the Tax Matters Agreement to be entered into by and between Parent and SpinCo in connection with the Separation, the Distribution or the other transactions contemplated by the Separation and Distribution Agreement.

“ Tax Authority ” shall have the meaning set forth in the Tax Matters Agreement.

“ Termination Charges ” means, with respect to the termination of any Service pursuant to Section 5.02(a)(i) , any and all costs, fees and expenses (other than any severance or retention costs, unless otherwise specified with respect to a particular Service on the Schedules hereto or in the other Ancillary Agreements) payable by the Provider of such Service to a Third Party directly as a result of the early termination of such Service; provided , however , that the Provider shall use commercially reasonable efforts to minimize any costs, fees or expenses payable to any Third Party in connection with such early termination of such Service and credit any such reductions against the Termination Charges payable by the Recipient.

“ Third Party ” means any Person other than the Parties or any of their respective Affiliates.

“ Third-Party Claim ” means any Action commenced by any Third Party against any Party or any of its Affiliates.

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Article II.

SERVICES

Section 2.01 Services .

(a)

Commencing as of the Effective Time, the Provider agrees to provide, or to cause one or more of its Subsidiaries to provide, to the Recipient, or any Subsidiary of the Recipient, the applicable services (the “ Services ”) set forth on the Schedules hereto.

(b)

After the date of this Agreement, if SpinCo or Parent (i) identifies a service that (x) the Parent or any of its Subsidiaries provided to SpinCo prior to the Distribution Date that SpinCo reasonably needs in order for the SpinCo Business to continue to operate in substantially the same manner in which the SpinCo Business operated prior to the Distribution Date (for the avoidance of doubt, without giving effect to any post-Distribution Date acquisitions by SpinCo), and either such service was not included on the Schedules hereto (other than because the Parties agreed such service shall not be provided) or the scope of such service that is included on the Schedules hereto needs to be expanded (other than because the Parties agreed that such scope would not be provided), or (y) SpinCo or any of its Subsidiaries provided to Parent prior to the Distribution Date that Parent reasonably needs in order for the Parent Business to continue to operate in substantially the same manner in which the Parent Business operated prior to the Distribution Date (for the avoidance of doubt, without giving effect to any post-Distribution Date acquisitions by Parent), and either such service was not included on the Schedules hereto (other than because the Parties agreed such service shall not be provided) or the scope of such service that is included on the Schedules hereto needs to be expanded (other than because the Parties agreed that such scope would not be provided), and (ii) provides written notice to the other Party within one hundred twenty (120) days after the Distribution Date requesting such additional services, then such other Party shall use its commercially reasonable efforts to provide, or to cause one of its Subsidiaries to provide, such requested additional services (such requested additional services, the “ Additional Services ” and such requested expanded services, the “ Expanded Services ”); provided , however , that no Party shall be obligated to provide any Additional Service or Expanded Service if it does not, in its reasonable judgment, have adequate resources to provide such Additional Service or Expanded Service or if the provision of such Additional Service or Expanded Service would significantly disrupt the operation of its or its Subsidiaries’ businesses (including, for the avoidance of doubt, disruptions or potential disruptions to information technology security); and provided , further , that the Provider shall not be required to provide any Additional Services or Expanded Services if the Parties are unable to reach agreement on the terms thereof (including with respect to Charges therefor). In connection with any request for Additional Services or Expanded Services in accordance with this Section 2.01(b), the Parties shall in good faith negotiate the terms of a supplement to the applicable Schedule, which terms shall be consistent with the terms of, and the pricing methodology used for, similar Services provided under this Agreement. Upon the mutual written agreement of the Parties, the supplement to the applicable Schedule shall describe in reasonable detail the nature, scope, service period(s), termination provisions and other terms applicable to such Additional Services in a manner similar to that in which the Services are described in the existing Schedules.

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Each supplement to the applicable Schedule, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and the Additional Services set forth therein shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

Section 2.02 Performance of Services .

(a)

Subject to Section 2.05 , the Provider shall perform, or shall cause one or more of its Subsidiaries to perform, all Services to be provided by the Provider in a manner that is based on its past practice and that is substantially similar in all material respects to the analogous services provided by or on behalf of Parent or any of its Subsidiaries to Parent or its applicable functional group or Subsidiary prior to the Effective Time, and, in any event, in a manner that conforms in all material respects with the terms of the Schedules hereto.

(b)

Nothing in this Agreement shall require the Provider to perform or cause to be performed any Service to the extent that the manner of such performance would constitute a violation of any applicable Law or any existing contract or agreement with a Third Party. If the Provider is or becomes aware of the potential for any such violation, the Provider shall promptly advise the Recipient of such potential violation, and the Provider and the Recipient will mutually seek an alternative that addresses such potential violation. The Parties agree to cooperate in good faith and use commercially reasonable efforts to obtain any necessary Third Party consents required under any existing contract or agreement with a Third Party to allow the Provider to perform, or cause to be performed, all Services to be provided by the Provider hereunder in accordance with the standards set forth in this Section 2.02 . Unless otherwise agreed in writing by the Parties, all reasonable out-of-pocket costs and expenses (if any) incurred by any Party or any of its Subsidiaries in connection with obtaining any such Third Party consent that is required to allow the Provider to perform or cause to be performed such Services shall be divided proportionately between the Provider and the Recipient in accordance with such Parties’ respective utilization of such Services at such time. If, with respect to a Service, the Parties, despite the use of such commercially reasonable efforts, are unable to obtain a required Third Party consent, or the performance of such Service by the Provider would constitute a violation of any applicable Law, the Provider shall have no obligation whatsoever to perform such Service or cause such Service to be performed.

(c)

The estimated resources required for each Service shall be set forth on the Schedules . Unless otherwise provided with respect to a specific Service on the Schedules hereto, the Provider shall not be obligated to perform or to cause to be performed any Service in a manner that is materially more burdensome (with respect to service quality or quantity) than analogous services provided to Parent or its applicable functional group or Subsidiary (collectively referred to as the “ Level of Service ”) during the one year period ending on the last day of Parent’s last fiscal quarter completed on or prior to the date of the Distribution (the “ Service Baseline Period ”). If the Recipient requests that the Provider perform or cause to be performed any Service that exceeds the Level of Service during the Service Baseline Period, then the Parties shall cooperate and act in good faith to determine whether the Provider could be required to provide such requested higher

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Level of Service. If the Parties determine that the Provider shall provide the requested higher Level of Service, then such higher Level of Service shall be documented in a written agreement signed by the Parties. If the Recipient requests that the Provider perform any Service that would require the use of resources set forth on the Schedules which resources are no longer accessible to the Provider, the Parties shall document any agreement with respect to a replacement resource for such Service in a written agreement signed by the Parties. Each amended section of the Schedules hereto, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such written agreement and the Level of Service increases set forth in such written agreement shall be deemed a part of the Services provided under this Agreement, in each case subject to the terms and conditions of this Agreement.

(d)

(i) Neither the Provider nor any of its Subsidiaries shall be required to perform or to cause to be performed any of the Services for the benefit of any Third Party or any other Person other than the Recipient and its Subsidiaries, and (ii) EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 2.02 OR SECTION 7.04 , EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL SERVICES ARE PROVIDED ON AN “AS-IS” BASIS, THAT THE RECIPIENT ASSUMES ALL RISK AND LIABILITY ARISING FROM OR RELATING TO ITS USE OF AND RELIANCE UPON THE SERVICES, AND THAT THE PROVIDER MAKES NO OTHER REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO THE SERVICES. EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

(e)

Each Party shall be responsible for its own compliance with any and all Laws applicable to its performance under this Agreement. No Party shall knowingly take any action in violation of any such applicable Law that results in Liability being imposed on the other Party.

Section 2.03 Charges for Services . Unless otherwise provided with respect to a specific Service on the Schedules hereto, the Recipient shall pay the Provider of the Services a fee (either one-time or recurring) for such Services (or category of Services, as applicable) (each fee constituting a “ Charge ” and, collectively, “ Charges ”), which Charges shall be set forth on the applicable Schedules hereto, or if not so set forth, then, unless otherwise provided with respect to a specific Service on the Schedule hereto, based upon the cost of providing such Services as shall be agreed to in good faith by the Parties from time to time. Except as otherwise set forth on the Schedules hereto, all Charges shall be exclusive of any Taxes (responsibility for which shall be governed by Section 4.03). During the term of this Agreement, the amount of a Charge for any Service may be modified to the extent of (a) any adjustments mutually agreed to by the Parties, (b) any adjustments due to a change in Level of Service requested by the Recipient and agreed upon by the Provider, and (c) any adjustment in the rates or charges imposed by any Third Party provider that is providing Services (proportional to the respective use of such Services by each

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Party), provided that the Provider will notify the Recipient in writing of any such change in rates at least fifteen (15) days prior to the effective date of such rate change. Together with any invoice for Charges, the Provider shall provide the Recipient with reasonable documentation, including any additional documentation reasonably requested by the Recipient to the extent that such documentation is in the Provider’s or its Subsidiaries’ possession or control, to support the calculation of such Charges.

Section 2.04 Reimbursement for Out-of-Pocket Costs and Expenses . The Recipient shall reimburse the Provider for reasonable out-of-pocket costs and expenses incurred by the Provider or any of its Subsidiaries in connection with providing the Services (including reasonable travel-related expenses, provided such travel-related expenses comply with the Recipient’s then-applicable business travel policies) to the extent that such costs and expenses are not reflected in the Charges for such Services; provided , however , that any such cost or expense in excess of five thousand dollars ($5,000) that is not consistent with historical practice between the Parties for any individual Service (including business travel and related expenses) shall require advance written approval of the Recipient; provided further, that if the Recipient does not provide such advance written approval and the incurrence of such cost or expense is reasonably necessary for Provider to provide such Service in accordance with the standards set forth in this Agreement, Provider shall not be required to perform such Service. Any reimbursable travel-related expenses incurred in performing the Services shall be incurred and charged to the Recipient in accordance with the Recipient’s then-applicable business travel policies, so long as Provider has received copies of such travel policies at a reasonable time prior to the time such expenses are incurred.

Section 2.05 Changes in the Performance of Services . Subject to the performance standards for Services set forth in Sections 2.02(a) , 2.02(b) and 2.02(c) , the Provider may make changes from time to time in the manner of performing the Services if the Provider is making similar changes in performing analogous services for itself and if the Provider furnishes to the Recipient reasonable prior written notice (in content and timing) of such changes. If such change shall materially adversely affect the timeliness or quality of, or the Charges for, the applicable Service, the Recipient shall be permitted to terminate this Agreement pursuant to Section 5.02(a)(i) without being required to pay any Termination Charges pursuant to Section 5.04 or comply with clauses (x), (y) and (z) of Section 5.02(a)(i) .

Section 2.06 Transitional Nature of Services . The Parties acknowledge the transitional nature of the Services and agree to cooperate in good faith and to use commercially reasonable efforts to avoid a disruption in the transition of the Services from the Provider to the Recipient (or its designee). Unless otherwise agreed with respect to a specific Service, each Party agrees to use commercially reasonable efforts to reduce or eliminate its and its Affiliates’ dependency on each Service to the extent and as soon as is reasonably practicable.

Section 2.07 Subcontracting . A Provider may hire or engage one or more Third Parties to perform any or all of its obligations under this Agreement; provided , however , that (a) such Provider shall use the same degree of care (but at least reasonable care) in selecting each of such Third Party as it would if such Third Party was being retained to provide similar services to the Provider and (b) such Provider shall in all cases remain responsible (as primary obligor) for all of its obligations under this Agreement with respect to the scope of the Services, the performance standard for Services set forth in Sections 2.02(a) , 2.02(b) and 2.02(c) and the content of the Services provided to the Recipient. Such Provider shall be liable for any breach of its

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obligations under this Agreement by any Third Party service provider engaged by such Provider. Subject to the confidentiality provisions set forth in Article VI , each Party shall, and shall cause their respective Affiliates to, provide, upon fifteen (15) business days’ prior written notice from the other Party, any Information within such Party’s or its Affiliates’ control that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by a Third Party, including any applicable invoices, agreements documenting the arrangements between such Third Party and the Provider and other supporting documentation; provided , further , however , that each Party shall make no more than one such request per Third Party during any calendar quarter.

Article III.

OTHER ARRANGEMENTS

Section 3.01 Access .

(a)

SpinCo shall, and shall cause its Subsidiaries to, allow Parent and its Subsidiaries and their respective Representatives reasonable access during normal business hours to the facilities of SpinCo and its Subsidiaries that is reasonably necessary for Parent and its Subsidiaries to fulfill their obligations under this Agreement. In addition to the foregoing right of access, SpinCo shall, and shall cause its Subsidiaries to, afford Parent, its Subsidiaries and their respective Representatives, upon reasonable advance written notice, reasonable access during normal business hours to the facilities, Information, systems, infrastructure and personnel of SpinCo and its Subsidiaries as reasonably necessary for Parent to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by SpinCo or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of SpinCo or any of its Subsidiaries and (ii) in the event that SpinCo determines that providing such access could reasonably be commercially detrimental, violate any applicable Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such consequence. Parent agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of SpinCo or its Subsidiaries, or when given access to any facilities, Information, systems, infrastructure or personnel of SpinCo or its Subsidiaries, conform to the policies and procedures of SpinCo and its Subsidiaries, as applicable, concerning health, safety, conduct and security which are made known or provided to Parent from time to time.

(b)

Parent shall, and shall cause its Subsidiaries to, allow SpinCo and its Subsidiaries and their respective Representatives reasonable access during normal business hours to the facilities of Parent and its Subsidiaries that is reasonably necessary for SpinCo and its Subsidiaries to fulfill their obligations under this Agreement. In addition to the foregoing right of access, Parent shall, and shall cause its Subsidiaries to, afford SpinCo, its Subsidiaries and their respective Representatives, upon reasonable advance written

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notice, reasonable access during normal business hours to the facilities, Information, systems, infrastructure and personnel of Parent and its Subsidiaries as reasonably necessary for SpinCo to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by Parent or its Subsidiaries, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of Parent or any of its Subsidiaries and (ii) in the event that Parent determines that providing such access could be commercially detrimental, violate any applicable Law or agreement or waive any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such consequence. SpinCo agrees that all of its and its Subsidiaries’ employees shall, and that it shall use commercially reasonable efforts to cause its Representatives’ employees to, when on the property of Parent or its Subsidiaries, or when given access to any facilities, Information, systems, infrastructure or personnel of Parent or its Subsidiaries, conform to the policies and procedures of Parent and its Subsidiaries, as applicable, concerning health, safety, conduct and security which are made known or provided to SpinCo from time to time.

Article IV.

BILLING; TAXES

Section 4.01 Procedure . Charges for the Services shall be charged to and payable by the Recipient. Amounts payable pursuant to this Agreement shall be paid by electronic or check-based payments (or such other method of payment as may be agreed between the Parties from time to time) to the Provider (as directed by the Provider), which amounts shall be due within thirty (30) days of the Recipient’s receipt of an invoice, which invoice may be provided at any time, so long as invoices are provided at least once per quarter, including reasonable documentation pursuant to Section 2.03 . All amounts due and payable hereunder shall be invoiced and paid in U.S. dollars. In the event of any billing dispute, the Recipient shall promptly pay any undisputed amount.

Section 4.02 Late Payments . Charges not paid when due (including any undisputed amounts) pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within forty-five (45) days of the receipt of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus two (2%) percent (the “ Interest Payment ”), provided that notice of any such late payment has been provided and the other Party has been provided fifteen (15) days to cure any such late payment.

Section 4.03 Taxes . Without limiting any provisions of this Agreement, the Recipient shall be responsible for and shall pay any and all sales, use, value-added, goods and services and similar Taxes imposed on, or payable with respect to, any Services received pursuant to this Agreement and any fees or charges (including any Charges) payable by it pursuant to this Agreement (but excluding any Taxes imposed on the Provider’s net income). Notwithstanding anything to the contrary in the previous sentence or elsewhere in this Agreement, the Recipient shall be entitled to deduct and withhold from any payment to the Provider any such Taxes that the Recipient is required by applicable Law to withhold and shall timely remit such Taxes to the applicable Tax Authority.

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Section 4.04 No Set-Off . Except as mutually agreed to in writing by Parent and SpinCo, no Party or any of its Affiliates shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or (b) any other amounts claimed to be owed to the other Party or any of its Subsidiaries arising out of this Agreement.

Section 4.05 Audit Rights . Subject to the confidentiality provisions of this Agreement, each Party shall, and shall cause its respective Affiliates to, provide, upon ten (10) days’ prior written notice from the other Party, any information within such Party’s or its Affiliates’ possession that the requesting Party reasonably requests in connection with any Services being provided to such requesting Party by the other Party or a Third Party service provider, including any applicable invoices or other supporting documentation, or in the case of a Third Party service provider, agreements documenting the arrangements between such Third Party service provider and the Provider; provided , however , that each Party shall make no more than one such request during any calendar month.

Article V.

TERM AND TERMINATION

Section 5.01 Term .

(a)

This Agreement shall commence at the Effective Time and shall terminate upon the earlier to occur of (i) the last date on which either Party is obligated to provide any Service to the other Party in accordance with the terms of this Agreement; (ii) the mutual written agreement of the Parties to terminate this Agreement in its entirety; and (iii) the date that is the two (2 )year anniversary of the Distribution Date. Unless otherwise terminated pursuant to Section 5.02 , this Agreement shall terminate with respect to each Service as of the close of business on the last day of the Service Period for such Service.

(b)

Following 120 days after the date hereof, if the Recipient reasonably determines that it will require a Service to continue beyond the date on which such Service is scheduled to terminate, the Recipient may request that the Provider extend such Service (any such extension, a “ Service Extension ”) for a specified period beyond the scheduled termination of such Service (which period shall in no event be shorter than sixty (60) days) by written notice to the Provider no less than thirty (30) days prior to the date of such scheduled termination, and Provider shall consider any such request in good faith; provided , however , that no Party shall be obligated to agree to any Service Extension, including because, after good-faith negotiations between the Parties, the Parties fail to reach an agreement with respect to the terms thereof; provided , further , however , that (i) there shall be no more than one (1) Service Extension with respect to each Service and (ii) the Provider shall not be obligated to provide such Service Extension if a Third Party consent is required. In connection with any request for Service Extensions in accordance with this Section 5.01(b) , the Parties shall in good faith (x) negotiate the terms of an amendment to the applicable Schedule, which amendment shall be consistent with the terms of, and the pricing methodology and rates used for, similar Services provided under this Agreement and (y) determine the costs and expenses (other than Service Charges), if any, that would be incurred by the Provider or the Recipient, as the case may be, in connection with the provision of such Service Extension, which costs and expenses shall

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be borne solely by the Party requesting the Service Extension. Each amended Schedule to implement a Service Extension, as agreed to in writing by the Parties, shall be deemed part of this Agreement as of the date of such agreement and any Services provided pursuant to such Service Extensions shall be deemed “Services” provided under this Agreement, in each case subject to the terms and conditions of this Agreement. Notwithstanding anything herein to the contrary, the term for any Service, as extended by a Service Extension, shall not exceed the date that is the two (2) year anniversary of the Distribution Date.

Section 5.02 Early Termination.

(a)

Subject to certain limitations set forth on the Schedules , and without prejudice to the Recipient’s rights with respect to Force Majeure, the Recipient may from time to time terminate this Agreement with respect to the entirety or portion of any Service (for the avoidance of doubt, the Recipient may terminate any Service (or portion thereof) set forth on any part of the Schedules hereto without terminating all or any other Services set forth on the same Schedule as such terminated Service (or portion thereof)):

(i)

for any reason or no reason, upon the giving of at least thirty (30) days’ prior written notice (or such other number of days specified in the Schedules hereto) to the Provider of such Service; provided , however , that any such termination (x) may not be effective prior to the end of the Minimum Service Period, (y) may only be effective as of the last day of a month and (z) shall be subject to the obligation to pay any applicable Termination Charges pursuant to Section 5.04 ; or

(ii)

if the Provider of such Service has failed to perform any of its material obligations under this Agreement with respect to such Service, and such failure shall continue to be uncured by the Provider for a period of at least thirty (30) days after receipt by the Provider of written notice of such failure from the Recipient; provided , however , that the Recipient shall not be entitled to terminate this Agreement with respect to the applicable Service if, as of the end of such period, there remains a good-faith Dispute between the Parties (undertaken in accordance with the terms of Section 8.16 ) as to whether the Provider has cured the applicable breach.

(b)

The Provider may terminate this Agreement with respect to the entirety or portion of any Service at any time upon prior written notice to the Recipient if the Recipient has failed to perform any of its material obligations under this Agreement with respect to such Service, including making payment of Charges for such Service when due, and such failure shall continue to be uncured by the Recipient for a period of at least thirty (30) days after receipt by the Recipient of a written notice of such failure from the Provider; provided , however , that the Provider shall not be entitled to terminate this Agreement with respect to the applicable Service if, as of the end of such period, there remains a good-faith Dispute between the Parties (undertaken in accordance with the terms of Section 8.16 ) as to whether the Recipient has cured the applicable breach. The Schedules hereto shall be updated to reflect any terminated Service.

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Section 5.03 Interdependencies . The Parties acknowledge and agree that (a) there may be interdependencies among the Services being provided under this Agreement; (b) upon the request of either Party, the Parties shall cooperate and act in good faith to determine whether (i) any such interdependencies exist with respect to the particular Service that a Party is seeking to terminate pursuant to Section 5.02 and (ii) in the case of such termination, the Provider’s ability to provide a particular Service in accordance with this Agreement would be materially and adversely affected by such termination of another Service; and (c) in the event that the Parties have determined that such interdependencies exist and such termination would materially and adversely affect the Provider’s ability to provide a particular Service in accordance with this Agreement, the Parties shall (i) negotiate in good faith to amend the Schedules hereto with respect to such impacted Service prior to such termination, which amendment shall be consistent with the terms of comparable Services, and (ii) if after such negotiation, the Parties are unable to agree on such amendment, the Provider’s obligation to provide such Service shall terminate automatically with such termination.

Section 5.04 Effect of Termination . Upon the termination of any Service pursuant to this Agreement, the Provider of the terminated Service shall have no further obligation to provide the terminated Service, and the Recipient of such Service shall have no obligation to pay any future Charges relating to such Service; provided , however , that the Recipient shall remain obligated to the Provider for (a) the Charges owed and payable in respect of Services provided prior to the effective date of termination for such Service, and (b) any applicable Termination Charges (which, in the case of this clause (b), shall not be payable in the event that the Recipient terminates any Service pursuant to Section 5.02(a)(ii) ). In connection with the termination of any Service, the provisions of this Agreement not relating solely to such terminated Service shall survive any such termination, and in connection with a termination of this Agreement, Article I , this Article V , Article VII and Article IX , all confidentiality obligations under this Agreement and Liability for all due and unpaid Charges, and Termination Charges shall continue to survive indefinitely.

Section 5.05 Information Transmission . The Provider, on behalf of itself and its respective Subsidiaries, shall use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the Recipient, in accordance with Section [6.1] of the Separation and Distribution Agreement, any Information received or computed by the Provider for the benefit of the Recipient concerning the relevant Service during the Service Period; provided , however , that, except as otherwise agreed to in writing by the Parties (a) the Provider shall not have any obligation to provide, or cause to be provided, Information in any non-standard format, (b) the Provider and its Subsidiaries shall be reimbursed for their reasonable costs in accordance with Section [6.3] of the Separation and Distribution Agreement for creating, gathering, copying, transporting and otherwise providing such Information, and (c) the Provider shall use commercially reasonable efforts to maintain any such Information in accordance with Section [6.4] of the Separation and Distribution Agreement.

Article VI.

CONFIDENTIALITY; PROTECTIVE ARRANGEMENTS

Section 6.01 Parent and SpinCo Obligations . Subject to Section 6.04 , each of Parent and SpinCo, on behalf of itself and each of its Subsidiaries, agrees to hold, and to cause its respective

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Representatives to hold, in strict confidence, with at least the same degree of care that applies to Parent’s Confidential Information pursuant to policies in effect as of the Effective Time, all Confidential Information concerning the other Party or its Subsidiaries or their respective businesses that is either in its possession (including Confidential Information in its possession prior to the date hereof) or furnished by such other Party or such other Party’s Subsidiaries or their respective Representatives at any time pursuant to this Agreement, and shall not use any such Confidential Information other than for such purposes as may be expressly permitted hereunder, except , in each case, to the extent that such Confidential Information (a) is or becomes generally available to the public, other than as a result of a disclosure by such Party or any of its Subsidiaries or any of their respective Representatives in violation of this Agreement; (b) is lawfully acquired from other sources by such Party or any of its Subsidiaries, which sources are not themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such Confidential Information; or (c) is independently developed or generated without reference to or use of the Confidential Information of the other Party or any of its Subsidiaries. If any Confidential Information of a Party or any of its Subsidiaries is disclosed to the other Party or any of its Subsidiaries in connection with providing the Services, then such disclosed Confidential Information shall be used only as required to perform such Services.

Section 6.02 No Release; Return or Destruction . Each Party agrees (a) not to release or disclose, or permit to be released or disclosed, any Confidential Information of the other Party addressed in Section 6.01 to any other Person, except its Representatives who need to know such Confidential Information in their capacities as such (who shall be advised of their obligations hereunder with respect to such Confidential Information) and except in compliance with Section 6.04 , and (b) to use commercially reasonable efforts to maintain such Confidential Information in accordance with Section [6.9] of the Separation and Distribution Agreement. Without limiting the foregoing, when any such Confidential Information is no longer needed for the purposes contemplated by the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreements, each Party will promptly after request of the other Party either return to the other Party all such Confidential Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or notify the other Party in writing that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon); provided , that the Parties may retain electronic back-up versions of such Confidential Information maintained on routine computer system backup tapes, disks or other backup storage devices.

Section 6.03 Privacy and Data Protection Laws . Each Party shall comply with all applicable state, federal and foreign privacy and data protection Laws that are or that may in the future be applicable to the provision of the Services under this Agreement.

Section 6.04 Protective Arrangements . In the event that a Party or any of its Subsidiaries either determines on the advice of its counsel that it is required to disclose any information pursuant to applicable Law or receives any request or demand under lawful process or from any Governmental Authority to disclose or provide information of the other Party (or any of its Subsidiaries) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party (to the extent legally permitted) as promptly as practicable under the circumstances prior to disclosing or providing such information and shall cooperate, at the expense of the other

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Party, in seeking any appropriate protective order requested by the other Party. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.

Article VII.

LIMITED LIABILITY AND INDEMNIFICATION

Section 7.01 Limitations on Liability .

(a)

SUBJECT TO SECTION 7.02 AND SECTION 7.01(C) , THE LIABILITIES OF THE PROVIDER AND ITS SUBSIDIARIES AND THEIR RESPECTIVE REPRESENTATIVES, COLLECTIVELY, UNDER THIS AGREEMENT FOR ANY ACT OR FAILURE TO ACT IN CONNECTION HEREWITH (INCLUDING THE PERFORMANCE OR BREACH OF THIS AGREEMENT), OR FROM THE SALE, DELIVERY, PROVISION OR USE OF ANY SERVICES PROVIDED UNDER OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, SHALL NOT EXCEED THE AGGREGATE CHARGES ACTUALLY PAID TO THE PROVIDER FOR SERVICES PURSUANT TO THIS AGREEMENT.

(b)

IN NO EVENT SHALL EITHER PARTY, ITS SUBSIDIARIES OR THEIR RESPECTIVE REPRESENTATIVES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER PARTY IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT (OTHER THAN ANY SUCH LIABILITY WITH RESPECT TO A THIRD-PARTY CLAIM), AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS SUBSIDIARIES AND ITS REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.

(c)

The limitations in Section 7.01(a) and Section 7.01(b) shall not apply in respect of any Liability arising out of or in connection with (i) either Party’s Liability for breaches of confidentiality under Article VI , (ii) either Party’s obligations under Section 7.03 or 7.04 , (iii) the gross negligence, willful misconduct or fraud of or by the Party to be charged or (iv) either Party’s obligations or liabilities under the Intellectual Property Matters Agreement.

Section 7.02 Obligation to Re-Perform; Liabilities . In the event of any breach of this Agreement by the Provider with respect to the provision of any Services (with respect to which the Provider can reasonably be expected to re-perform in a commercially reasonable manner),

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the Provider shall (a) promptly correct in all material respects such error, defect or breach or re-perform in all material respects such Services at the request of the Recipient and at the sole cost and expense of the Provider and (b) subject to the limitations set forth in Section 7.01 , reimburse the Recipient and its Subsidiaries and Representatives for Liabilities attributable to such breach by the Provider. The remedy set forth in this Section 7.02 shall be the sole and exclusive remedy of the Recipient for any such breach of this Agreement; provided , however , that the foregoing shall not prohibit the Recipient from exercising its right to terminate this Agreement in accordance with the provisions of Section 5.02(a)(ii) or seeking specific performance in accordance with Section 8.17 . Any request for re-performance in accordance with this Section 7.02 by the Recipient must be in writing and specify in reasonable detail the particular error, defect or breach, and such request must be made no more than one month from the later of (x) the date on which such breach occurred and (y) the date on which such breach was reasonably discovered by the Recipient.

Section 7.03 Third-Party Claims . In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement, the Recipient shall indemnify, defend and hold harmless the Provider, its Subsidiaries and each of their respective Representatives, and each of the successors and assigns of any of the foregoing (collectively, the “ Provider Indemnitees ”), from and against any and all claims of Third Parties relating to, arising out of or resulting from the Recipient’s use or receipt of the Services provided by the Provider hereunder, other than Third Party Claims arising out of the gross negligence, willful misconduct or fraud of any Provider Indemnitee.

Section 7.04 Provider Indemnity . In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement, this Agreement or any other Ancillary Agreement, the Provider shall indemnify, defend and hold harmless the Recipient, its Subsidiaries and each of their respective Representatives, and each of the successors and assigns of any of the foregoing (collectively, the “ Recipient Indemnitees ”), from and against any and all Liabilities relating to, arising out of or resulting from the sale, delivery or provision of any Services provided by such Provider hereunder, but only to the extent that such Liability relates to, arises out of or results from the Provider’s gross negligence, willful misconduct or fraud.

Section 7.05 Indemnification Procedures . The procedures for indemnification set forth in Sections [4.5, 4.6 and 4.7] of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement.

Article VIII.

MISCELLANEOUS

Section 8.01 Mutual Cooperation . Each Party shall, and shall cause its Subsidiaries to, cooperate with the other Party and its Subsidiaries in connection with the performance of the Services hereunder; provided , however , that such cooperation shall not unreasonably disrupt the normal operations of such Party or its Subsidiaries; and, provided , further , that this Section 8.01 shall not require such Party to incur any out-of-pocket costs or expenses unless and except as expressly provided in this Agreement or otherwise agreed to in writing by the Parties.

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Section 8.02 Further Assurances . Subject to the terms of this Agreement, each Party shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that the other Party may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 8.03 Audit Assistance . Each of the Parties and their respective Subsidiaries are or may be subject to regulation and audit by a Governmental Authority (including a Tax Authority), standards organizations, customers or other parties to contracts with such Parties or their respective Subsidiaries under applicable Law, standards or contract provisions. If a Governmental Authority, standards organization, customer or other party to a contract with a Party or its Subsidiary exercises its right to examine or audit such Party’s or its Subsidiary’s books, records, documents or accounting practices and procedures pursuant to such applicable Law, standards or contract provisions, and such examination or audit relates to the Services, then the other Party shall provide, at the sole cost and expense of the requesting Party, all assistance reasonably requested by the Party that is subject to the examination or audit in responding to such examination or audits or requests for Information, to the extent that such assistance or Information is within the reasonable control of the cooperating Party and is related to the Services. In the case of any conflict between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.

Section 8.04 Title to Intellectual Property . Except as expressly provided for under the terms of this Agreement or the Separation and Distribution Agreement or the Intellectual Property Matters Agreement, the Recipient acknowledges that it shall acquire no right, title or interest (including any license rights or rights of use) in any intellectual property which is owned or licensed by the Provider, by reason of the provision of the Services hereunder. The Recipient shall not remove or alter any copyright, trademark, confidentiality or other proprietary notices that appear on any intellectual property owned or licensed by the Provider, and the Recipient shall reproduce any such notices on any and all copies thereof. The Recipient shall not attempt to decompile, translate, reverse engineer or make excessive copies of any intellectual property owned or licensed by the Provider, and the Recipient shall promptly notify the Provider of any such attempt, regardless of whether by the Recipient or any Third Party, of which the Recipient becomes aware.

Section 8.05 Independent Contractors . The Parties each acknowledge and agree that they are separate entities, each of which has entered into this Agreement for independent business reasons. The relationships of the Parties hereunder are those of independent contractors and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship between the Parties. Employees performing Services hereunder do so on behalf of, under the direction of, and as employees of, the Provider, and the Recipient shall have no right, power or authority to direct such employees, unless otherwise specified with respect to a particular Service on the Schedules hereto.

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Section 8.06 Counterparts; Entire Agreement; Corporate Power .

(a)

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b)

This Agreement, the Separation and Distribution Agreement and the other Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. This Agreement, the Separation and Distribution Agreement, and the other Ancillary Agreements govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

(c)

Parent represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, and SpinCo represents on behalf of itself and, to the extent applicable, each of its Subsidiaries, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it and is enforceable in accordance with the terms hereof.

(d)

Each Party acknowledges and agrees that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 8.07 Governing Law . This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

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Section 8.08 Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided , however , that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party (such consent not to be unreasonably withheld in connection with the divestiture of any Subsidiary or business of such Party that is a Recipient). Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under the Separation and Distribution Agreement, this Agreement and the other Ancillary Agreements in whole (i.e., the assignment of a Party’s rights and obligations under the Separation and Distribution Agreement, this Agreement and all the other Ancillary Agreements all at the same time) in connection with a merger, consolidation or other business combination of a Party with or into any other Person or a sale of all or substantially all of the assets of a Party to another Person, in each case so long as the resulting, surviving or acquiring Person assumes all the obligations of the relevant Party by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.

Section 8.09 Third-Party Beneficiaries . Except as provided in Article VII with respect to the Provider Indemnitees and the Recipient Indemnitees in their respective capacities as such, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder; and (b) there are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other Third Party with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 8.10 Notices . All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8.10 ):

If to Parent, to:

Varian Medical Systems, Inc.

3100 Hansen Way

Palo Alto, California 94304

Attention: General Counsel

If to SpinCo, to:

Varex Imaging Corporation.

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Attention: General Counsel

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Either Party may, by notice to the other Party, change the address to which such notices are to be given.

Section 8.11 Severability . If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

Section 8.12 Force Majeure . No Party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation hereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligations is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. Without limiting the termination rights contained in this Agreement, in the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such Force Majeure, (a) provide written notice to the other Party of the nature and extent of such Force Majeure; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as reasonably practicable (and in no event later than the date that the affected Party resumes providing analogous services to, or otherwise resumes analogous performance under any other agreement for, itself, its Affiliates or any Third Party) unless this Agreement has previously been terminated under Article V or this Section 8.12 . The Recipient shall be (i) relieved of the obligation to pay Charges for the affected Service(s) throughout the duration of such Force Majeure and (ii) entitled to permanently terminate such Service(s) if the delay or failure in providing such Services because of a Force Majeure shall continue to exist for more than fifteen (15) consecutive days (it being understood that the Recipient shall not be required to provide any advance notice of such termination to the Provider).

Section 8.13 Headings . The Article, Section and Paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 8.14 Survival of Covenants . Except as expressly set forth in this Agreement, the covenants, representations and warranties and other agreements contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Effective Time and shall remain in full force and effect thereafter.

Section 8.15 Waivers of Default . Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

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Section 8.16 Dispute Resolution .

(a)

In the event of any controversy, dispute or claim (a “ Dispute ”) arising out of or relating to any Party’s rights or obligations under this Agreement (whether arising in contract, tort or otherwise), calculation or allocation of the costs of any Service or otherwise arising out of or relating in any way to this Agreement (including the interpretation or validity of this Agreement), such Dispute shall be resolved in accordance with the dispute resolution process referred to in Article VII of the Separation and Distribution Agreement.

(b)

In any Dispute regarding the amount of a Charge or a Termination Charge, if such Dispute is finally resolved pursuant to the dispute resolution process set forth or referred to in Section 8.16(a) and it is determined that the Charge or the Termination Charge, as applicable, that the Provider has invoiced the Recipient, and that the Recipient has paid to the Provider, is greater or less than the amount that the Charge or the Termination Charge, as applicable, should have been, then (i) if it is determined that the Recipient has overpaid the Charge or the Termination Charge, as applicable, the Provider shall within ten (10) calendar days after such determination reimburse the Recipient an amount of cash equal to such overpayment, plus the Interest Payment, accruing from the date of payment by the Recipient to the time of reimbursement by the Provider; and (ii) if it is determined that the Recipient has underpaid the Charge or the Termination Charge, as applicable, the Recipient shall within ten (10) calendar days after such determination reimburse the Provider an amount of cash equal to such underpayment, plus the Interest Payment, accruing from the date such payment originally should have been made by the Recipient to the time of payment by the Recipient. Prior to implementation of the dispute resolution process referred to in Article VII of the Separation and Distribution Agreement, the Parties shall use their respective commercially reasonable efforts, if practicable, to attempt in good faith to resolve any Dispute in accordance with the procedures set forth in Schedule 8.16 .

Section 8.17 Specific Performance . Subject to Section 8.16 , in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) in respect of its rights or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties. Unless otherwise agreed in writing, the Parties shall continue to provide Services and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of Section 8.16 and this Section 8.17 with respect to all matters not subject to such Dispute; provided , however , that this obligation shall only exist during the term of this Agreement.

Section 8.18 Amendments . No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom enforcement of such waiver, amendment, supplement or modification is sought.

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Section 8.19 Precedence of Schedules . Each Schedule attached to or referenced in this Agreement is hereby incorporated into and shall form a part of this Agreement; provided , however , that the terms contained in such Schedule shall only apply with respect to the Services provided under that Schedule. In the event of a conflict between the terms contained in an individual Schedule and the terms in the body of this Agreement, the terms in the Schedule shall take precedence with respect to the Services under such Schedule only. No terms contained in individual Schedules shall otherwise modify the terms of this Agreement.

Section 8.20 Interpretation . In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Annexes and Exhibits hereto) and not to any particular provision of this Agreement; (c) Article, Section, Exhibit, Annex and Schedule references are to the Articles, Sections, Exhibits, Annexes and Schedules to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in Palo Alto, California or Salt Lake City, Utah; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [●], 2016.

Section 8.21 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.


VARIAN MEDICAL SYSTEMS, INC.

By:
		Name:
		Title:

VAREX IMAGING CORPORATION

By:
		Name:
		Title:

[Signature Page to Transition Services Agreement]

Exhibit 10.2

TAX MATTERS AGREEMENT

DATED AS OF [ ● ]

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

TABLE OF CONTENTS


		Page

Section 1.	Definition of Terms		1

Section 2.	Allocation of Tax Liabilities		11

Section 2.01	General Rule		11

Section 2.02	Allocation of U.S. Federal Income Tax and Federal Other Tax		11

Section 2.03	Allocation of State Income and State Other Taxes		12

Section 2.04	Allocation of Foreign Taxes		12

Section 2.05	Certain Transaction and Other Taxes		12

Section 2.06	Attribution of Taxes		13

Section 3.	Proration of Taxes for Straddle Periods		14

Section 4.	Preparation and Filing of Tax Returns		14

Section 4.01	General		14

Section 4.02	Parent’s Responsibility		14

Section 4.03	SpinCo’s Responsibility		15

Section 4.04	Tax Accounting Practices		15

Section 4.05	Consolidated or Combined Tax Returns		15

Section 4.06	Right to Review Tax Returns		16

Section 4.07	SpinCo Carrybacks and Claims for Refund		16

Section 4.08	Apportionment of Taxes, Earnings and Profits and Tax Attributes		17

Section 5.	Tax Payments		17

Section 5.01	Payment of Taxes with Respect to Parent Federal Consolidated Income Tax Returns and Parent State Combined Income Tax Returns		17

Section 5.02	Payment of Taxes with Respect to Joint Returns (Other Than a Parent Federal Consolidated Income Tax Return or Parent State Combined Income Tax Return) and Certain Returns of Other Taxes		18


Section 5.03	Payment of Separate Company Taxes	19

Section 5.04	Indemnification Payments	19

Section 6.	Tax Benefits	20

Section 6.01	Tax Benefits	20

Section 6.02	Parent and SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation	21

Section 7.	Tax-Free Status	21

Section 7.01	Representations	21

Section 7.02	Restrictions on SpinCo	22

Section 7.03	Restrictions on Parent	24

Section 7.04	Procedures Regarding Opinions and Rulings	24

Section 7.05	Liability for Tax-Related Losses	25

Section 7.06	Section 336(e) Election	27

Section 8.	Assistance and Cooperation	28

Section 8.01	Assistance and Cooperation	28

Section 8.02	Income Tax Return Information	28

Section 8.03	Reliance by Parent	29

Section 8.04	Reliance by SpinCo	29

Section 9.	Tax Records	29

Section 9.01	Retention of Tax Records	29

Section 9.02	Access to Tax Records	30

Section 10.	Tax Contests	30

Section 10.01	Notice	30

Section 10.02	Control of Tax Contests	30


Section 11.	Effective Date; Termination of Prior Intercompany Tax Allocation Agreements	32

Section 12.	Survival of Obligations	32

Section 13.	Treatment of Payments; Tax Gross-Up	32

Section 13.01	Treatment of Tax Indemnity and Tax Benefit Payments	32

Section 13.02	Tax Gross-Up	32

Section 13.03	Interest Under This Agreement	33

Section 14.	Disagreements	33

Section 15.	Late Payments	33

Section 16.	Expenses	34

Section 17.	General Provisions	34

Section 17.01	Addresses and Notices	34

Section 17.02	Counterparts; Entire Agreement; Corporate Power	34

Section 17.03	Waiver	35

Section 17.04	Severability	35

Section 17.05	Assignability	36

Section 17.06	Further Action	36

Section 17.07	Integration	36

Section 17.08	Headings	36

Section 17.09	Governing Law	36

Section 17.10	Amendment	36

Section 17.11	SpinCo Subsidiaries	36

Section 17.12	Successors	36

Section 17.13	Specific Performance	37

iii

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (this “Agreement” ) is entered into as of [●], by and between Varian Medical Systems, Inc., a Delaware corporation ( “Parent” ), and Varex Imaging Corporation, a Delaware corporation ( “SpinCo” ) (collectively, the “Companies” and each a “Company” ).

RECITALS

WHEREAS, Parent and SpinCo have entered into a Separation and Distribution Agreement, dated as of [●] (the “Separation and Distribution Agreement” ), providing for the separation of the Parent Group from the SpinCo Group;

WHEREAS, pursuant to the terms of the Separation and Distribution Agreement, Parent will, among other things, (i) (a) contribute the Varex Assets to SpinCo, (b) cause SpinCo to assume the Varex Liabilities, in actual or constructive exchange for (c) the issuance by SpinCo to Parent of SpinCo Common Stock and (d) the transfer by SpinCo to Parent of cash in an amount equal to $[●] (the “ Cash Distribution ”), (ii) transfer the Cash Distribution to third-party creditors or stockholders of Parent (the “ Creditor Repayment ”) in connection with the reorganization; and (iii) effect the Distribution;

WHEREAS, for U.S. Federal Income Tax purposes, it is intended that each of the Internal Distributions and the Distribution shall qualify as transactions that are generally tax free pursuant to Sections 355(a) and/or 368(a)(1)(D) of the Code;

WHEREAS, as of the date hereof, Parent is the common parent of an affiliated group (as defined in Section 1504 of the Code) of corporations, including SpinCo, which has elected to file consolidated Federal Income Tax Returns;

WHEREAS, as a result of the Distribution, SpinCo and its subsidiaries will cease to be members of the affiliated group of which Parent is the common parent (the “Deconsolidation” );

WHEREAS, the parties desire to provide for and agree upon the allocation between the parties of liabilities for Taxes arising prior to, as a result of, and subsequent to the Distribution, and to provide for and agree upon other matters relating to Taxes;

NOW THEREFORE, in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

Section 1. Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings, and capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Separation and Distribution Agreement:

“Accounting Cutoff Date” means, with respect to SpinCo, any date as of the end of which there is a closing of the financial accounting records for such entity.

“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of

Taxes, including (a) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (b) any claim for equitable recoupment or other offset, and (c) any claim for refund or credit of Taxes previously paid.

“Affiliate” means any entity that is directly or indirectly “controlled” by either the person in question or an Affiliate of such person. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise. The term Affiliate shall refer to Affiliates of a person as determined immediately after the Distribution.

“Agreement” shall mean this Tax Matters Agreement.

“business day” has the meaning set forth in the Separation and Distribution Agreement.

“Cash Distribution” shall have the meaning provided in the recitals of this Agreement.

“CFO Certificate” shall have the meaning set forth in Section 7.02(e) of this Agreement.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Companies” and “Company” shall have the meaning provided in the first sentence of this Agreement.

“Compensatory Equity Interests” shall have the meaning set forth in Section 6.02(a) of this Agreement.

“Contribution” means the contribution of assets, including all of the shares of capital stock of Internal SpinCo, by Parent to SpinCo pursuant to the Separation and Distribution Agreement in actual or constructive exchange for (i) the issuance by SpinCo to Parent of shares of SpinCo Common Stock and (ii) the Cash Distribution.

“Creditor Repayment” shall have the meaning provided in the recitals of this Agreement.

“Deconsolidation” shall have the meaning provided in the recitals of this Agreement.

“Deconsolidation Date” means the last date on which SpinCo qualifies as a member of the affiliated group (as defined in Section 1504 of the Code) of which Parent is the common parent.

“DGCL” means the Delaware General Corporation Law.

“Distribution” shall mean the distribution by Parent of all the common stock of SpinCo pro rata to holders of Parent common stock.

“Distribution Date” has the meaning set forth in the Separation and Distribution Agreement.

“Distribution-Related Tax Contest” shall mean any Tax Contest in which the IRS, another Tax Authority or any other party asserts a position that could reasonably be expected to adversely affect the Tax-Free Status of the Contribution and Distribution, the Internal Contribution and/or any of the Internal Distributions.

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“Effective Time” has the meaning set forth in the Separation and Distribution Agreement.

“Employee Matters Agreement” means the Employee Matters Agreement, dated as of [●], by and between Parent and SpinCo.

“Federal Income Tax” means any Tax imposed by Subtitle A of the Code, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Federal Income Tax Return” means any Tax Return of (i) any member of the SpinCo Group (including any consolidated, combined or unitary return), or (ii) any member of the Parent Group (including any consolidated, combined or unitary return), in each case, with respect to Federal Income Taxes, including any Parent Federal Consolidated Income Tax Return and any SpinCo Federal Consolidated Income Tax Return.

“Federal Other Tax” means any Tax imposed by the federal government of the United States of America other than any Federal Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Fifty-Percent or Greater Interest” shall have the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

“Filing Date” shall have the meaning set forth in Section 7.05(d) of this Agreement.

“Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for a Tax Period, (a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a State, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (b) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (c) by a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or a comparable agreement under the laws of a State, local, or foreign taxing jurisdiction; (d) by any allowance of a refund or credit in respect of an overpayment of Income Tax or Other Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Income Tax or Other Tax; or (e) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the parties.

“First Internal Distribution” means the distribution by VMSN of all the common stock of Internal SpinCo to VMSN Holdings in a transaction intended to qualify as a distribution that is generally tax free pursuant to Sections 355(a) and 368(a)(1)(D) of the Code.

“Foreign Income Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, which is an income tax as defined in Treasury Regulations Section 1.901-2, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

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“Foreign Other Tax” means any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession, other than any Foreign Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Foreign Tax” means any Foreign Income Taxes or Foreign Other Taxes.

“Former Employee” has the meaning set forth in the Employee Matters Agreement.

“Group” means the Parent Group or the SpinCo Group, or both, as the context requires.

“High-Level Dispute” means any dispute or disagreement (a) relating to liability under Section 7.05 of this Agreement or (b) in which the amount of liability in dispute exceeds $[●] million.

“Income Tax” means any Federal Income Tax, State Income Tax or Foreign Income Tax.

“Indemnitee” shall have the meaning set forth in Section 13.03 of this Agreement.

“Indemnitor” shall have the meaning set forth in Section 13.03 of this Agreement.

“Internal Contribution” means the contribution of specified assets by VMSN to Internal SpinCo pursuant to the Separation and Distribution Agreement.

“Internal Distributions” shall mean the First Internal Distribution, the Second Internal Distribution, and the Third Internal Distribution.

“Internal SpinCo” means Varex Imaging International Holdings BV, a besloten vennootschap organized under the laws of the Netherlands, and a direct wholly owned subsidiary of VMSN.

“Internal SpinCo Active Trade or Business” means the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) by Internal SpinCo and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of the trade or business relied upon to satisfy Section 355(b) of the Code with respect to each of the Internal Distributions as conducted immediately prior to the First Internal Distribution.

“Internal SpinCo Capital Stock” means all classes or series of capital stock of Internal SpinCo, including (i) the common stock of Internal SpinCo, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in Internal SpinCo for U.S. Federal Income Tax purposes.

“IRS” means the U.S. Internal Revenue Service.

“Joint Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest which is neither a SpinCo Adjustment nor a Parent Adjustment.

“Joint Return” shall mean any Return of a member of the Parent Group or the SpinCo Group that is not a Separate Return.

“Notified Action” shall have the meaning set forth in Section 7.04(a) of this Agreement.

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“Other Tax” means any Federal Other Tax, State Other Tax, or Foreign Other Tax.

“Parent” shall have the meaning provided in the first sentence of this Agreement.

“Parent Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent Parent would be exclusively liable for any resulting Tax under this Agreement or exclusively entitled to receive any resulting Tax Benefit under this Agreement.

“Parent Affiliated Group” shall have the meaning provided in the definition of “Parent Federal Consolidated Income Tax Return.”

“Parent Business” has the meaning set forth in the Separation and Distribution Agreement.

“Parent Federal Consolidated Income Tax Return” means any U.S. Federal Income Tax Return for the affiliated group (as defined in Section 1504 of the Code and the regulations thereunder) of which Parent is the common parent (the “Parent Affiliated Group” ).

“Parent Foreign Combined Income Tax Return” means a consolidated, combined or unitary or other similar Foreign Income Tax Return or any Foreign Income Tax Return with respect to any profit and/or loss sharing group, group payment or similar group or fiscal unity that actually includes, by election or otherwise, one or more members of the Parent Group together with one or more members of the SpinCo Group.

“Parent Group” means Parent and its Affiliates, excluding any entity that is a member of the SpinCo Group.

“Parent Separate Return” means any Separate Return of Parent or any member of the Parent Group.

“Parent State Combined Income Tax Return” means a consolidated, combined or unitary State Income Tax Return that actually includes, by election or otherwise, one or more members of the Parent Group and one or more members of the SpinCo Group.

“Past Practices” shall have the meaning set forth in Section 4.04(a) of this Agreement.

“Payment Date” means (i) with respect to any Parent Federal Consolidated Income Tax Return, the due date for any required installment of estimated taxes determined under Section 6655 of the Code, the due date (determined without regard to extensions) for filing the return determined under Section 6072 of the Code, and the date the return is filed, and (ii) with respect to any other Tax Return, the corresponding dates determined under the applicable Tax Law.

“Payor” shall have the meaning set forth in Section 5.04(a) of this Agreement.

“Person” means any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. Federal Income Tax purposes.

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“Post-Deconsolidation Period” means any Tax Period beginning after the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period beginning the day after the Deconsolidation Date.

“Pre-Deconsolidation Period” means any Tax Period ending on or before the Deconsolidation Date, and, in the case of any Straddle Period, the portion of such Straddle Period ending on the Deconsolidation Date.

“Prime Rate” has the meaning set forth in the Separation and Distribution Agreement.

“Privilege” means any privilege that may be asserted under applicable law, including, any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by SpinCo management or shareholders, is a hostile acquisition, or otherwise, as a result of which SpinCo would merge or consolidate with any other Person or as a result of which any Person or Persons would (directly or indirectly) acquire, or have the right to acquire, from SpinCo and/or one or more holders of outstanding shares of SpinCo Capital Stock, a number of shares of SpinCo Capital Stock that would, when combined with any other changes in ownership of SpinCo Capital Stock pertinent for purposes of Section 355(e) of the Code, comprise 40% or more of (A) the value of all outstanding shares of stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of SpinCo as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (A) the adoption by SpinCo of a shareholder rights plan or (B) issuances by SpinCo that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated into this definition and its interpretation.

“Representation Letters” means the representation letters and any other materials delivered by, or on behalf of, Parent, SpinCo or others to a Tax Advisor in connection with the issuance by such Tax Advisor of a Tax Opinion.

“Required Party” shall have the meaning set forth in Section 5.04(a) of this Agreement.

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“Responsible Company” means, with respect to any Tax Return, the Company having responsibility for preparing and filing such Tax Return under this Agreement.

“Restriction Period” shall mean the period beginning on the date hereof and ending on the day after the two-year anniversary of the Distribution Date.

“Retention Date” shall have the meaning set forth in Section 9.01 of this Agreement.

“Second Internal Distribution” means the distribution by VMSN Holdings of all the common stock of Internal SpinCo to VMSI Holdings in a transaction intended to qualify as a distribution that is generally tax free pursuant to Section 355(a) of the Code.

“Section 336(e) Election” has the meaning set forth in Section 7.06.

“Section 7.02(e) Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.

“Separate Return” means (a) in the case of any Tax Return of any member of the SpinCo Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the Parent Group and (b) in the case of any Tax Return of any member of the Parent Group (including any consolidated, combined or unitary return), any such Tax Return that does not include any member of the SpinCo Group.

“Separation and Distribution Agreement” has the meaning set forth in the recitals of this Agreement.

“SpinCo” shall have the meaning provided in the first sentence of this Agreement, and references herein to SpinCo shall include any entity treated as a successor to SpinCo.

“SpinCo Active Trade or Business” means the active conduct (as defined in Section 355(b)(2) of the Code and the regulations thereunder) by SpinCo and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code) of the trade or business relied upon to satisfy Section 355(b) of the Code with respect to the Distribution as conducted immediately prior to the Distribution.

“SpinCo Adjustment” means any proposed adjustment by a Tax Authority or claim for refund asserted in a Tax Contest to the extent SpinCo would be exclusively liable for any resulting Tax under this Agreement or exclusively entitled to receive any resulting Tax Benefit under this Agreement.

“SpinCo Capital Stock” means all classes or series of capital stock of SpinCo, including (i) the SpinCo Common Stock, (ii) all options, warrants and other rights to acquire such capital stock and (iii) all instruments properly treated as stock in SpinCo for U.S. Federal Income Tax purposes.

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“SpinCo Carryback” means any net operating loss, net capital loss, excess tax credit, or other similar Tax item of any member of the SpinCo Group which may or must be carried from one Tax Period to another prior Tax Period under the Code or other applicable Tax Law.

“SpinCo Common Stock” has the meaning ascribed to the term “Varex Shares” in the Separation and Distribution Agreement.

“SpinCo Federal Consolidated Income Tax Return” shall mean any U.S. Federal Income Tax Return for the affiliated group (as that term is defined in Section 1504 of the Code) of which SpinCo is the common parent.

“SpinCo Group” means SpinCo and its Affiliates, as determined immediately after the Distribution.

“SpinCo Separate Return” means any Separate Return of SpinCo or any member of the SpinCo Group.

“State Income Tax” means any Tax imposed by any State of the United States (or by any political subdivision of any such State) or the District of Columbia, or any city or municipality located therein, which is imposed on or measured by net income, including state and local franchise or similar Taxes measured by net income, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“State Income Tax Return” means any Tax Return with respect to State Income Taxes.

“State Other Tax” means any Tax imposed by any State of the United States (or by any political subdivision of any such State) or the District of Columbia, or any city or municipality located therein, other than any State Income Taxes, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“State Tax” means any State Income Taxes or State Other Taxes.

“Straddle Period” means any Tax Period that begins on or before and ends after the Deconsolidation Date.

“Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem , stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any governmental entity or political subdivision thereof, and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.

“Tax Advisor” means a U.S. tax counsel or accountant of recognized national standing.

“Tax Advisor Dispute” shall have the meaning set forth in Section 14 of this Agreement.

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“Tax Attribute” or “Attribute” shall mean a net operating loss, net capital loss, unused investment credit, unused foreign tax credit, excess charitable contribution, general business credit or any other Tax Item that could reduce a Tax.

“Tax Authority” means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

“Tax Benefit” means any loss, deduction, refund, credit, or other item reducing Taxes otherwise payable.

“Tax Contest” means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

“Tax-Free Status” means the qualification of each of (i) the Contribution and Distribution, taken together, (ii) the Internal Contribution and First Internal Distribution, taken together, (iii) the Second Internal Distribution, and (iv) the Third Internal Distribution (a) as a transaction described in Section 368(a)(1)(D) and/or Section 355(a) of the Code, (b) as a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(c)(2) and 361(c)(2) of the Code, as applicable, and (c) as a transaction in which Parent, SpinCo and the members of their respective Groups recognize no income or gain for U.S. Federal Income Tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than (x) gain recognized pursuant to Section 361(b) with respect to any portion of the Cash Distribution that is not transferred to shareholders or creditors of Parent in connection with the Contribution and Distribution, (y) income or gain recognized pursuant to Sections 367(b) and/or 1248 and the Treasury Regulations promulgated under such provisions with respect to the Internal Contribution and/or Internal Distributions, or (z) intercompany items or excess loss accounts taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code.

“Tax Item” means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit.

“Tax Law” means the law of any governmental entity or political subdivision thereof relating to any Tax.

“Tax Opinion” means each opinion of a Tax Advisor delivered to Parent in connection with, and regarding the Federal Income Tax treatment of, (i) the Contribution and the Distribution, (ii) the Internal Contribution and First Internal Distribution, (iii) the Second Internal Distribution, or (iv) the Third Internal Distribution.

“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

“Tax Records” means any Tax Returns, Tax Return workpapers, documentation relating to any Tax Contests, and any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority.

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“Tax-Related Losses” means (i) all federal, state and local Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise; (ii) all reasonable accounting, legal and other professional fees, and court costs incurred in connection with such Taxes; and (iii) all reasonable costs and expenses and any damages associated with stockholder litigation or controversies and any amount required to be paid by Parent (or any Parent Affiliate) or SpinCo (or any SpinCo Affiliate) in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority, in each case, resulting from the failure of the Contribution and the Distribution, the Internal Contribution and the First Internal Distribution, the Second Internal Distribution, or the Third Internal Distribution to have Tax-Free Status; provided , that amounts shall be treated as having been required to be paid for purposes of clause (iii) of this definition to the extent they are paid in a good faith compromise of an asserted claim.

“Tax Return” or “Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document filed or required to be filed under the Code or other Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

“Third Internal Distribution” means the distribution by VMSI Holdings of all the common stock of Internal SpinCo to Parent in a transaction intended to qualify as a distribution that is generally tax free pursuant to Section 355(a) of the Code.

“Transactions” means the Contribution, the Distribution, the Creditor Payment, and the other transactions contemplated by the Separation and Distribution Agreement (including the Internal Contribution, and the Internal Distributions).

“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

“Unqualified Tax Opinion” means an unqualified opinion of a Tax Advisor on which Parent may rely to the effect that (i) a transaction will not affect the Tax-Free Status of (a) the Contribution and the Distribution, (b) the Internal Contribution and the First Internal Distribution, (c) the Second Internal Distribution, or (d) the Third Internal Distribution, and (ii) will not adversely affect any of the conclusions set forth in any Tax Opinion; provided , that any tax opinion obtained in connection with a proposed acquisition of SpinCo Capital Stock entered into during the Restriction Period shall not qualify as an Unqualified Tax Opinion unless such tax opinion concludes that such proposed acquisition will not be treated as “part of a plan (or series of related transactions),” within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, that includes the Distribution or any Internal Distribution. Any such opinion must assume that the Contribution and Distribution, the Internal Contribution and each of the Internal Distributions would have qualified for Tax-Free Status if the transaction in question did not occur.

“Varex Assets” has the meaning set forth in the Separation and Distribution Agreement.

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“Varex Business” has the meaning set forth in the Separation and Distribution Agreement.

“Varex Liabilities” has the meaning set forth in the Separation and Distribution Agreement.

“VMSI Holdings” means VMS International Holdings, Inc., a Delaware corporation, and a directly wholly owned subsidiary of Parent.

“VMSN” means VMS Nederland BV, a besloten vennootschap organized under the laws of the Netherlands, and a directly wholly owned subsidiary of VMSN Holdings.

“VMSN Holdings” means VMS Netherlands Holdings, Inc., a Delaware corporation, and a directly wholly owned subsidiary of VMSI Holdings.

Section 2. Allocation of Tax Liabilities.

Section 2.01 General Rule .

(a) Parent Liability . Parent shall be liable for, and shall indemnify and hold harmless the SpinCo Group from and against any liability for, Taxes which are allocated to Parent under this Section 2.

(b) SpinCo Liability . SpinCo shall be liable for, and shall indemnify and hold harmless the Parent Group from and against any liability for, Taxes which are allocated to SpinCo under this Section 2.

Section 2.02 Allocation of U.S. Federal Income Tax and Federal Other Tax . Except as otherwise provided in Section 2.05, Federal Income Tax and Federal Other Tax shall be allocated as follows:

(a) Allocation of Tax Relating to Parent Federal Consolidated Income Tax Returns. With respect to any Parent Federal Consolidated Income Tax Return, Parent shall be responsible for any and all Federal Income Taxes due or required to be reported on any such Income Tax Return (including any increase in such Tax as a result of a Final Determination).

(b) Allocation of Tax Relating to Federal Separate Income Tax Returns. (i) Parent shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any Parent Separate Return (including any increase in such Tax as a result of a Final Determination); (ii) SpinCo shall be responsible for any and all Federal Income Taxes due with respect to or required to be reported on any SpinCo Separate Return (including any increase in such Tax as a result of a Final Determination).

(c) Allocation of Federal Other Tax . Parent shall be responsible for any and all Federal Other Taxes attributable to the Parent Business (including any increase in such Tax as a result of a Final Determination). SpinCo shall be responsible for any and all Federal Other Taxes attributable to the Varex Business (including any increase in such Tax as a result of a Final Determination).

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Section 2.03 Allocation of State Income and State Other Taxes. Except as otherwise provided in Section 2.05, State Income Tax and State Other Tax shall be allocated as follows:

(a) Allocation of Tax Relating to Parent State Combined Income Tax Returns. With respect to any Parent State Combined Income Tax Return, Parent shall be responsible for any and all State Income Taxes due or required to be reported on such Income Tax Return (including any increase in such Tax as a result of a Final Determination).

(b) Allocation of Tax Relating to State Separate Income Tax Returns. (i) Parent shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any Parent Separate Return (including any increase in such State Income Tax as a result of a Final Determination); (ii) SpinCo shall be responsible for any and all State Income Taxes due with respect to or required to be reported on any SpinCo Separate Return (including any increase in such State Income Tax as a result of a Final Determination).

(c) Allocation of State Other Tax . Parent shall be responsible for any and all State Other Taxes attributable to the Parent Business (including any increase in such Tax as a result of a Final Determination). SpinCo shall be responsible for any and all State Other Taxes attributable to the Varex Business (including any increase in such Tax as a result of a Final Determination).

Section 2.04 Allocation of Foreign Taxes. Except as otherwise provided in Section 2.05, Foreign Income Tax and Foreign Other Tax shall be allocated as follows:

(a) Allocation of Tax Relating to Parent Foreign Combined Income Tax Returns. Parent shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any Parent Foreign Combined Income Tax Return (including any increase in such Tax as a result of a Final Determination).

(b) Allocation of Tax Relating to Separate Returns. (i) Parent shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any Parent Separate Return (including any increase in such Foreign Income Tax as a result of a Final Determination); (ii) SpinCo shall be responsible for any and all Foreign Income Taxes due with respect to or required to be reported on any SpinCo Separate Return (including any increase in such Foreign Income Tax as a result of a Final Determination).

(c) Allocation of Foreign Other Tax . Parent shall be responsible for any and all Foreign Other Taxes attributable to the Parent Business. SpinCo shall be responsible for any and all Foreign Other Taxes attributable to the Varex Business.

Section 2.05 Certain Transaction and Other Taxes .

(a) SpinCo Liability . SpinCo shall be liable for, and shall indemnify and hold harmless the Parent Group from and against any liability for:

(i) subject to Section 2.05(a)(iv), any stamp, sales and use, gross receipts, or other transfer Taxes imposed by any Tax Authority on any member of the SpinCo Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions;

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(ii) any Tax resulting from a breach by SpinCo of any representation or covenant in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;

(iii) any Tax-Related Losses for which SpinCo is responsible pursuant to Section 7.05 of this Agreement; and

(iv) any value-added Tax imposed by any Tax Authority on any transfer occurring pursuant to the Transactions to the extent any member of the SpinCo Group is the transferee with respect to the relevant transfer.

The amount for which SpinCo is liable pursuant to Section 2.05(a)(i), (ii) and (iv) shall include all accounting, legal and other professional fees, and court costs incurred in connection with the relevant Taxes.

(b) Parent Liability . Parent shall be liable for, and shall indemnify and hold harmless the SpinCo Group from and against any liability for:

(i) subject to Section 2.05(b)(iv), any stamp, sales and use, gross receipts, or other transfer Taxes imposed by any Tax Authority on any member of the Parent Group (if such member is primarily liable for such Tax) on the transfers occurring pursuant to the Transactions;

(ii) any Tax resulting from a breach by Parent of any representation or covenant in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement;

(iii) any Tax-Related Losses for which Parent is responsible pursuant to Section 7.05 of this Agreement; and

(iv) any value-added Tax imposed by any Tax Authority on any transfer occurring pursuant to the Transactions to the extent any member of the Parent Group is the transferee with respect to the relevant transfer.

The amounts for which Parent is liable pursuant to Section 2.05(b)(i), (ii) and (iv) shall include all accounting, legal and other professional fees, and court costs incurred in connection with the relevant Taxes.

Section 2.06 Attribution of Taxes . For purposes of Sections 2.02(c), 2.03(c), and 2.04(c), a Tax and any Tax Items shall be considered attributable to the Varex Business on the one hand and the Parent Business on the other (but not both) to the extent that such Tax and/or Tax Item would result if such Tax Return were prepared on a separate basis taking into account only the operations and assets of the Varex Business on the one hand and only the operations and assets of the Parent Business on the other hand (but not both), as applicable. Parent shall determine in good faith and otherwise in accordance with this Agreement which Tax Items are properly attributable to assets or activities of the Varex Business (and in the case of a Tax Item that is properly attributable to both the Varex Business and the Parent Business, the allocation of such Tax Item between the SpinCo Business and the Parent Business).

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Section 3. Proration of Taxes for Straddle Periods.

(a) General Method of Proration . In the case of any Straddle Period, Tax Items shall be apportioned between Pre-Deconsolidation Periods and Post-Deconsolidation Periods in accordance with the principles of Treasury Regulations Section 1.1502-76(b) as reasonably interpreted and applied by Parent. With respect to the Parent Federal Consolidated Income Tax Return for the taxable year that includes the Distribution, Parent shall determine in its sole discretion whether to make an election under Treasury Regulations Section 1.1502-76(b)(2)(ii). SpinCo shall, and shall cause each member of the SpinCo Group to, take all actions necessary to give effect to such election.

(b) Transactions Treated as Extraordinary Item . In determining the apportionment of Tax Items between Pre-Deconsolidation Periods and Post-Deconsolidation Periods, any Tax Items relating to the Transactions shall be treated as extraordinary items described in Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods, and any Taxes related to such items shall be treated under Treasury Regulations Section 1.1502-76(b)(2)(iv) as relating to such extraordinary items and shall (to the extent occurring on or prior to the Deconsolidation Date) be allocated to Pre-Deconsolidation Periods.

Section 4. Preparation and Filing of Tax Returns.

Section 4.01 General . Except as otherwise provided in this Section 4, Tax Returns shall be prepared and filed when due (taking into account extensions) by the Person obligated to file such Tax Returns under the Code or applicable Tax Law. The Companies shall provide, and shall cause their Affiliates to provide, assistance and cooperation to one another in accordance with Section 8 with respect to the preparation and filing of Tax Returns, including by providing information required to be provided pursuant to Section 8.

Section 4.02 Parent’s Responsibility. Parent has the exclusive obligation and right to prepare and file, or to cause to be prepared and filed:

(a) Parent Federal Consolidated Income Tax Returns for any Tax Periods ending on, before or after the Deconsolidation Date;

(b) Parent State Combined Income Tax Returns, Parent Foreign Combined Income Tax Returns and any other Joint Returns which Parent reasonably determines are required to be filed (or which Parent chooses to be filed) by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Deconsolidation Date; and

(c) Parent Separate Returns and SpinCo Separate Returns which Parent reasonably determines are required to be filed by the Companies or any of their Affiliates for Tax Periods ending on, before or after the Deconsolidation Date (limited, in the case of SpinCo Separate Returns, to such Returns as are required to be filed on or prior to the Deconsolidation Date).

Section 4.03 SpinCo’s Responsibility . SpinCo shall prepare and file, or shall cause to be prepared and filed, all Tax Returns required to be filed by or with respect to members of the SpinCo Group other than those Tax Returns which Parent is required or entitled to prepare and

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file under Section 4.02. The Tax Returns required to be prepared and filed by SpinCo under this Section 4.03 shall include (a) any SpinCo Federal Consolidated Income Tax Return for Tax Periods ending after the Deconsolidation Date and (b) SpinCo Separate Returns required to be filed after the Deconsolidation Date.

Section 4.04 Tax Accounting Practices.

(a) General Rule . Except as otherwise provided in Section 4.04(b), with respect to any Tax Return that SpinCo has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.03, for any Pre-Deconsolidation Period or any Straddle Period (or any Tax Period beginning after the Deconsolidation Date to the extent items reported on such Tax Return could reasonably be expected to affect items reported on any Tax Return that Parent has the obligation or right to prepare and file for any Pre-Deconsolidation Period or any Straddle Period), such Tax Return shall be prepared in accordance with past practices, accounting methods, elections or conventions ( “Past Practices” ) used with respect to the Tax Returns in question except to the extent (i) otherwise required by a change in applicable law or (ii) as would not have an adverse effect on Parent or its Affiliates. Except as otherwise provided in Section 4.04(b), Parent shall prepare any Tax Return which it has the obligation and right to prepare and file, or cause to be prepared and filed, under Section 4.02, in accordance with reasonable Tax accounting practices selected by Parent.

(b) Reporting of Transactions . Except to the extent otherwise required by a change in applicable law or as a result of a Final Determination, (A) neither Parent nor SpinCo shall, and shall not permit or cause any member of its respective Group to, take any position that is inconsistent with the treatment of (i) the Contribution and Distribution, taken together, (ii) the Internal Contribution and the First Internal Distribution, taken together, (iii) the Second Internal Distribution, or (iv) the Third Internal Distribution, in each case, as having Tax-Free Status (or analogous status under state or local law) and, (B) SpinCo shall not knowingly, and shall not knowingly permit or cause any member of the SpinCo Group to, take any position with respect to an item of income, deduction, gain, loss, or credit on a Tax Return, or otherwise treat such item in a manner which is inconsistent with the manner such item is reported on a Tax Return required to be prepared or filed by Parent pursuant to Section 4.02 hereof (including, without limitation, the claiming of a deduction previously claimed on any such Tax Return).

Section 4.05 Consolidated or Combined Tax Returns . SpinCo will elect and join, and will cause its respective Affiliates to elect and join, in filing any Parent State Combined Income Tax Returns, Parent Foreign Combined Income Tax Returns, and any other Joint Returns that Parent determines are required to be filed by the Companies or any of their Affiliates (or that Parent chooses to file pursuant to Section 4.02(b)) for Tax Periods ending on, before or after the Deconsolidation Date. With respect to any SpinCo Separate Returns relating to any Tax Period (or portion thereof) ending on or prior to the Distribution Date, SpinCo will elect and join, and will cause its respective Affiliates to elect and join, in filing consolidated, unitary, combined, or other similar joint Tax Returns, to the extent each entity is eligible to join in such Tax Returns, if Parent reasonably determines that the filing of such Tax Returns is consistent with past reporting practices, or, in the absence of applicable past practices, will result in the minimization of the net present value of the aggregate Tax to the entities eligible to join in such Tax Returns.

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Section 4.06 Right to Review Tax Returns.

(a) General . The Responsible Company with respect to any material Tax Return shall make such Tax Return (or the relevant portions thereof), related workpapers, and other supporting documents available for review by the other Company, if requested, to the extent (i) such Tax Return relates to Taxes for which such other Company is or would reasonably be expected to be liable, (ii) such other Company is or would reasonably be expected to be liable in whole or in part for any additional Taxes owing as a result of adjustments to the amount of Taxes reported on such Tax Return, (iii) such Tax Return relates to Taxes for which the other Company would reasonably be expected to have a claim for Tax Benefits under this Agreement, or (iv) reasonably necessary for the other Company to confirm compliance with the terms of this Agreement. The Responsible Company shall use reasonable efforts to make such Tax Return, workpapers, and other supporting documents available for review as required under this paragraph promptly once such Tax Return is materially complete, but in any event no later than 20 days in advance of the due date for filing such Tax Return (unless the Responsible Company receives a request for review from the other Company within 20 days of the due date for filing such Tax Return, in which case the Responsible Company shall make such Tax Return, workpapers, and other supporting documents available promptly after the receipt of such request), such that the other Company has a meaningful opportunity to review and comment on such Tax Return and shall use reasonable efforts to have such Tax Return modified before filing, taking into account the person responsible for payment of the Tax (if any) reported on such Tax Return and whether the amount of Tax liability at issue is material. The Companies shall attempt in good faith to resolve any disagreement arising out of the review of such Tax Return and, failing such resolution, any disagreement shall be resolved in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable. For purposes of this Section 4.06(a), a Tax Return is “material” if it could reasonably be expected to reflect (A) Tax liability equal to or in excess of $1 million, (B) a credit or credits equal to or in excess of $1 million or (C) a loss or losses equal to or in excess of $3 million.

(b) Execution of Returns Prepared by Other Party . In the case of any Tax Return which is required to be prepared and filed by one Company under this Agreement and which is required by law to be signed by the other Company (or by its authorized representative), the Company which is legally required to sign such Tax Return shall not be required to sign such Tax Return under this Agreement unless there is at least a reasonable basis for the Tax treatment of each material item reported on the Tax Return.

Section 4.07 SpinCo Carrybacks and Claims for Refund. SpinCo hereby agrees that, unless Parent consents in writing, (i) no Adjustment Request with respect to any Tax Return with respect to which Parent is the Responsible Company (including any Joint Return) or any other Tax Return reflecting Taxes for which Parent is responsible under Section 2 shall be filed, and (ii) any available elections to waive the right to claim in any Pre-Deconsolidation Period with respect to any Tax Return with respect to which Parent is the Responsible Company (including any Joint Return) or any Tax Return reflecting Taxes for which both Parent and SpinCo are responsible under Section 2 any SpinCo Carryback arising in a Post-Deconsolidation Period shall be made, and no affirmative election shall be made to claim any such SpinCo Carryback; provided , however , that the parties agree that any such Adjustment Request shall be made with respect to any SpinCo Carryback related to U.S. federal or State Income Taxes, upon the

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reasonable request of SpinCo, if such SpinCo Carryback is necessary to prevent the loss of the federal and/or State Income Tax Benefit of such SpinCo Carryback (including, but not limited to, an Adjustment Request with respect to a SpinCo Carryback of a federal or State capital loss arising in a Post-Deconsolidation Period to a Pre-Deconsolidation Period) and such Adjustment Request, based on Parent’s sole determination, will cause no Tax detriment to Parent, the Parent Group or any member of the Parent Group. Any Adjustment Request which Parent consents to make under this Section 4.07 shall be prepared and filed by the Responsible Company for the Tax Return to be adjusted.

Section 4.08 Apportionment of Taxes, Earnings and Profits and Tax Attributes.

(a) If the Parent Affiliated Group has a Tax Attribute, the portion, if any, of such Tax Attribute apportioned to SpinCo or the members of the SpinCo Group and treated as a carryover to the first Post Deconsolidation Period of SpinCo (or such member) shall be determined by Parent in accordance with Treasury Regulations Sections 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if applicable, 1.1502-79A.

(b) No Tax Attribute with respect to consolidated Federal Income Tax of the Parent Affiliated Group, other than those described in Section 4.08(a), and no Tax Attribute with respect to consolidated, combined or unitary state, local, or foreign Income Tax, in each case, arising in respect of a Joint Return shall be apportioned to SpinCo or any member of the SpinCo Group, except as Parent (or such member of the Parent Group as Parent shall designate) determines is otherwise required under applicable law.

(c) Parent (or its designee) shall determine the portion, if any, of any Tax Attribute which must (absent a Final Determination to the contrary) be apportioned to SpinCo or any member of the SpinCo Group in accordance with this Section 4.08 and applicable law and the amount of tax basis and earnings and profits to be apportioned to SpinCo or any member of the SpinCo Group in accordance with this Section 4.08 and applicable law, and shall provide written supporting documentation of the calculation thereof to SpinCo as soon as reasonably practicable after the information necessary to make such calculation becomes available to Parent. For the absence of doubt, Parent shall not be liable to SpinCo or any member of the SpinCo Group for any failure of any determination under this Section 4.08 to be accurate under applicable law.

(d) The written documentation delivered by Parent pursuant to Section 4.08(c) shall be binding on SpinCo and each member of the SpinCo Group and shall not be subject to dispute resolution. Except to the extent otherwise required by a change in applicable law or pursuant to a Final Determination, SpinCo shall not take any position (whether on a Tax Return or otherwise) that is inconsistent with the information contained in such written documentation.

Section 5. Tax Payments.

Section 5.01 Payment of Taxes with Respect to Parent Federal Consolidated Income Tax Returns and Parent State Combined Income Tax Returns . Parent shall pay (a) to the IRS any Tax due with respect to any Parent Federal Consolidated Income Tax Return (including any Federal Income Tax due from the Parent Affiliated Group that is required to be paid as a result of an adjustment to an Parent Federal Consolidated Income Tax Return) and (b) to the applicable Tax Authority any Tax due with respect to any Parent State Combined Income Tax Return (including any State Income Tax due that is required to be paid as a result of an adjustment to a Parent State Combined Income Tax Return).

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Section 5.02 Payment of Taxes with Respect to Joint Returns (Other Than a Parent Federal Consolidated Income Tax Return or Parent State Combined Income Tax Return) and Certain Returns of Other Taxes . In the case of (I) any Joint Return (other than a Parent Federal Consolidated Income Tax Return or Parent State Combined Income Tax Return) and (II) any Return of Other Taxes reflecting Taxes for which both Parent and SpinCo are responsible under Section 2:

(a) Payment of Tax Due. The Responsible Company shall compute the amount of Tax required to be paid to the applicable Tax Authority (taking into account the requirements of Section 4.04 relating to consistent accounting and reporting practices, as applicable) with respect to any Tax Return on the Payment Date for such Tax Return. The Responsible Company shall pay such amount to such Tax Authority on or before such Payment Date. The Responsible Company shall provide notice to the other Company setting forth such other Company’s responsibility for the amount of Taxes paid to the Tax Authority and provide proof of payment of such Taxes.

(b) Computation and Payment of Liability with Respect to Tax Due . Within 30 days following the earlier of (i) the due date (taking into account extensions) for filing any such Tax Return (excluding any Tax Return with respect to payment of estimated Taxes or Taxes due with a request for extension of time to file) or (ii) the date on which such Tax Return is filed, if Parent is the Responsible Company, then SpinCo shall pay to Parent the amount, if any, allocable to the SpinCo Group under the provisions of this Agreement, and if SpinCo is the Responsible Company, then Parent shall pay to SpinCo the amount, if any, allocable to the Parent Group under the provisions of this Agreement, in each case, plus interest computed at the Prime Rate on the amount of the payment based on the number of days from the earlier of (i) the due date of the Tax Return (including extensions) or (ii) the date on which such Tax Return is filed, to the date of payment. For the avoidance of doubt, however, (x) the 30-day period described herein shall not commence unless and until the Responsible Company notifies the other Company pursuant to Section 5.02(a) hereof, and (y) interest shall not accrue during any time period where such notification has not been received, unless such notification is received within the 30-day period described herein, in which case interest shall accrue beginning on the earlier of (i) the due date of the Tax Return (excluding extensions) or (ii) the date on which such Tax Return is filed.

(c) Adjustments Resulting in Underpayments . In the case of any adjustment pursuant to a Final Determination with respect to any such Tax Return, the Responsible Company shall pay to the applicable Tax Authority when due any additional Tax due with respect to such Tax Return required to be paid as a result of such adjustment pursuant to such Final Determination. The Responsible Company shall compute the amount attributable to the SpinCo Group or the Parent Group (as the case may be) in accordance with this Agreement and SpinCo shall pay to Parent any amount due Parent (or Parent shall pay SpinCo any amount due SpinCo) under this Agreement within 30 days from the later of (i) the date the additional Tax was paid by the Responsible Company or, in an instance where no cash payment is due to a Tax Authority, the date of such Final Determination, or (ii) the date of receipt of a written notice and demand from the Responsible Company for payment of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars

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relating thereto. Any payments required under this Section 5.02(c) shall include interest computed at the Prime Rate based on the number of days from the date the additional Tax was paid by the Responsible Company (or, in an instance where no cash payment is due to a Tax Authority, the date of such Final Determination) to the date of the payment under this Section 5.02(c).

(d) Notwithstanding anything to the contrary herein, if the amount to be paid pursuant to Section 5.02(b) or (c) (in each case, excluding interest) is in excess of $1 million, then, no later than the later of (i) 5 business days after the date of receipt of a written notice and demand from the Responsible Company for payment of the amount due, accompanied by a statement detailing the Taxes required to be paid and (ii) 3 business days prior to the due date for the payment of such Tax, SpinCo shall pay to Parent any amount due Parent (or Parent shall pay SpinCo any amount due SpinCo under Section 2.

Section 5.03 Payment of Separate Company Taxes . Each Company shall pay, or shall cause to be paid, to the applicable Tax Authority when due all Taxes owed by such Company or a member of such Company’s Group with respect to a Separate Return of Income Taxes and with respect to a Separate Return of Other Taxes ( provided that Separate Returns of Other Taxes described in clause (II) of Section 5.02 shall be governed by Section 5.02).

Section 5.04 Indemnification Payments .

(a) If any Company (the “Payor” ) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Company (the “Required Party” ) is liable for under this Agreement, the Payor shall provide notice to the Required Party of the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. Such Required Party shall have a period of 30 days after the receipt of notice to respond thereto. Unless the Required Party disputes the amount it is liable for under this Agreement, the Required Party shall reimburse the Payor within 45 days of delivery by the Payor of the notice described above. To the extent the Required Party does not agree with the amount the Payor claims the Required Party is liable for under this Agreement, the dispute shall be resolved in accordance with Section 14. Any reimbursement shall include interest on the Tax payment computed at the Prime Rate based on the number of days from the date of the payment to the Tax Authority to the date of reimbursement under this Section 5.04. Notwithstanding anything to the contrary herein, if the amount to be paid pursuant to this Section 5.04 (excluding interest) is in excess of $1 million, then, no later than the later of (i) 5 business days after delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by a statement detailing the Taxes required to be paid and describing in reasonable detail the particulars relating thereto, (ii) 3 business days prior to the due date for the payment of such Tax, the Required Party shall pay the Payor.

(b) Any Tax indemnity payment required to be made by the Required Party pursuant to this Agreement shall be reduced by any corresponding Tax Benefit payment required to be made to the Required Party by the other Company pursuant to Section 6. For the avoidance of doubt, a Tax Benefit payment is treated as corresponding to a Tax indemnity payment to the extent the Tax Benefit realized is directly attributable to the same Tax Item (or adjustment of such Tax Item pursuant to a Final Determination) that gave rise to the Tax indemnity payment.

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(c) All indemnification payments under this Agreement shall be made by Parent directly to SpinCo and by SpinCo directly to Parent; provided , however , that if the Companies mutually agree with respect to any such indemnification payment, any member of the Parent Group, on the one hand, may make such indemnification payment to any member of the SpinCo Group, on the other hand, and vice versa.

Section 6. Tax Benefits.

Section 6.01 Tax Benefits.

(a) Except as set forth below, Parent shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Income Taxes and Other Taxes for which Parent is liable hereunder, SpinCo shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Income Taxes and Other Taxes for which SpinCo is liable hereunder, and a Company receiving a refund to which another Company is entitled hereunder in whole or in part shall pay over such refund (or portion thereof) to such other Company within 30 days after such refund is received (together with interest computed at the Prime Rate based on the number of days from the date the refund was received to the date the refund was paid over).

(b) If a member of the SpinCo Group actually realizes in cash any Tax Benefit as a result of an adjustment pursuant to a Final Determination that increases Taxes for which a member of the Parent Group is liable hereunder (or reduces any Tax Attribute of a member of the Parent Group) and such Tax Benefit would not have arisen but for such adjustment (determined on a “with and without” basis), or if a member of the Parent Group actually realizes in cash any Tax Benefit as a result of an adjustment pursuant to a Final Determination that increases Taxes for which a member of the SpinCo Group is liable hereunder (or reduces any Tax Attribute of a member of the SpinCo Group) and such Tax Benefit would not have arisen but for such adjustment (determined on a “with and without” basis), SpinCo or Parent, as the case may be, shall make a payment to either Parent or SpinCo, as appropriate, within 30 days following such actual realization of the Tax Benefit, in an amount equal to such Tax Benefit actually realized in cash (including any Tax Benefit actually realized as a result of the payment), plus interest on such amount computed at the Prime Rate based on the number of days from the date of such actual realization of the Tax Benefit to the date of payment of such amount under this Section 6.01(b).

(c) No later than 30 days after a Tax Benefit described in Section 6.01(b) is actually realized in cash by a member of the Parent Group or a member of the SpinCo Group, Parent (if a member of the Parent Group actually realizes such Tax Benefit) or SpinCo (if a member of the SpinCo Group actually realizes such Tax Benefit) shall provide the other Company with a written calculation of the amount payable to such other Company by Parent or SpinCo pursuant to this Section 6. In the event that Parent or SpinCo disagrees with any such calculation described in this Section 6.01(c), Parent or SpinCo shall so notify the other Company in writing within 15 days of receiving the written calculation set forth above in this Section 6.01(c). Parent and SpinCo shall endeavor in good faith to resolve such disagreement, and, failing that, the amount payable under this Section 6 shall be determined in accordance with the disagreement resolution provisions of Section 14 as promptly as practicable. To the extent the amount payable determined pursuant to this Section 6.01(c) differs from the amount paid pursuant to Section 6.01(b), an appropriate adjusting payment shall be made promptly.

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(d) SpinCo shall be entitled to any refund that is attributable to, and would not have arisen but for, a SpinCo Carryback pursuant to the proviso set forth in Section 4.07; provided , however , SpinCo shall indemnify and hold the members of the Parent Group harmless from and against any and all collateral Tax consequences resulting from or caused by any such Carryback, including (but not limited to) the loss or postponement of any benefit from the use of Tax Attributes generated by a member of the Parent Group or an Affiliate thereof if (x) such Tax Attributes expire unutilized, but would have been utilized but for such Carryback, or (y) the use of such Tax Attributes is postponed to a later Tax Period than the Tax Period in which such Tax Attributes would have been utilized but for such Carryback. Any such payment of such refund made by Parent to SpinCo pursuant to this Section 6.01(d) shall be recalculated in light of any Final Determination (or any other facts that may arise or come to light after such payment is made, such as a carryback of an Parent Group Tax Attribute to a Tax Period in respect of which such refund is received) that would affect the amount to which SpinCo is entitled, and an appropriate adjusting payment shall be made by SpinCo to Parent such that the aggregate amount paid pursuant to this Section 6.01(d) equals such recalculated amount (with interest computed at the Prime Rate).

Section 6.02 Parent and SpinCo Income Tax Deductions in Respect of Certain Equity Awards and Incentive Compensation.

(a) Allocation of Deductions . To the extent permitted by applicable law, Income Tax deductions arising by reason of exercises of options to purchase Parent or SpinCo stock or settlement of restricted stock awards, restricted stock units or performance stock unit awards, in each case, following the Distribution, with respect to Parent stock or SpinCo stock (such options, restricted stock units, or performance stock unit awards, collectively, “Compensatory Equity Interests” ) held by any Person shall be claimed by the issuing corporation.

(b) Withholding and Reporting . Tax reporting and withholding with respect to Compensatory Equity Interests shall be governed by Section 4.02(e) of the Employee Matters Agreement.

Section 7. Tax-Free Status.

Section 7.01 Representations.

(a) Each of Parent and SpinCo hereby represents and warrants that (A) it has reviewed the Representation Letters and (B) subject to any qualifications therein, all information, representations and covenants contained in such Representation Letters that relate to such Company or any member of its Group are true, correct and complete.

(b) SpinCo hereby represents and warrants that it has no plan or intention of taking any action, or failing to take any action (or causing or permitting any member of its Group to take or fail to take any action), in each case, from and after the Distribution Date, that could reasonably be expected to cause any representation or factual statement made in this Agreement, the Separation and Distribution Agreement, the Representation Letters or any of the Ancillary Agreements to be untrue.

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(c) SpinCo hereby represents and warrants that, during the two-year period ending on the Distribution Date, there was no “agreement, understanding, arrangement, substantial negotiations or discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of any member of the SpinCo Group or by any other person or persons with the implicit or explicit permission of one or more of such officers or directors regarding an acquisition of all or a significant portion of the SpinCo Capital Stock (or any predecessor); provided , however , that no representation is made regarding any such “agreement, understanding, arrangement, substantial negotiations or discussions” (as such terms are defined in Treasury Regulations 1.355-7(h)) by any one or more officers or directors of Parent.

Section 7.02 Restrictions on SpinCo .

(a) SpinCo agrees that it will not take or fail to take, or cause or permit any SpinCo Affiliate to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in this Agreement, the Separation and Distribution Agreement, any of the Ancillary Agreements or any Representation Letter. SpinCo agrees that it will not take or fail to take, or permit any SpinCo Affiliate to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any other transaction contemplated by the Separation and Distribution Agreement which is intended by the parties to be tax-free from so qualifying.

(b) Reserved.

(c) SpinCo agrees that, from the date hereof until the first day after the Restriction Period, it will (i) maintain its status as a company engaged in the SpinCo Active Trade or Business for purposes of Section 355(b)(2) of the Code and (ii) not engage in any transaction that would result in it ceasing to be a company engaged in the SpinCo Active Trade or Business for purposes of Section 355(b)(2) of the Code. SpinCo further agrees that, from the date hereof until the first day after the Restriction Period, it will cause Internal SpinCo to (A) maintain its status as a company engaged in the Internal SpinCo Active Trade or Business for purposes of Section 355(b)(2) of the Code and (B) not engage in any transaction that would result in it ceasing to be a company engaged in the Internal SpinCo Active Trade or Business for purposes of Section 355(b)(2) of the Code.

(d) SpinCo agrees that, from the date hereof until the first day after the Restriction Period, it will not (i) enter into any Proposed Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether by (a) redeeming rights under a shareholder rights plan, (b) finding a tender offer to be a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction, or (c) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the DGCL or any similar corporate statute, any “fair price” or other provision of SpinCo’s charter or bylaws or otherwise), (ii) merge or consolidate with any other Person or liquidate or

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partially liquidate, (iii) in a single transaction or series of transactions (A) sell or transfer (other than sales or transfers of inventory in the ordinary course of business) all or substantially all of the assets that were transferred to SpinCo pursuant to the Contribution, (B) sell or transfer 30% or more of the gross assets of the SpinCo Active Trade or Business or (C) sell or transfer 30% or more of the consolidated gross assets of SpinCo and its Affiliates (in each case, such percentages to be measured based on fair market value as of the Distribution Date), (iv) redeem or otherwise repurchase (directly or through a SpinCo Affiliate) any SpinCo stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment by Revenue Procedure 2003-48), (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of SpinCo Capital Stock (including, without limitation, through the conversion of one class of SpinCo Capital Stock into another class of SpinCo Capital Stock), (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation or covenant made in the Representation Letters) which in the aggregate (and taking into account any other transactions described in this subparagraph (d)) would be reasonably likely to have the effect of causing or permitting one or more persons to acquire, directly or indirectly, stock representing a Fifty-Percent or Greater Interest in SpinCo or otherwise jeopardize the Tax-Free Status of the Contribution, the Distribution, the Internal Contribution, or any of the Internal Distributions, or (vii) cause or permit Internal SpinCo to take any action or enter into any transaction described in the preceding clauses (ii), (iii), (iv), (v) or (vi) (substituting references therein to “SpinCo,” the “Contribution,” the “SpinCo Active Trade or Business” and “SpinCo Capital Stock” with references to “Internal SpinCo,” the “Internal Contribution,” the “Internal SpinCo Active Trade or Business” and “Internal SpinCo Capital Stock”) unless, in each case, prior to taking any such action set forth in the foregoing clauses (i) through (vii), (A) SpinCo shall have requested that Parent obtain a private letter ruling (or, if applicable, a supplemental private letter ruling) from the IRS and/or any other applicable Tax Authority in accordance with Section 7.04(b) and (d) of this Agreement to the effect that such transaction will not affect the Tax-Free Status and Parent shall have received such a private letter ruling in form and substance satisfactory to Parent in its sole and absolute discretion (and in determining whether a private letter ruling is satisfactory, Parent may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations made in connection with such private letter ruling), or (B) SpinCo shall provide Parent with an Unqualified Tax Opinion in form and substance satisfactory to Parent in its sole and absolute discretion (and in determining whether an opinion is satisfactory, Parent may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion and Parent may determine that no opinion would be acceptable to Parent) or (C) Parent shall have waived the requirement to obtain such private letter ruling or Unqualified Tax Opinion.

(e) Certain Issuances of SpinCo Capital Stock . If SpinCo proposes to enter into any Section 7.02(e) Acquisition Transaction or, to the extent SpinCo has the right to prohibit any Section 7.02(e) Acquisition Transaction, proposes to permit any Section 7.02(e) Acquisition Transaction to occur, in each case, during the period from the date hereof until the first day after the Restriction Period, SpinCo shall provide Parent, no later than ten days following the signing of any written agreement with respect to the Section 7.02(e) Acquisition Transaction, with a written description of such transaction (including the type and amount of SpinCo Capital Stock to be issued in such transaction) and a certificate of the Chief Financial Officer of SpinCo to the

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effect that the Section 7.02(e) Acquisition Transaction is not a Proposed Acquisition Transaction or any other transaction to which the requirements of Section 7.02(d) apply (a “CFO Certificate” ).

Section 7.03 Restrictions on Parent. Parent agrees that it will not take or fail to take, or cause or permit any member of the Parent Group to take or fail to take, any action where such action or failure to act would be inconsistent with or cause to be untrue any material, information, covenant or representation in this Agreement, the Separation and Distribution Agreement, any of the Ancillary Agreements or any Representation Letters. Parent agrees that it will not take or fail to take, or cause or permit any member of the Parent Group to take or fail to take, any action which prevents or could reasonably be expected to prevent (A) the Tax-Free Status, or (B) any other transaction contemplated by the Separation and Distribution Agreement which is intended by the parties to be tax-free from so qualifying.

Section 7.04 Procedures Regarding Opinions and Rulings.

(a) If SpinCo notifies Parent that it desires to take one of the actions described in clauses (i) through (vii) of Section 7.02(d) (a “Notified Action” ), Parent and SpinCo shall reasonably cooperate to attempt to obtain the private letter ruling or Unqualified Tax Opinion referred to in Section 7.02(d), unless Parent shall have waived the requirement to obtain such private letter ruling or Unqualified Tax Opinion.

(b) Rulings or Unqualified Tax Opinions at SpinCo’s Request. At the reasonable request of SpinCo pursuant to Section 7.02(d), Parent shall cooperate with SpinCo and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a private letter ruling from the IRS (and/or any other applicable Tax Authority, or if applicable, a supplemental private letter ruling) or cooperate with SpinCo to enable SpinCo to obtain an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action. Further, in no event shall Parent be required to file any request for a private letter ruling under this Section 7.04(b) unless SpinCo represents that (A) it has reviewed the request for such private letter ruling, and (B) all information and representations, if any, relating to any member of the SpinCo Group, contained in the related private letter ruling documents are (subject to any qualifications therein) true, correct and complete. SpinCo shall reimburse Parent for all reasonable costs and expenses incurred by the Parent Group in obtaining a private letter ruling or Unqualified Tax Opinion requested by SpinCo within 10 business days after receiving an invoice from Parent therefor.

(c) Rulings or Unqualified Tax Opinions at Parent’s Request . Parent shall have the right to obtain a private letter ruling (or, if applicable, a supplemental private letter ruling) from the IRS (and/or any other applicable Tax Authority) or an Unqualified Tax Opinion at any time in its sole and absolute discretion. If Parent determines to obtain a private letter ruling or an Unqualified Tax Opinion, SpinCo shall (and shall cause each Affiliate of SpinCo to) cooperate with Parent and take any and all actions reasonably requested by Parent in connection with obtaining the private letter ruling or Unqualified Tax Opinion (including, without limitation, by making any representation or covenant or providing any materials or information requested by the IRS (or other applicable Tax Authority) or Tax Advisor; provided that SpinCo shall not be required to make (or cause any Affiliate of SpinCo to make) any representation or covenant that is inconsistent with historical facts or as to future matters or events over which it has no control). Parent and SpinCo shall each bear its own costs and expenses in obtaining a private letter ruling or an Unqualified Tax Opinion requested by Parent.

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(d) SpinCo hereby agrees that Parent shall have sole and exclusive control over the process of obtaining any private letter ruling pursuant to Section 7.04(b) or (c), and that only Parent shall apply for such a private letter ruling. In connection with obtaining a private letter ruling pursuant to Section 7.04(b), (A) Parent shall keep SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Parent in connection therewith; (B) Parent shall (1) reasonably in advance of the submission of any related private letter ruling documents provide SpinCo with a draft copy thereof, (2) reasonably consider SpinCo’s comments on such draft copy, and (3) provide SpinCo with a final copy; and (C) Parent shall provide SpinCo with notice reasonably in advance of, and SpinCo shall have the right to attend, any formally scheduled meetings with the IRS (or other applicable Tax Authority) (subject to the approval of the IRS (or other applicable Tax Authority)) that relate to such private letter ruling. Neither SpinCo nor any SpinCo Affiliate directly or indirectly controlled by SpinCo shall seek any guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time concerning the Contribution and the Distribution, the Internal Contribution and the First Internal Distribution, the Second Internal Distribution, or the Third Internal Distribution (including the impact of any transaction on any of the foregoing).

Section 7.05 Liability for Tax-Related Losses.

(a) Notwithstanding anything in this Agreement or the Separation and Distribution Agreement to the contrary, subject to Section 7.05(c), SpinCo shall be responsible for, and shall indemnify and hold harmless Parent and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to or result from any one or more of the following: (A) the acquisition (other than pursuant to the Contribution or the Distribution) of all or a portion of SpinCo’s Capital Stock and/or its or its subsidiaries’ assets (including any Internal SpinCo Capital Stock) by any means whatsoever by any Person, (B) any “agreement, understanding, arrangement, substantial negotiations or discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of any member of the SpinCo Group or by any other person or persons with the implicit or explicit permission of one or more of such officers or directors regarding transactions or events that cause the Distribution or any Internal Distribution to be treated as part of a plan pursuant to which one or more Persons acquire, directly or indirectly, stock of SpinCo or Internal SpinCo, in each case, representing a Fifty-Percent or Greater Interest therein, (C) any action or failure to act by SpinCo after the Distribution (including, without limitation, any amendment to SpinCo’s certificate of incorporation (or other organizational documents), whether through a stockholder vote or otherwise) affecting the voting rights of SpinCo stock (including, without limitation, through the conversion of one class of SpinCo Capital Stock into another class of SpinCo Capital Stock), (D) any act or failure to act by SpinCo or any SpinCo Affiliate described in Section 7.02 (regardless whether such act or failure to act is covered by a private letter ruling, Unqualified Tax Opinion or waiver described in clause (A), (B) or (C) of Section 7.02(d)), a CFO Certificate described in Section 7.02(e) or a consent described in Section 7.02(g)) or (E) any breach by SpinCo of its agreements and representations set forth in Section 7.01.

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(b) Notwithstanding anything in this Agreement or the Separation and Distribution Agreement to the contrary, subject to Section 7.05(c), Parent shall be responsible for, and shall indemnify and hold harmless SpinCo and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses that are attributable to, or result from any one or more of the following: (A) the acquisition (other than pursuant to the Contribution or the Distribution) of all or a portion of Parent’s stock and/or its or its subsidiaries’ assets (including any capital stock of VMSN, VMSN Holdings, or VMSI Holdings) by any means whatsoever by any Person, (B) any “agreement, understanding, arrangement, substantial negotiations or discussions” (as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more officers or directors of any member of the Parent Group or by any other person or persons with the implicit or explicit permission of one or more of such officers or directors regarding transactions or events that cause the Distribution, or any Internal Distribution to be treated as part of a plan pursuant to which one or more Persons acquire, directly or indirectly, stock of Parent, VMSN, VMSN Holdings, or VMSI Holdings, in each case, representing a Fifty-Percent or Greater Interest therein, (C) any act or failure to act by Parent or a member of the Parent Group described in Section 7.03 or (D) any breach by Parent of its agreement and representations set forth in Section 7.01(a).

(c)

(i) To the extent that any Tax-Related Loss is subject to indemnity under both Sections 7.05(a) and (b), responsibility for such Tax-Related Loss shall be shared by Parent and SpinCo according to relative fault.

(ii) Notwithstanding anything in Section 7.05(b) or (c)(i) or any other provision of this Agreement or the Separation and Distribution Agreement to the contrary:

(A) with respect to (I) any Tax-Related Loss resulting from the application of Section 355(e) or Section 355(f) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in Parent, VMSN, VMSN Holdings, or VMSI Holdings) and (II) any other Tax-Related Loss resulting, in whole or in part, from an acquisition after the Distribution of any stock or assets of SpinCo (or any SpinCo Affiliate) by any means whatsoever by any Person or any action or failure to act by SpinCo affecting the voting rights of SpinCo, SpinCo shall be responsible for, and shall indemnify and hold harmless Parent and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss; and

(B) for purposes of calculating the amount and timing of any Tax-Related Loss for which SpinCo is responsible under this Section 7.05, Tax-Related Losses shall be calculated by assuming that Parent, the Parent Affiliated Group and each member of the Parent Group (I) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year and (II) have no Tax Attributes in any relevant taxable year.

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(iii) Notwithstanding anything in Section 7.05(a) or (c)(i) or any other provision of this Agreement or the Separation and Distribution Agreement to the contrary, (A) with respect to (I) any Tax-Related Loss resulting from the application of Section 355(e) or Section 355(f) of the Code (other than as a result of an acquisition of a Fifty-Percent or Greater Interest in SpinCo or Internal SpinCo) and (II) any other Tax-Related Loss resulting, in whole or in part, from an acquisition after the Distribution of any stock or assets of Parent (or any Parent Affiliate) by any means whatsoever by any Person, Parent shall be responsible for, and shall indemnify and hold harmless SpinCo and its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of such Tax-Related Loss; and (B) for purposes of calculating the amount and timing of any Tax-Related Loss for which Parent is responsible under this Section 7.05, Tax-Related Losses shall be calculated by assuming that SpinCo, the SpinCo Group, and each member of the SpinCo Group (I) pay Tax at the highest marginal corporate Tax rates in effect in each relevant taxable year and (II) have no Tax Attributes in any relevant taxable year.

(d) SpinCo shall pay Parent the amount of any Tax-Related Losses for which SpinCo is responsible under this Section 7.05: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than two business days prior to the date Parent files, or causes to be filed, the applicable Tax Return for the year of the Contribution or Distribution, as applicable (the “Filing Date” ) ( provided that if such Tax-Related Losses arise pursuant to a Final Determination described in clause (a), (b) or (c) of the definition of “Final Determination,” then SpinCo shall pay Parent no later than two business days prior to the due date for making payment with respect to such Final Determination) and (B) in the case of Tax-Related Losses described in clause (ii) or (iii) of the definition of Tax-Related Losses, no later than two business days after the date Parent pays such Tax-Related Losses. Parent shall pay SpinCo the amount of any Tax-Related Losses (described in clause (ii) or (iii) of the definition of Tax-Related Loss) for which Parent is responsible under this Section 7.05 no later than two business days after the date SpinCo pays such Tax-Related Losses. Each party shall have the right to review the calculation of any Tax-Related Losses prepared by the other party, including any related workpapers and other supporting documentation.

Section 7.06 Section 336(e) Election. If Parent determines, in its sole discretion, that a protective election under Section 336(e) of the Code (a “Section 336(e) Election” ) shall be made with respect to the Distribution, SpinCo shall (and shall cause the relevant member of the SpinCo Group to) join with Parent or the relevant member of the Parent Group in the making of such election and shall take any action reasonably requested by Parent or that is otherwise necessary to give effect to such election (including making any other related election). If a Section 336(e) Election is made with respect to the Distribution, then this Agreement shall be amended in such a manner as is determined by Parent in good faith to take into account such Section 336(e) Election (including by requiring that, in the event the Contribution and Distribution fail to have Tax-Free Status and Parent is not entitled to indemnification for the Tax-Related Losses arising from such failure, SpinCo shall pay over to Parent any Tax Benefits actually realized in cash by the SpinCo Group or any member of the SpinCo Group arising from the step-up in Tax basis resulting from the Section 336(e) Election); provided , such amounts payable shall be reduced by all reasonable costs incurred by SpinCo to amend any Tax Returns or other governmental filings related to such Section 336(e) Election.

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Section 8. Assistance and Cooperation.

Section 8.01 Assistance and Cooperation.

(a) Each of the Companies shall provide (and cause its Affiliates to provide) the other and its agents, including accounting firms and legal counsel, with such cooperation or information as such other Company reasonably requests in connection with Tax matters relating to the Companies and their Affiliates, including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making available, upon reasonable notice, all information and documents in their possession relating to the other Company and its Affiliates as provided in Section 9. Each of the Companies shall also make available to the other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their respective Affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.

(b) Any information or documents provided under this Section 8 or Section 9 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. Notwithstanding any other provision of this Agreement or any other agreement, (i) neither Parent nor any Parent Affiliate shall be required to provide SpinCo or any SpinCo Affiliate or any other Person access to or copies of any information (including the proceedings of any Tax Contest) other than information that relate solely to SpinCo, the business or assets of SpinCo or any SpinCo Affiliate and (ii) in no event shall Parent or any Parent Affiliate be required to provide SpinCo, any SpinCo Affiliate or any other Person access to or copies of any information if such action could reasonably be expected to result in the waiver of any Privilege. In addition, in the event that Parent determines that the provision of any information to SpinCo or any SpinCo Affiliate could be commercially detrimental, violate any law or agreement or waive any Privilege, the parties shall use reasonable best efforts to permit compliance with its obligations under this Section 8 or Section 9 in a manner that avoids any such harm or consequence.

Section 8.02 Income Tax Return Information. SpinCo and Parent acknowledge that time is of the essence in relation to any request for information, assistance or cooperation made by Parent or SpinCo pursuant to Section 8.01 or this Section 8.02. SpinCo and Parent acknowledge that failure to conform to the deadlines set forth herein or reasonable deadlines otherwise set by Parent or SpinCo could cause irreparable harm. Each Company shall provide to the other Company information and documents relating to its Group required by the other Company to prepare Tax Returns. Any information or documents the Responsible Company requires to prepare such Tax Returns shall be provided in such form as the Responsible Company reasonably requests and in sufficient time for the Responsible Company to file such Tax Returns on a timely basis.

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Section 8.03 Reliance by Parent. If any member of the SpinCo Group supplies information to a member of the Parent Group in connection with a Tax liability and an officer of a member of the Parent Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the Parent Group identifying the information being so relied upon, the chief financial officer of SpinCo (or any officer of SpinCo as designated by the chief financial officer of SpinCo) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. SpinCo agrees to indemnify and hold harmless each member of the Parent Group and its directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to a member of the SpinCo Group having supplied, pursuant to this Section 8, a member of the Parent Group with inaccurate or incomplete information in connection with a Tax liability.

Section 8.04 Reliance by SpinCo. If any member of the Parent Group supplies information to a member of the SpinCo Group in connection with a Tax liability and an officer of a member of the SpinCo Group signs a statement or other document under penalties of perjury in reliance upon the accuracy of such information, then upon the written request of such member of the SpinCo Group identifying the information being so relied upon, the chief financial officer of Parent (or any officer of Parent as designated by the chief financial officer of Parent) shall certify in writing that to his or her knowledge (based upon consultation with appropriate employees) the information so supplied is accurate and complete. Parent agrees to indemnify and hold harmless each member of the SpinCo Group and its directors, officers and employees from and against any fine, penalty, or other cost or expense of any kind attributable to a member of the Parent Group having supplied, pursuant to this Section 8, a member of the SpinCo Group with inaccurate or incomplete information in connection with a Tax liability.

Section 9. Tax Records.

Section 9.01 Retention of Tax Records . Each Company shall preserve and keep all Tax Records (including emails and other digitally stored materials) exclusively relating to the assets and activities of its Group for Pre-Deconsolidation Periods, and Parent shall preserve and keep all other Tax Records relating to Taxes of the Groups for Pre-Deconsolidation Tax Periods, for so long as the contents thereof may become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven years after the Deconsolidation Date (such later date, the “Retention Date” ). After the Retention Date, each Company may dispose of such Tax Records upon 90 days’ prior written notice to the other Company. If, prior to the Retention Date, a Company reasonably determines that any Tax Records which it would otherwise be required to preserve and keep under this Section 9 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Company agrees, then such first Company may dispose of such Tax Records upon 90 days’ prior notice to the other Company. Any notice of an intent to dispose given pursuant to this Section 9.01 shall include a list of the Tax Records to be disposed of describing in reasonable detail the files, books, or other records being disposed. The notified Company shall have the opportunity, at its cost and expense, to copy or remove, within such 90-day period, all or any part of such Tax Records, and the other Company will then dispose of the same Tax Records. If, at any time prior to the Retention Date, a Company determines to decommission or otherwise discontinue any computer program or

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information technology system used to access or store any Tax Records, then such Company may decommission or discontinue such program or system upon 90 days’ prior notice to the other Company, and the other Company shall have the opportunity, at its cost and expense, to copy, within such 90-day period, all or any part of the underlying data relating to the Tax Records accessed by or stored on such program or system.

Section 9.02 Access to Tax Records. The Companies and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Company and its Affiliates, authorized agents and representatives and any representative of a Tax Authority or other Tax auditor direct access during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case, to the extent reasonably required by the other Company in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement. To the extent any Tax Records are required to be or are otherwise transferred by the Companies or their respective Affiliates to any Person other than an Affiliate, the Company or its respective Affiliates shall transfer such records to the other Company at such time.

Section 10. Tax Contests.

Section 10.01 Notice . Each of the Companies shall provide prompt notice to the other Company of any written communication from a Tax Authority regarding any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware related to Taxes for which it may be entitled to indemnification by the other Company hereunder. Such notice shall include copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. The failure of one Company to notify the other of such communication in accordance with the immediately preceding sentences shall not relieve such other Company of any liability or obligation to pay such Tax or make indemnification payments under this Agreement, except to the extent that the failure timely to provide such notification actually prejudices the ability of such other Company to contest such Tax liability or increases the amount of such Tax liability.

Section 10.02 Control of Tax Contests.

(a) Separate Company Taxes. In the case of any Tax Contest with respect to any Separate Return (other than a Separate Return of Other Taxes described in clause (II) of Section 5.02), the Company having liability for the Tax shall have exclusive control over the Tax Contest, including with respect to any settlement of such Tax liability, subject to Section 10.02(e) below.

(b) Parent Federal Consolidated Income Tax Return and Parent State Combined Income Tax Return. In the case of any Tax Contest with respect to any Parent Federal Consolidated Income Tax Return or any Parent State Combined Income Tax Return, Parent shall have exclusive control over the Tax Contest, including with respect to any settlement of such Tax liability, subject to Section 10.02(e)(i) below.

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(c) Parent Foreign Combined Income Tax Return. In the case of any Tax Contest with respect to any Parent Foreign Combined Income Tax Return, Parent shall have exclusive control over the Tax Contest, including with respect to any settlement of such Tax liability.

(d) Joint Returns and Certain Other Returns. In the case of any Tax Contest with respect to (I) any Joint Return (other than any Parent Federal Consolidated Income Tax Return, any Parent State Combined Income Tax Return or any Parent Foreign Combined Income Tax Return) or (II) any Return of Other Taxes described in clause (II) of Section 5.02, (i) Parent shall control the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any Parent Adjustment, including settlement of any such Parent Adjustment and (ii) SpinCo shall control the defense or prosecution of the portion of the Tax Contest directly and exclusively related to any SpinCo Adjustment, including settlement of any such SpinCo Adjustment, and (iii) the Companies shall jointly control the defense or prosecution of Joint Adjustments and any and all administrative matters not directly and exclusively related to any Parent Adjustment or SpinCo Adjustment. In the event of any disagreement regarding any matter described in clause (iii), the provisions of Section 14 of this Agreement shall apply.

(e) Distribution-Related Tax Contests.

(i) In the event of any Distribution-Related Tax Contest as a result of which SpinCo could reasonably be expected to become liable for any Tax or Tax-Related Losses and which Parent has the right to administer and control pursuant to Section 10.02(a) or (b) above, (A) Parent shall consult with SpinCo reasonably in advance of taking any significant action in connection with such Tax Contest, (B) Parent shall offer SpinCo a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Contest, (C) Parent shall defend such Tax Contest diligently and in good faith as if it were the only party in interest in connection with such Tax Contest, and (D) Parent shall provide SpinCo copies of any written materials relating to such Tax Contest received from the relevant Tax Authority. Notwithstanding anything in the preceding sentence to the contrary, the final determination of the positions taken, including with respect to settlement or other disposition, in any Distribution-Related Tax Contest shall be made in the sole discretion of Parent and shall be final and not subject to the dispute resolution provisions of Article VII of the Separation and Distribution Agreement.

(ii) In the event of any Distribution-Related Tax Contest with respect to any SpinCo Separate Return, (A) SpinCo shall consult with Parent reasonably in advance of taking any significant action in connection with such Tax Contest, (B) SpinCo shall consult with Parent and offer Parent a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Tax Contest, (C) SpinCo shall defend such Tax Contest diligently and in good faith as if it were the only party in interest in connection with such Tax Contest, (D) Parent shall be entitled to participate in such Tax Contest and receive copies of any written materials relating to such Tax Contest received from the relevant Tax Authority, and (E) SpinCo shall not settle, compromise or abandon any such Tax Contest without obtaining the prior written consent of Parent, which consent shall not be unreasonably withheld.

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(f) Power of Attorney. Each member of the SpinCo Group shall execute and deliver to Parent (or such member of the Parent Group as Parent shall designate) any power of attorney or other similar document reasonably requested by Parent (or such designee) in connection with any Tax Contest (as to which Parent is the Controlling Party) described in this Section 10.

Section 11. Effective Date; Termination of Prior Intercompany Tax Allocation Agreements . This Agreement shall be effective as of the Effective Time. As of the Effective Time, (i) all prior intercompany Tax allocation agreements or arrangements between one or more members of the Parent Group, on the one hand, and one or more members of the SpinCo Group, on the other hand, shall be terminated, and (ii) amounts due under such agreements as of the date on which the Effective Time occurs shall be settled as of the Effective Time. Upon such termination and settlement, no further payments by or to Parent or by or to SpinCo, with respect to such agreements shall be made, and all other rights and obligations resulting from such agreements between the Companies and their Affiliates shall cease at such time. Any payments pursuant to such agreements shall be disregarded for purposes of computing amounts due under this Agreement; provided that to the extent appropriate, as determined by Parent, payments made pursuant to such agreements shall be credited to SpinCo or Parent, respectively, in computing their respective obligations pursuant to this Agreement, in the event that such payments relate to a Tax liability that is the subject matter of this Agreement for a Tax Period that is the subject matter of this Agreement.

Section 12. Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

Section 13. Treatment of Payments; Tax Gross-Up.

Section 13.01 Treatment of Tax Indemnity and Tax Benefit Payments . In the absence of any change in Tax treatment under the Code or other applicable Tax Law, for all Income Tax purposes, the Companies agree to treat, and to cause their respective Affiliates to treat, (i) any indemnity payment required by this Agreement or by the Separation and Distribution Agreement as either a contribution by Parent to SpinCo or a distribution by SpinCo to Parent, as the case may be, occurring immediately prior to the Distribution; and (ii) any payment of interest or State Income Taxes by or to a Tax Authority, as taxable or deductible, as the case may be, to the Company entitled under this Agreement to retain such payment or required under this Agreement to make such payment.

Section 13.02 Tax Gross-Up . If notwithstanding the manner in which Tax indemnity payments and Tax Benefit payments were reported, there is an adjustment to the Tax liability of a Company as a result of its receipt of a payment pursuant to this Agreement or the Separation and Distribution Agreement, such payment shall be appropriately adjusted so that the amount of such payment, reduced by all Income Taxes payable with respect to the receipt thereof (but taking into account all correlative Tax Benefits resulting from the payment of such Income Taxes), shall equal the amount of the payment which the Company receiving such payment would otherwise be entitled to receive.

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Section 13.03 Interest Under This Agreement . Anything herein to the contrary notwithstanding, to the extent one Company ( “Indemnitor” ) makes a payment of interest to another Company ( “Indemnitee” ) under this Agreement with respect to the period from the date that the Indemnitee made a payment of Tax to a Tax Authority to the date that the Indemnitor reimbursed the Indemnitee for such Tax payment, the interest payment shall be treated as interest expense to the Indemnitor (deductible to the extent provided by law) and as interest income by the Indemnitee (includible in income to the extent provided by law). The amount of the payment shall not be adjusted to take into account any associated Tax Benefit to the Indemnitor or increase in Tax to the Indemnitee.

Section 14. Disagreements. The Companies desire that collaboration will continue between them. Accordingly, they will try, and they will cause their respective Group members to try, to resolve in good faith all disagreements regarding their respective rights and obligations under this Agreement, including any amendments hereto. In furtherance thereof, in the event of any dispute or disagreement (other than a High-Level Dispute) (a “Tax Advisor Dispute” ) between any member of the Parent Group and any member of the SpinCo Group as to the interpretation of any provision of this Agreement or the performance of obligations hereunder, the Companies shall negotiate in good faith to resolve the Tax Advisor Dispute. If, within thirty (30) business days, such good faith negotiations do not resolve the Tax Advisor Dispute, then the matter will be referred to a Tax Advisor acceptable to each of the Companies. The Tax Advisor may, in its discretion, obtain the services of any third-party appraiser, accounting firm or consultant that the Tax Advisor deems necessary to assist it in resolving such disagreement. The Tax Advisor shall furnish written notice to the Companies of its resolution of any such Tax Advisor Dispute as soon as practical, but in any event no later than 45 days after its acceptance of the matter for resolution. Any such resolution by the Tax Advisor will be conclusive and binding on the Companies. Following receipt of the Tax Advisor’s written notice to the Companies of its resolution of the Tax Advisor Dispute, the Companies shall each take or cause to be taken any action necessary to implement such resolution of the Tax Advisor. In accordance with Section 16, each Company shall pay its own fees and expenses (including the fees and expenses of its representatives) incurred in connection with the referral of the matter to the Tax Advisor. All fees and expenses of the Tax Advisor in connection with such referral shall be shared equally by the Companies. Any High-Level Dispute shall be resolved pursuant to the procedures set forth in Article VII of the Separation and Distribution Agreement; provided that each of the arbitrators selected in accordance with such Article VII must be Tax Advisors. Nothing in this Section 14 will prevent either Company from seeking injunctive relief if any delay resulting from the efforts to resolve the Tax Advisor Dispute through the Tax Advisor (or any delay resulting from the efforts to resolve any High-Level Dispute through the procedures set forth in Article VII of the Separation and Distribution Agreement, as modified by the proviso in the preceding sentence) could result in serious and irreparable injury to either Company. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, Parent and SpinCo are the only members of their respective Group entitled to commence a dispute resolution procedure under this Agreement, and each of Parent and SpinCo will cause its respective Group members not to commence any dispute resolution procedure other than through such party as provided in this Section 14.

Section 15. Late Payments. Any amount owed by one party to another party under this Agreement which is not paid when due shall bear interest at the Prime Rate plus two percent,

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compounded semiannually, from the due date of the payment to the date paid. To the extent interest required to be paid under this Section 15 duplicates interest required to be paid under any other provision of this Agreement, interest shall be computed at the higher of the interest rate provided under this Section 15 or the interest rate provided under such other provision.

Section 16. Expenses. Except as otherwise provided in this Agreement, each party and its Affiliates shall bear their own expenses incurred in connection with the preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement.

Section 17. General Provisions.

Section 17.01 Addresses and Notices . All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by facsimile with receipt confirmed, to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 17.01):


If to Parent : Varian Medical Systems, Inc. 3100 Hansen Way Palo Alto, California 94304 Attention: Director, Taxes Facsimile: [●]		with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: David C. Karp Ronald C. Chen Facsimile: (212) 403-2000

If to SpinCo : Varex Imaging Corporation 1678 S. Pioneer Road Salt Lake City, Utah 84104 Attention: Director, Taxes Facsimile: [●]		with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: David C. Karp Ronald C. Chen Facsimile: (212) 403-2000

A party may, by notice to the other party, change the address to which such notices are to be given.

Section 17.02 Counterparts; Entire Agreement; Corporate Power .

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

(b) This Agreement and the exhibits, schedules and appendices hereto, contain the entire agreement between the parties with respect to the subject matter hereof and supersede all

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previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter. In the event of any inconsistency between this Agreement and the Separation and Distribution Agreement, or any other agreements relating to the transactions contemplated by the Separation and Distribution Agreement, with respect to matters addressed herein, the provisions of this Agreement shall control.

(c) Parent represents on behalf of itself and each other member of the Parent Group, and SpinCo represents on behalf of itself and each other member of the SpinCo Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d) Each party acknowledges that it and each other party may execute this Agreement by facsimile, stamp or mechanical signature, and that deliver of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other party at any time, it will as promptly and reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 17.03 Waiver. Waiver by a party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party. No failure or delay by a party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise of any other right, power or privilege.

Section 17.04 Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

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Section 17.05 Assignability. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, no such party hereto may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other parties hereto. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement in whole in connection with a change of control of a party so long as the resulting, surviving or transferee person assumes all the obligations of the relevant party hereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other party.

Section 17.06 Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement, including the execution and delivery to the other parties and their Affiliates and representatives of such powers of attorney or other authorizing documentation as is reasonably necessary or appropriate in connection with Tax Contests (or portions thereof) under the control of such other parties in accordance with Section 10.

Section 17.07 Integration . The provisions of this Agreement are solely for the benefit of the parties and are not intended to confer upon any Person except the parties any rights or remedies hereunder, and there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third person with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 17.08 Headings . The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 17.09 Governing Law. This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies.

Section 17.10 Amendment. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 17.11 SpinCo Subsidiaries . If, at any time, SpinCo acquires or creates one or more subsidiaries that are includable in the SpinCo Group, they shall be subject to this Agreement and all references to the SpinCo Group herein shall thereafter include a reference to such subsidiaries.

Section 17.12 Successors . This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto

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(including but not limited to any successor of Parent or SpinCo succeeding to the Tax attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

Section 17.13 Specific Performance . Subject to the provisions of Section 14, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the parties.

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IN WITNESS WHEREOF, each party has caused this Agreement to be executed on its behalf by a duly authorized officer on the date first set forth above.


VARIAN MEDICAL SYSTEMS, INC.

By:
Name:
Title:

VAREX IMAGING CORPORATION

By:
Name:
Title:

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Exhibit 10.3

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

DATED AS OF [●]

TABLE OF CONTENTS


ARTICLE I DEFINITIONS		1

Section 1.01.	Definitions	1
Section 1.02.	Interpretation	6

ARTICLE II GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES		6

Section 2.01.	General Principles	6
Section 2.02.	Service Credit	7
Section 2.03.	Adoption and Transfer and Assumption of Benefit Plans	8
Section 2.04.	Individual Agreements	9
Section 2.05.	Collective Bargaining	9
Section 2.06.	Non-U.S. Regulatory Compliance	9

ARTICLE III ASSIGNMENT OF EMPLOYEES		9

Section 3.01.	Assignment and Transfer of Employees	9
Section 3.02.	At-Will Status	10
Section 3.03.	Severance	10
Section 3.04.	Not a Change in Control	10

ARTICLE IV EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION		10

Section 4.01.	Generally	10
Section 4.02.	Equity Incentive Awards	11
Section 4.03.	Employee Stock Purchase Plan	16
Section 4.04.	Non-Equity Incentive Plans	16
Section 4.05.	Director Compensation	16

ARTICLE V RETIREMENT PLANS		17

Section 5.01.	Establishment of Plan	17
Section 5.02.	Rollover of Account Balances	17
Section 5.03.	Plan Fiduciaries	17

ARTICLE VI NONQUALIFIED DEFERRED COMPENSATION PLANS		18

Section 6.01.	Generally	18
Section 6.02.	Participant Elections	18
Section 6.03.	Participation; Distributions	18

ARTICLE VII WELFARE BENEFIT PLANS		18

Section 7.01.	Welfare Plans	18
Section 7.02.	COBRA and HIPAA	20
Section 7.03.	Vacation, Holidays and Leaves of Absence	20

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Section 7.04.	Severance and Unemployment Compensation	20
Section 7.05.	Workers’ Compensation	20
Section 7.06.	Insurance Contracts	20
Section 7.07.	Third-Party Vendors	21

ARTICLE VIII NON-U.S. EMPLOYEES		21

ARTICLE IX MISCELLANEOUS		21

Section 9.01.	Information Sharing and Access	21
Section 9.02.	Preservation of Rights to Amend	22
Section 9.03.	Fiduciary Matters	22
Section 9.04.	Further Assurances	23
Section 9.05.	Counterparts; Entire Agreement; Corporate Power	23
Section 9.06.	Governing Law	24
Section 9.07.	Assignability	24
Section 9.08.	Third-Party Beneficiaries	24
Section 9.09.	Notices	25
Section 9.10.	Severability	26
Section 9.11.	Force Majeure	26
Section 9.12.	Headings	26
Section 9.13.	Survival of Covenants	26
Section 9.14.	Waivers of Default	26
Section 9.15.	Dispute Resolution	26
Section 9.16.	Specific Performance	27
Section 9.17.	Amendments	27
Section 9.18.	Interpretation	27
Section 9.19.	Limitations of Liability	27
Section 9.20.	Mutual Drafting	27

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EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT, dated as of [●] (this “ Agreement ”), is by and between Varian Medical Systems, Inc. a Delaware corporation (“ Parent ”), and Varex Imaging Corporation, a Delaware corporation (“ Varex ”).

R E C I T A L S:

WHEREAS, in furtherance of the foregoing, the Parent Board has determined that it is appropriate and desirable to separate the Varex Business from the Parent Business (the “ Separation ”) and, following the Separation, to make a distribution, on a pro rata basis, to holders of Parent Shares on the Record Date of all of the outstanding Varex Shares owned by Parent (the “ Distribution ”);

WHEREAS, in order to effectuate the Separation and Distribution, Parent and Varex have entered into a Separation and Distribution Agreement, dated as of [●] (the “ Separation and Distribution Agreement ”);

WHEREAS, in addition to the matters addressed by the Separation and Distribution Agreement, the Parties desire to enter into this Agreement to set forth the terms and conditions of certain employment, compensation and benefit matters; and

WHEREAS, the Parties acknowledge that this Agreement, the Separation and Distribution Agreement and the Ancillary Agreements represent the integrated agreement of Parent and Varex relating to the Separation and Distribution, are being entered into together and would not have been entered into independently.

ARTICLE I

DEFINITIONS

Section 1.01. Definitions . For purposes of this Agreement, the following terms shall have the meanings set forth below. Any terms that are capitalized but not otherwise defined herein shall have the respective meanings assigned to them in the Separation and Distribution Agreement.

“ Adjusted Varex Stock Value ” shall mean the product of (a) the Varex Stock Value, multiplied by (b) the Distribution Ratio.

“ Agreement ” shall have the meaning set forth in the Preamble to this Agreement and shall include all Schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 9.17 .

“ Benefit Plan ” shall mean any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature from an employer to any Employee, or to any family member, dependent, or beneficiary of any such Employee, including cash or deferred arrangement plans, profit sharing plans, post-employment programs, pension plans, thrift plans, supplemental pension plans, welfare plans, stock option, stock purchase, stock appreciation rights, restricted stock, restricted stock units, performance stock units, other equity-based compensation and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, travel and accident, life, accidental death and dismemberment, disability and accident insurance, tuition reimbursement, adoption assistance, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays; provided , however , that the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, unemployment or any similar plans, programs or policies or Individual Agreements.

“ COBRA ” shall mean the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq . of ERISA and at Section 4980B of the Code.

“ Distribution ” shall have the meaning set forth in the Recitals.

“ Employee ” shall mean any Parent Employee or Varex Employee.

“ ERISA ” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ Former Employee ” shall mean any individual who is a former employee of the Parent Group as of the Effective Time.

“ HIPAA ” shall mean the U.S. Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

“ Individual Agreement ” shall mean any individual (a) employment contract, (b) retention, severance or change in control agreement, (c) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of Taxes and living standards in the host country), or (d) other agreement containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the Parent Group and a Varex Employee, as in effect immediately prior to the Effective Time.

“ IRS ” shall mean the U.S. Internal Revenue Service.

“ Parent ” shall have the meaning set forth in the Preamble.

“ Parent 401(k) Plan ” shall mean the Varian Medical Systems, Inc. Retirement Plan.

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“ Parent Awards ” shall mean Parent Option Awards, Parent RSU Awards and Parent PSU Awards, collectively.

“ Parent Benefit Plan ” shall mean any Benefit Plan established, sponsored or maintained by Parent or any of its Subsidiaries immediately prior to the Effective Time including any Parent Retained Qualified Plan, but excluding any Varex Benefit Plan.

“ Parent Compensation Committee ” shall mean the Compensation Committee of the Parent Board.

“ Parent Deferred Compensation Plans ” shall mean the Varian Medical Systems, Inc. 2005 Deferred Compensation Plan, as amended, and the Varian Medical Systems, Inc. Deferred Compensation Plan, as amended.

“ Parent Employees ” shall have the meaning set forth in Section 3.01 .

“ Parent ESPP ” shall mean the Parent Employee Stock Purchase Plan, as in effect from time to time.

“ Parent Non-Equity Incentive Plans ” shall mean the corporate non-equity incentive plans of the Parent Group.

“ Parent Omnibus Plan ” shall mean the Third Amended and Restated Varian Medical Systems, Inc. 2005 Omnibus Stock Plan, as amended from time to time.

“ Parent Option Award ” shall mean an award of options to purchase Parent Shares granted pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

“ Parent PSU Award ” shall mean a performance stock unit award granted pursuant to the Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

“ Parent Ratio ” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the Post-Separation Parent Stock Value.

“ Parent Restricted Stock Award ” shall mean an award of time-based restricted Parent Shares granted pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

“ Parent Retained Qualified Plans ” shall have the meaning set forth in Section 5.02(a) .

“ Parent RSU Award ” shall mean an award of time-based restricted stock units or deferred stock units granted pursuant to a Parent Omnibus Plan that is outstanding as of immediately prior to the Effective Time.

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“ Parent Value Factor ” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the sum of (i) the Adjusted Varex Stock Value and (ii) the Post-Separation Parent Stock Value.

“ Parent Welfare Plan ” shall mean any Parent Benefit Plan which is a Welfare Plan.

“ Parties ” shall mean the parties to this Agreement.

“ Post-Separation Parent Awards ” shall mean Post-Separation Parent Option Awards, Post-Separation Parent Restricted Stock Awards, Post-Separation Parent RSU Awards and Post-Separation Parent PSU Awards, collectively.

“ Post-Separation Parent Option Award ” shall mean a Parent Option Award adjusted as of the Effective Time in accordance with Section 4.02(a) .

“ Post-Separation Parent PSU Award ” shall mean a Parent PSU Award adjusted as of the Effective Time in accordance with Section 4.02(d) .

“ Post-Separation Parent Restricted Stock Award ” shall mean a Parent Restricted Stock Award as adjusted as of the Effective Time in accordance with Section 4.02(c) .

“ Post-Separation Parent RSU Award ” shall mean a Parent RSU Award as adjusted as of the Effective Time in accordance with Section 4.02(b) .

“ Post-Separation Parent Stock Value ” shall mean the simple average of the closing per-share price of Parent Shares trading on the NYSE for each of the first five (5) full Trading Sessions immediately after the Effective Time.

“ Pre-Separation Parent Stock Value ” shall mean the closing per-share price of Parent Shares trading “regular way with due bills” on the NYSE as of the last Trading Session prior to the Effective Time.

“ Pre-Separation Parent Supplemental Unemployment Benefit Pay Plan and Trust ” shall mean the Parent Supplemental Unemployment Benefit Pay Plan and Trust, as such plan and trust are in effect immediately prior to the Effective Time.

“ Separation ” shall have the meaning set forth in the Recitals.

“ Separation and Distribution Agreement ” shall have the meaning set forth in the Recitals to this Agreement.

“ Varex ” shall have the meaning set forth in the Preamble.

“ Varex 401(k) Plan ” shall mean the Varex Imaging Corporation 401(k) Retirement Plan, established by Varex pursuant to Section 5.03(b) .

“ Varex Awards ” shall mean Varex Option Awards and Varex RSU Awards, collectively.

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“ Varex Benefit Plan ” shall mean any Benefit Plan established, sponsored, maintained or contributed to by a member of the Varex Group as of or after the Effective Time, including any Varex Retained Qualified Plan and any Benefit Plans assumed or adopted by Varex pursuant to Section 2.03(a) and Section 2.03(b) .

“ Varex Board ” shall mean the Board of Directors of Varex.

“ Varex Deferred Compensation Plans ” shall mean the Varex Imaging Corporation 2016 Deferred Compensation Plan and the Varex Imaging Corporation Frozen Deferred Compensation Plan, in each case, as adopted by Varex pursuant to Section 6.01(a) .

“ Varex Employees ” shall have the meaning set forth in Section 3.01 .

“ Varex Omnibus Plan ” shall mean the Varex 2016 Omnibus Stock Plan, as established by Varex as of the Effective Time pursuant to Section 4.01 .

“ Varex Option Award ” shall mean an award of options to purchase Varex Shares assumed by Varex pursuant to the Varex Omnibus Plan in accordance with Section 4.02(a) .

“ Varex Ratio ” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the Varex Stock Value.

“ Varex Retained Qualified Plans ” shall have the meaning set forth in Section 5.02(b) .

“ Varex RSU Award ” shall mean an award of time-based restricted stock units or deferred stock units assumed pursuant to the Varex Omnibus Plan in accordance with Section 4.02(b) .

“ Varex Stock Value ” shall mean the simple average of the closing per-share price of Varex Shares trading on the NYSE for each of the first five (5) full Trading Sessions immediately after the Effective Time.

“ Varex Value Factor ” shall mean the quotient obtained by dividing (a) the Pre-Separation Parent Stock Value by (b) the sum of (i) the Varex Stock Value and (ii) the quotient obtained by dividing the Post-Separation Parent Stock Value by the Distribution Ratio.

“ Varex Welfare Plan ” shall mean a Welfare Plan established, sponsored, maintained or contributed to by any member of the Varex Group for the benefit of Varex Employees.

“ Tax ” shall have the meaning set forth in the Tax Matters Agreement.

“ Trading Session ” shall mean the period of time during any given calendar day, commencing with the determination of the opening price on the NYSE and ending with the determination of the closing price on the NYSE, in which trading in Parent Shares or Varex Shares (as applicable) is permitted on the NYSE.

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“ Transferred Director ” shall mean each Varex non-employee director as of the Effective Time who served as a non-employee director on the Parent Board immediately prior to the Effective Time.

“ Welfare Plan ” shall mean any “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, mental health, substance abuse and retiree health), disability benefits, or life, accidental death and dismemberment, and business travel insurance, pre-Tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time-off programs, contribution funding toward a health savings account, flexible spending accounts, supplemental unemployment benefits or severance.

Section 1.02. Interpretation . Section 10.15 of the Separation and Distribution Agreement is hereby incorporated by reference.

ARTICLE II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.01. General Principles .

(a) Acceptance and Assumption of Varex Liabilities . Except as otherwise provided by this Agreement, on or prior to the Effective Time, but in any case prior to the Distribution, Varex and the applicable Varex Designees shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a Varex Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by Parent’s or Varex’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the Varex Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the Varex Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Varex Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims under a Varex Benefit Plan, taking into account the Varex Benefit Plan’s assumption of Liabilities with respect to Varex Employees that were originally the Liabilities of the corresponding Parent Benefit Plan with respect to periods prior to the Effective Time; and

(iii) any and all Liabilities expressly assumed or retained by any member of the Varex Group pursuant to this Agreement.

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(b) Acceptance and Assumption of Parent Liabilities . Except as otherwise provided by this Agreement, on or prior to the Effective Time, but in any case prior to the Distribution, Parent and certain members of the Parent Group designated by Parent shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a Parent Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by Parent’s or Varex’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the Parent Group or the Varex Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the Parent Group or the Varex Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Parent Employees and Former Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims under a Parent Benefit Plan, taking into account a corresponding Varex Benefit Plan’s assumption of Liabilities with respect to Varex Employees that were originally the Liabilities of such Parent Benefit Plan with respect to periods prior to the Effective Time; and

(iii) any and all Liabilities expressly assumed or retained by any member of the Parent Group pursuant to this Agreement.

(c) Unaddressed Liabilities. To the extent that this Agreement does not address particular Liabilities under any Benefit Plan and the Parties later determine that they should be allocated in connection with the Distribution, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.

Section 2.02. Service Credit . As of the Effective Time, the Varex Benefit Plans shall, and Varex shall cause each member of the Varex Group to, recognize for each Varex Employee who is employed immediately following the Effective Time by a member of the Varex Group full service with Parent or any of its Subsidiaries or predecessor entities at or before the Effective Time, to the same extent that such service was recognized by Parent for similar purposes prior to the Effective Time as if such full service had been performed for a member of the Varex Group, for purposes of eligibility, vesting and determination of level of benefits under any such Varex Benefit Plan.

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Section 2.03. Adoption and Transfer and Assumption of Benefit Plans .

(a) Adoption by Varex of Benefit Plans . As of no later than the Effective Time, Varex shall adopt Benefit Plans (and related trusts, if applicable) as contemplated by, and in accordance with, the terms of this Agreement.

(b) Plans Not Required to Be Adopted . With respect to any Benefit Plan not listed or otherwise addressed in this Agreement, the Parties shall agree in good faith on the treatment of such plan taking into account the handling of any comparable plan under this Agreement and, notwithstanding that Varex shall not have an obligation to continue to maintain any such plan with respect to the provision of future benefits from and after the Effective Time, Varex shall remain obligated to pay or provide any previously accrued or incurred benefits to the Varex Employees consistent with Section 2.01(a) of this Agreement.

(c) Information and Operation . Each Party shall use its commercially reasonable efforts to provide the other Party with information describing each Benefit Plan election made by an Employee or Former Employee that may have application to such Party’s Benefit Plans from and after the Effective Time, and each Party shall use its commercially reasonable efforts to administer its Benefit Plans using those elections. Each Party shall, upon reasonable request, use its commercially reasonable efforts to provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

(d) No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, no participant in any Benefit Plan shall receive service credit or benefits to the extent that receipt of such service credit or benefits would result in duplication of benefits provided to such participant by the corresponding Benefit Plan or any other plan, program or arrangement sponsored or maintained by a member of the Group that sponsors the corresponding Benefit Plan. Furthermore, unless expressly provided for in this Agreement, the Separation and Distribution Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting distributions or entitlements under any Benefit Plan sponsored or maintained by a member of the Parent Group or member of the Varex Group on the part of any Employee or Former Employee.

(e) Transition Services . The Parties acknowledge that the Parent Group or the Varex Group may provide administrative services for certain of the other Party’s compensation and benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.

(f) Beneficiaries . References to Parent Employees, Varex Employees, Former Employees, and current and former non-employee directors of either Parent or Varex, shall be deemed to refer to their beneficiaries, dependents, survivors and alternate payees, as applicable.

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Section 2.04. Individual Agreements .

(a) Assignment by Parent . To the extent necessary, Parent shall assign, or cause an applicable member of the Parent Group to assign, to Varex or another member of the Varex Group, as designated by Varex, all Individual Agreements, with such assignment to be effective as of no later than the Effective Time; provided , however , that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Effective Time, each member of the Varex Group shall be considered to be a successor to each member of the Parent Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the Varex Group shall enjoy all of the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Varex Group; provided , further , that in no event shall Parent be permitted to enforce any Individual Agreement (including any agreement containing non-competition or non-solicitation covenants) against a Varex Employee for action taken in such individual’s capacity as a Varex Employee other than on behalf of Varex Group as requested by Varex Group in its capacity as a third-party beneficiary.

(b) Assumption by Varex. Effective as of the Effective Time, Varex shall assume and honor any individual agreement to which any Varex Employee is a party with any member of the Parent Group, including any Individual Agreement.

Section 2.05. Collective Bargaining . No later than the Effective Time, to the extent necessary, Varex shall (a) assume all collective bargaining agreements (including any national, sector or local collective bargaining agreement) that cover Varex Employees and the Liabilities arising under any such collective bargaining agreements, and (b) join any industrial, employer or similar association or federation if membership is required for the relevant collective bargaining agreement to continue to apply.

Section 2.06. Non-U.S. Regulatory Compliance . Parent shall have the authority to adjust the treatment described in this Agreement with respect to Varex Employees who are located outside of the United States in order to ensure compliance with the applicable Laws or regulations of countries outside of the United States or to preserve the Tax benefits provided under local Tax Law or regulation before the Distribution.

ARTICLE III

ASSIGNMENT OF EMPLOYEES

Section 3.01. Assignment and Transfer of Employees . Effective as of no later than the Effective Time and except as otherwise agreed by the Parties, (a) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the Varex Group as of immediately after the Effective Time (including any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence approved by the Parent Human Resources department or otherwise taken in accordance with applicable Law) (collectively, the “ Varex Employees ”) is employed by a member of the Varex Group as of immediately after the Effective Time, and (b) the applicable member of the Parent Group shall have taken such actions as are necessary to ensure that each individual who is intended to be an employee of the Parent Group as of immediately after

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the Effective Time (including any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence approved by the Parent Human Resources department or otherwise taken in accordance with applicable Law) and any other individual employed by the Parent Group as of the Effective Time who is not a Varex Employee (collectively, the “ Parent Employees ”) is employed by a member of the Parent Group as of immediately after the Effective Time. Each of the Parties agrees to execute, and to seek to have the applicable Employees execute, such documentation, if any, as may be necessary to reflect such assignment and/or transfer.

Section 3.02. At-Will Status . Nothing in this Agreement shall create any obligation on the part of any member of the Parent Group or any member of the Varex Group to (a) continue the employment of any Employee or permit the return from a leave of absence for any period after the date of this Agreement (except as required by applicable Law) or (b) change the employment status of any Employee from “at-will,” to the extent that such Employee is an “at-will” employee under applicable Law.

Section 3.03. Severance . The Parties acknowledge and agree that, except as required by applicable Law, the Separation, Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 3.03 shall not be deemed an involuntary termination of employment entitling any Varex Employee or Parent Employee to severance payments or benefits.

Section 3.04. Not a Change in Control . The Parties acknowledge and agree that neither the consummation of the Separation, Distribution nor any transaction contemplated by this Agreement, the Separation and Distribution Agreement or any other Ancillary Agreement shall be deemed a “change in control,” “change of control,” or term of similar import for purposes of any Benefit Plan sponsored or maintained by any member of the Parent Group or member of the Varex Group.

ARTICLE IV

EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION

Section 4.01. Generally . Each Parent Award that is outstanding as of immediately prior to the Effective Time shall be adjusted as described below; provided , however , effective immediately prior to the Effective Time, the Parent Compensation Committee may provide for different adjustments with respect to some or all Parent Awards to the extent that the Parent Compensation Committee deems such adjustments necessary and appropriate. Any adjustments made by the Parent Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties and their respective Affiliates. Before the Effective Time, the Varex Omnibus Plan shall be established, with such terms as are necessary to permit the implementation of the provisions of Section 4.02 .

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Section 4.02. Equity Incentive Awards .

(a) Option Awards . Each Parent Option Award that is outstanding as of immediately prior to the Effective Time shall be treated as follows:

(A) the number of Parent Shares subject to such Post-Separation Parent Option Award shall be equal to the product, rounded down to the nearest whole share, of (I) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time, multiplied by (II) the Parent Ratio; and

(B) the per share exercise price of such Post-Separation Parent Option Award shall be equal to the quotient, rounded up to the nearest cent, of (I) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time, divided by (II) the Parent Ratio.

Notwithstanding anything to the contrary in this Section 4.02(a)(i) , the exercise price, the number of Parent Shares subject to each Post-Separation Parent Option Award and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code.

(ii) Varex Employees and Directors . If the holder is a Varex Employee or a Transferred Director, such award shall be converted, as of the Effective Time, into a Varex Option Award and shall, except as otherwise provided in this Section 4.02 , be subject to the same terms and conditions (including with respect to vesting and expiration) after the Effective Time as were applicable to such Parent Option Award immediately prior to the Effective Time; provided , however , that from and after the Effective Time:

(A) the number of Parent Shares subject to such Varex Option Award shall be equal to the product, rounded down to the nearest whole share, of (I) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time, multiplied by (II) the Varex Ratio; and

(B) the per share exercise price of such Varex Option Award shall be equal to the quotient, rounded up to the nearest cent, of (I) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time, divided by (II) the Varex Ratio.

Notwithstanding anything to the contrary in this Section 4.02(a)(ii) , the exercise price, the number of Varex Shares subject to each Varex Option Award and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code.

(iii) Former Employees . If the holder is a Former Employee, such award shall be converted, as of the Effective Time, into both a Post-Separation Parent Option Award and a Varex Option Award and shall, except as otherwise provided in this Section 4.02 , be subject to

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the same terms and conditions (including with respect to vesting and expiration) after the Effective Time as were applicable to such Parent Option Award immediately prior to the Effective Time; provided , however , that from and after the Effective Time:

(A) the number of Parent Shares subject to such Post-Separation Parent Option Award shall be equal to the product, rounded down to the nearest whole share, obtained by multiplying (I) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time by (II) the Parent Value Factor;

(B) the number of Varex Shares subject to such Varex Option Award shall be equal to the product, rounded down to the nearest whole share, obtained by multiplying (I) the number of Parent Shares subject to the corresponding Parent Option Award immediately prior to the Effective Time by (II) the Varex Value Factor;

(C) the per share exercise price of such Post-Separation Parent Option Award shall be equal to the quotient, rounded up to the nearest cent, obtained by dividing (I) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time by (II) the Parent Ratio; and

(D) the per share exercise price of such Varex Option Award shall be equal to the quotient, rounded up to the nearest cent, obtained by dividing (I) the per share exercise price of the corresponding Parent Option Award immediately prior to the Effective Time by (II) the Varex Ratio.

Notwithstanding anything to the contrary in this Section 4.02(a)(iii) , the exercise price, the number of Parent Shares and Varex Shares subject to each Post-Separation Parent Option Award and Varex Option Award, and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code.

(b) RSU Awards . Each Parent RSU Award that is outstanding as of immediately prior to the Effective Time shall be treated as follows:

(i) Parent Employees and Directors . If the holder is a Parent Employee or a non-employee director of Parent (other than a Transferred Director), such award shall be converted, as of the Effective Time, into a Post-Separation Parent RSU Award, and shall, except as otherwise provided in this Section 4.02 , be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent RSU Award as of immediately prior to the Effective Time; provided , however , that from and after the Effective Time, the number of Parent Shares subject to such Post-Separation Parent RSU Award shall be equal to the product, rounded to the nearest whole share, of (A) the number of Parent Shares subject to the corresponding Parent RSU Share Award as of immediately prior to the Effective Time, multiplied by (B) the Parent Ratio.

(ii) Varex Employees and Directors . If the holder is a Varex Employee or a Transferred Director, such award shall be converted, as of the Effective Time, into a Varex RSU Award, and shall, except as otherwise provided in this Section 4.02 , be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent RSU Award as of immediately prior to the Effective Time; provided ,

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however , that from and after the Effective Time, the number of Varex Shares subject to such Varex RSU Award shall be equal to the product, rounded to the nearest whole share, of (A) the number of Parent Shares subject to the corresponding Parent RSU Award as of immediately prior to the Effective Time, multiplied by (B) the Varex Ratio.

(iii) Former Employees . If the holder is a Former Employee, such award shall be converted as of the Effective Time into a Post-Separation Parent RSU and a Varex RSU Award and each such award shall, except as otherwise provided in this Section 4.02 , be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent RSU Award prior to the Effective Time; provided , however , that from and after the Effective Time the number of shares subject to (i) the Post-Separation Parent RSU Award shall be equal to the number of Parent Shares subject to the corresponding Parent RSU Award as of immediately prior to the Effective Time, and (ii) the Varex RSU Award shall be equal to the product, rounded to the nearest whole share, of (A) the number of Parent Shares subject to the Parent RSU Award as of immediately prior to the Effective Time, multiplied by (B) the Distribution Ratio.

(c) Restricted Stock Awards . Each Parent Restricted Stock Award that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into a Post-Separation Parent Restricted Stock Award, and shall, except as otherwise provided in this Section 4.02 , be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent Restricted Stock Award as of immediately prior to the Effective Time; provided , however , that from and after the Effective Time, the number of Parent Shares subject to such Post-Separation Parent Restricted Stock Award shall be equal to the product, rounded to the nearest whole share, of (A) the number of Parent Shares subject to the corresponding Parent Restricted Stock Share Award as of immediately prior to the Effective Time, multiplied by (B) the Parent Ratio.

(d) PSU Awards . Each Parent PSU Award that is outstanding as of immediately prior to the Effective Time shall be converted, as of the Effective Time, into a Post-Separation Parent PSU Award, and shall, except as otherwise provided in this Section 4.02 and the terms of the award agreement governing the applicable Parent PSU Award, be subject to the same terms and conditions (including with respect to vesting) after the Effective Time as were applicable to such Parent PSU Award immediately prior to the Effective Time; provided , however , that from and after the Effective Time:

(i) PSU Awards Held by Parent Employees . In the case of any Parent PSU Award held by a Parent Employee, the number of Parent Shares subject to such Post-Separation Parent PSU Award shall be equal to the product, rounded to the nearest whole share, obtained by multiplying (A) the number of Parent Shares subject to the corresponding Parent PSU Award immediately prior to the Effective Time by (B) the Parent Ratio.

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(ii) PSU Awards (FY 2015-2017) Held by Varex Employees . In the case of any Parent PSU Award with a fiscal year 2015-2017 performance period held by a Varex Employee:

(A) satisfaction of the performance conditions applicable to such award shall be determined based on actual performance as of September 30, 2016 (with performance conditions adjusted as necessary to reflect the shortened performance period), as determined by the compensation committee of the Parent Board in its sole discretion;

(B) the number of Parent Shares subject to such Parent PSU Award as of immediately prior to the Effective Time shall be deemed equal to the product of (I) the number of Parent Shares that would have been payable pursuant to such Parent PSU Award based on the satisfaction of the performance conditions determined pursuant to the immediately preceding clause (A), multiplied by (II) 27/36; and

(C) such Parent PSU Award shall be settled as soon as practicable following the Effective Time with respect to the number of Parent Shares equal to the product, rounded to the nearest whole share, of (I) the number of Parent Shares calculated pursuant to the immediately preceding clause (B), multiplied by (II) the Parent Ratio.

(iii) PSU Awards (FY 2016-2018) Held by Varex Employees . In the case of any Parent PSU Award with a fiscal year 2016-2018 performance period held by a Varex Employee:

(e) Settlement; Tax Reporting and Withholding.

(i) Except as otherwise provided in this Section 4.02(e) , after the Effective Time, Post-Separation Parent Awards, regardless of by whom held, shall be settled by Parent, and Varex Awards, regardless of by whom held, shall be settled by Varex.

(ii) Upon the vesting, payment or settlement, as applicable, of Varex Awards, Varex shall be solely responsible for ensuring the satisfaction of all applicable Tax withholding requirements on behalf of each Varex Employee and for ensuring the collection and remittance of applicable employee withholding Taxes to the Parent Group with respect to each Former Employee (with Parent Group being responsible for remittance of the applicable employee Taxes and payment and remittance of the applicable employer Taxes relating to Former

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Employees to the applicable Governmental Authority). Upon the vesting, payment or settlement, as applicable, of Post-Separation Parent Awards, Parent shall be solely responsible for ensuring the satisfaction of all applicable Tax withholding requirements on behalf of each Parent Employee or Former Employee. Following the Effective Time, Parent shall be responsible for all income Tax reporting in respect of Post-Separation Parent Awards and Varex Awards held by Parent Employees, Former Employees and individuals who are or were Parent non-employee directors, and Varex shall be responsible for all income Tax reporting in respect of Varex Awards held by Varex Employees and Transferred Directors.

(iii) Varex shall be responsible for the settlement of cash dividends or dividend equivalents on any Varex RSU Award held by a Varex Employee or Transferred Director. Prior to the date any such settlement is due, Parent shall pay Varex in cash amounts required to settle any dividends or dividend equivalents accrued prior to the Effective Time with respect to such Varex RSU Awards. Parent shall be responsible for the settlement of cash dividends or dividend equivalents on any Post-Separation Parent RSU Awards, Varex RSU Awards or Post-Separation Parent PSU Awards held by Parent Employee, Former Employee or non-employee director of Parent. Prior to the date any such settlement is due, Varex shall pay Parent in cash amounts required to settle any dividends or dividend equivalents accrued following the Effective Time with respect to such Varex RSU Awards. For the avoidance of doubt, the term “dividend equivalents” shall not include any dividend equivalents that are deemed reinvested in Varex Shares or Parent Shares, consistent with the practice with respect to the applicable award prior to the Separation, and Parent or Varex, as applicable, shall adjust the number of shares subject to the applicable Post-Separation Parent Award or Varex Award, as applicable, to reflect such deemed reinvestment in the manner set forth in the applicable award agreement.

(iv) Following the Effective Time, if any Varex Award held by a Former Employee shall fail to become vested, such Varex Award shall be forfeited to Varex.

(f) Cooperation. Each of the Parties shall establish an appropriate administration system in order to administer, in an orderly manner, (i) exercises of vested Post-Separation Parent Options and Varex Options, (ii) the vesting and forfeiture of unvested Post-Separation Parent Awards and Varex Awards, and (iii) the withholding and reporting requirements with respect to all awards. Each of the Parties shall work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable Person’s data and records in respect of such awards are correct and updated on a timely basis. The foregoing shall include employment status and information required for vesting and forfeiture of awards and Tax withholding/remittance, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable Laws.

(g) Registration and Other Regulatory Requirements . Varex agrees to file Forms S-1, S-3 and S-8 registration statements with respect to, and to cause to be registered pursuant to the Securities Act, the Varex Shares authorized for issuance under the Varex Omnibus Plan, as required pursuant to the Securities Act, not later than the Effective Time and in any event before the date of issuance of any Varex Shares pursuant to the Varex Omnibus Plan. The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 4.02(g) , including compliance with securities Laws and other legal

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requirements associated with equity compensation awards in affected non-U.S. jurisdictions. Parent agrees to facilitate the adoption and approval of the Varex Omnibus Plan consistent with the requirements of Treasury Regulations Section 1.162-27(f)(4)(iii).

Section 4.03. Employee Stock Purchase Plan . The administrator of the Parent ESPP shall take all actions necessary and appropriate to provide that all payroll deductions and other contributions of the participants in the Parent ESPP who are Varex Employees shall cease on or before the Distribution Date.

Section 4.04. Non-Equity Incentive Plans .

(a) Corporate Bonus Practices .

(i) The Varex Group shall be responsible for determining all non-equity bonus awards that would otherwise be payable to Varex Employees for any performance periods that are open when the Effective Time occurs. The Varex Group shall also determine for Varex Employees (A) the extent to which established performance criteria (as interpreted by the Varex Group, in its sole discretion) have been met, and (B) the payment level for each Varex Employee. The Varex Group shall assume all Liabilities with respect to any such bonus awards payable to Varex Employees for any performance periods that are open when the Effective Time occurs and thereafter, and no member of the Parent Group shall have any obligations with respect thereto.

(ii) The Parent Group shall be responsible for determining all bonus awards that would otherwise be payable under the Parent Non-Equity Incentive Plans to Parent Employees or Former Employees for any performance periods that are open when the Effective Time occurs. The Parent Group shall also determine for Parent Employees or Former Employees (A) the extent to which established performance criteria (as interpreted by the Parent Group, in its sole discretion) have been met, and (B) the payment level for each Parent Employee or Former Employee. The Parent Group shall retain (or assume as necessary) all Liabilities with respect to any such bonus awards payable to Parent Employees or Former Employees for any performance periods that are open when the Effective Time occurs and thereafter, and no member of the Varex Group shall have any obligations with respect thereto.

(b) Parent Retained Bonus Plans . No later than the Effective Time, the Parent Group shall continue to retain (or assume as necessary) any incentive plan for the exclusive benefit of Parent Employees and Former Employees, whether or not sponsored by the Parent Group, and, from and after the Effective Time, shall be solely responsible for all Liabilities thereunder.

(c) Varex Retained Bonus Plans . No later than the Effective Time, the Varex Group shall continue to retain (or assume as necessary) any incentive plan for the exclusive benefit of Varex Employees, whether or not sponsored by the Varex Group, and, from and after the Effective Time, shall be solely responsible for all Liabilities thereunder.

Section 4.05. Director Compensation . Parent shall be responsible for the payment of any fees for service on the Parent Board that are earned at, before, or after the Effective Time, and Varex shall not have any responsibility for any such payments except as otherwise provided in Article VI with respect to deferred compensation. With respect to any Varex non-employee

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director, Varex shall be responsible for the payment of any fees for service on the Varex Board that are earned at any time after the Effective Time and Parent shall not have any responsibility for any such payments. Notwithstanding the foregoing, Varex shall commence paying quarterly cash retainers to Varex non-employee directors in respect of the quarter in which the Effective Time occurs; provided that (a) if Parent has already paid such quarter’s cash retainers to Parent non-employee directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, Varex shall pay Parent an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to Varex after the Distribution Date (other than any amount that is subject to a deferral election and is credited or to be credited to any such director’s account under the Parent Deferred Compensation Plans), and (b) if Parent has not yet paid such quarter’s cash retainers to Parent non-employee directors prior to the Effective Time, then within thirty (30) days after the Distribution Date, Parent shall pay Varex an amount equal to the portion of such payment that is attributable to Transferred Directors’ service to Parent on and prior to the Distribution Date.

ARTICLE V

RETIREMENT PLANS

Section 5.01. Establishment of Plan . Effective on or before the Distribution Date, the Varex Board shall adopt and establish the Varex 401(k) Plan and a related trust, which shall be intended to meet the qualification requirements of Section 401(a) of the Code (including under Sections 401(k) and (m) of the Code) including the safe-harbor requirements of Section 401(k)(12) of the Code. Varex may make such changes, modifications or amendments to the Varex 401(k) Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Separation or which result from vendor limitations. Before the Distribution Date, Varex shall provide Parent with (a) a copy of the Varex 401(k) Plan and related trust and applicable IRS volume submitter approval or other IRS favorable determination letter with respect to the plan and (b) a copy of certified resolutions of the Varex Board (or its authorized committee or other delegate) evidencing adoption of the Varex 401(k) Plan and related trust and the obligations described in Section 5.02 .

Section 5.02. Rollover of Account Balances . Varex Employees shall be eligible to participate in the Varex 401(k) Plan as of no later than the Effective Time to the extent that they were eligible to participate in the Parent 401(k) Plan as of immediately prior to the Effective Time. As soon as reasonably practicable following the Distribution Date, Varex shall permit each Varex Employee to make contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code) in the form of cash (or, in the case of loans, notes) in an amount equal to the full account balance distributable to such Varex Employee from the Parent 401(k) Plan to the Varex 401(k) Plan.

Section 5.03. Plan Fiduciaries . For all periods on and after the Effective Time, the Parties agree that the applicable fiduciaries of each of the Parent 401(k) Plan and the Varex 401(k) Plan, respectively, shall have the authority with respect to the Parent 401(k) Plan and the Varex 401(k) Plan, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

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ARTICLE VI

NONQUALIFIED DEFERRED COMPENSATION PLANS

Section 6.01. Generally .

(a) Establishment of the Deferred Compensation Plan . As of no later than the Effective Time, Varex shall establish the Varex Deferred Compensation Plans and a related rabbi trust.

(b) Assumption of Assets and Liabilities from Varex . As of no later than the Effective Time, Varex shall, and shall cause the Varex Deferred Compensation Plans to, assume all Assets and Liabilities under the Parent Deferred Compensation Plans related to the benefits of Varex Employees and Transferred Directors determined as of immediately prior to the Effective Time, and the Parent Group and the Parent Deferred Compensation Plans shall be relieved of all Assets and Liabilities related to such benefits. Parent shall retain all Liabilities under the Parent Deferred Compensation Plans for the benefits for Parent Employees, Former Employees, non-employee directors of Parent as of immediately following the Effective Time and former non-employee directors of Parent (other than the Transferred Directors). From and after the Effective Time, Varex Employees and Transferred Directors shall cease to be participants in the Parent Deferred Compensation Plans.

Section 6.02. Participant Elections . Any election made by a Varex Employee or Transferred Director under the Parent Deferred Compensation Plans, including without limitation those with respect to compensation deferral, investments, optional forms of benefit, benefit commencement and beneficiaries, shall be recognized for the same purposes under the Varex Deferred Compensation Plans. No new elections shall be permitted under the Parent Deferred Compensation Plans and Varex Deferred Compensation Plans as a result of the Separation.

Section 6.03. Participation; Distributions . The Parties acknowledge that none of the transactions contemplated by this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement shall trigger a payment or distribution of compensation under any of the Parent Deferred Compensation Plans or Varex Deferred Compensation Plans for any participant and, consequently, that the payment or distribution of any compensation to which such participant is entitled under any such plan shall occur upon such participant’s separation from service from the Parent Group or Varex Group or at such other time as provided in the applicable deferred compensation plan or participant’s deferral election.

ARTICLE VII

WELFARE BENEFIT PLANS

Section 7.01. Welfare Plans .

(a) Establishment of Varex Welfare Plans . The Varex Employees shall be permitted to continue to participate in the Parent Welfare Plans until December 31, 2016. As of no later than January 1, 2017, Varex shall establish the Varex Welfare Plans.

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(b) Waiver of Conditions; Benefit Maximums . Varex shall use commercially reasonable efforts to cause the Varex Welfare Plans to:

(i) with respect to initial enrollment, waive (A) all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to any Varex Employee, other than limitations that were in effect with respect to the Varex Employee under the applicable Parent Welfare Plan as of immediately prior to January 1, 2017, and (B) any waiting period limitation or evidence of insurability requirement applicable to a Varex Employee other than limitations or requirements that were in effect with respect to such Varex Employee under the applicable Parent Welfare Plans as of immediately prior to January 1, 2017; and

(ii) take into account (A) with respect to aggregate annual, lifetime, or similar maximum benefits available under the Varex Welfare Plans, a Varex Employee’s prior claim experience under the Parent Welfare Plans and any Benefit Plan that provides leave benefits; and (B) any eligible expenses incurred by a Varex Employee and his or her covered dependents during the portion of the plan year of the applicable Parent Welfare Plan ending as of January 1, 2017 to be taken into account under such Varex Welfare Plan for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Varex Employee and his or her covered dependents for the applicable plan year to the same extent as such expenses were taken into account by Parent for similar purposes prior to January 1, 2017 as if such amounts had been paid in accordance with such Varex Welfare Plan.

(c) Flexible Spending Accounts . As of no later than January 1, 2017, Varex shall establish a flexible spending account benefit plan (the “ Varex FSA ”). Until March 31, 2017, Varex Employees shall be permitted to submit for reimbursement claims incurred in respect of 2016 to the flexible spending account benefit plan maintained by Parent in respect of 2016 (the “ Parent FSA ”), which claims shall be eligible for reimbursement through such date in accordance with the terms of the Parent FSA. As of March 31, 2017, any remaining balance in excess of $500 in an active Varex Employee’s account under the Parent FSA shall be transferred to the Varex FSA.

(d) Allocation of Welfare Plan Assets and Liabilities .

(i) Except as otherwise provided in this Article VII , effective as of the Effective Time, the Parent Group shall retain or assume, as applicable, and be responsible for all Assets (including any insurance contracts, policies or other funding vehicles) and Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of Parent Employees, Varex Employees and Former Employees under the Parent Welfare Plans before, at, or after the Effective Time, and the Varex Group shall retain or assume, as applicable, and be responsible for all Assets (including any insurance contracts, policies or other funding vehicles) and Liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by or on behalf of Varex Employees under the Varex Welfare Plans at or after the Effective Time. Except as otherwise provided in this Article VII , no Varex Welfare Plan shall provide coverage to any Parent Employee or Former Employee after the Effective Time, and no Parent Welfare Plan shall provide coverage to any Varex Employee after January 1, 2017.

(ii) For these purposes, a claim or Liability is deemed to be incurred: (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or Liability; (B) with respect to life insurance, accidental

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death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or Liability; and (C) with respect to disability benefits, upon the date of an Employee’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or Liability.

Section 7.02. COBRA and HIPAA . The Parent Group shall continue to be responsible for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, and the corresponding provisions of the Parent Welfare Plans with respect to any Parent Employees or Former Employees (and their covered dependents) who incur a qualifying event under COBRA before, as of, or after the Effective Time. Effective as of January 1, 2017, the Varex Group shall assume responsibility for complying with, and providing coverage pursuant to, the health care continuation requirements of COBRA, and the corresponding provisions of the Varex Welfare Plans with respect to any Varex Employees (and their covered dependents) who incur a qualifying event or loss of coverage under the Varex Welfare Plans and/or the Parent Welfare Plans before, as of, or after January 1, 2017. The Parties agree that the consummation of the transactions contemplated by the Separation and Distribution Agreement shall not constitute a COBRA qualifying event for any purpose of COBRA.

Section 7.03. Vacation, Holidays and Leaves of Absence . Effective as of no later than the Effective Time, the Varex Group shall assume all Liabilities of the Varex Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Varex Employee, unless otherwise required by applicable Law. The Parent Group shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Parent Employee.

Section 7.04. Severance and Unemployment Compensation . As of the Effective Time, the Varex Group shall assume and be responsible for any and all Liabilities to, or relating to, Varex Employees in respect of severance, unemployment compensation and supplemental unemployment benefits, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time. The Parent Group shall retain or assume, as applicable, and be responsible for any and all Liabilities to, or relating to, Parent Employees and Former Employees in respect of severance, unemployment compensation and supplemental unemployment benefits, regardless of whether the event giving rise to the Liability occurred before, at or after the Effective Time.

Section 7.05. Workers’ Compensation . With respect to claims for workers’ compensation in the United States, (a) the Varex Group shall be responsible for claims in respect of Varex Employees, whether occurring before, at or after the Effective Time, and (b) the Parent Group shall be responsible for all claims in respect of Parent Employees and Former Employees, whether occurring before, at or after the Effective Time. The treatment of workers’ compensation claims by Varex with respect to Parent insurance policies shall be governed by Section 5.1 of the Separation and Distribution Agreement.

Section 7.06. Insurance Contracts . To the extent that any Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, the Parties shall cooperate and use their commercially reasonable efforts to replicate such insurance contracts for Varex or Parent as applicable (except to the extent that changes are required under applicable

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Law or filings by the respective insurers) and to maintain any pricing discounts or other preferential terms for both Parent and Varex for a reasonable term. Neither Party shall be liable for failure to obtain such insurance contracts, pricing discounts, or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.06 .

Section 7.07. Third-Party Vendors . Except as provided below, to the extent that any Welfare Plan is administered by a third-party vendor, the Parties shall cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for Parent or Varex, as applicable and to maintain any pricing discounts or other preferential terms for both Parent and Varex for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges, or administrative fees that such Party may incur pursuant to this Section 7.07 .

ARTICLE VIII

NON-U.S. EMPLOYEES

To the extent commercially reasonable, Varex Employees who are residents outside of the United States or otherwise are subject to non-U.S. Law and their related benefits and Liabilities shall be treated in the same manner as the Varex Employees who are residents of the United States and are not subject to non-U.S. Law. Notwithstanding anything in this Agreement to the contrary, all actions taken with respect to non-U.S. Employees or U.S. Employees working in non-U.S. jurisdictions shall be subject to and accomplished in accordance with applicable Law consistent with the custom of the applicable jurisdictions.

ARTICLE IX

MISCELLANEOUS

Section 9.01. Information Sharing and Access .

(a) Sharing of Information. Subject to any limitations imposed by applicable Law, each of Parent and Varex (acting directly or through members of the Parent Group or the Varex Group, respectively) shall provide to the other Party and its authorized agents and vendors all information necessary (including information for purposes of determining benefit eligibility, participation, vesting, calculation of benefits) on a timely basis under the circumstances for the Party to perform its duties under this Agreement. Such information shall include information relating to equity awards under stock plans. To the extent that such information is maintained by a third-party vendor, each Party shall use its commercially reasonable efforts to require the third-party vendor to provide the necessary information and assist in resolving discrepancies or obtaining missing data.

(b) Transfer of Personnel Records and Authorization . Subject to any limitation imposed by applicable Law and to the extent that it has not done so before the Effective Time, Parent shall transfer to Varex any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to Varex Employees and other records reasonably required by Varex to enable Varex properly to carry out its obligations under this Agreement. Such transfer of

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records generally shall occur as soon as administratively practicable at or after the Effective Time. Each Party shall permit the other Party reasonable access to its Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.

(c) Access to Records. To the extent not inconsistent with this Agreement, the Separation and Distribution Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related and benefit plan related records after the Effective Time shall be provided to members of the Parent Group and members of the Varex Group pursuant to the terms and conditions of Article VI of the Separation and Distribution Agreement.

(d) Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, Parent and Varex shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, Actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.

(e) Cooperation. Each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection Laws) all relevant documents, resolutions, government filings, data, payroll, employment and benefit plan information on regular timetables and cooperate as needed with respect to (i) any claims under or audit of or litigation with respect to any employee benefit plan, policy or arrangement contemplated by this Agreement, (ii) efforts to seek a determination letter, private letter ruling or advisory opinion from the IRS or U.S. Department of Labor on behalf of any employee benefit plan, policy or arrangement contemplated by this Agreement, (iii) any filings that are required to be made or supplemented to the IRS, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority, and (iv) any audits by a Governmental Authority or corrective actions, relating to any Benefit Plan, labor or payroll practices; provided , however , that requests for cooperation must be reasonable and not interfere with daily business operations.

(f) Confidentiality. Notwithstanding anything in this Agreement to the contrary, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 6.9 of the Separation and Distribution Agreement and the requirements of applicable Law.

Section 9.02. Preservation of Rights to Amend . Except as set forth in this Agreement, the rights of each member of the Parent Group and each member of the Varex Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

Section 9.03. Fiduciary Matters . Parent and Varex each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that

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to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 9.04. Further Assurances . Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 9.05. Counterparts; Entire Agreement; Corporate Power .

(a) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party.

(b) This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

(c) Parent represents on behalf of itself and each other member of the Parent Group, and Varex represents on behalf of itself and each other member of the Varex Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

(d) Each Party acknowledges that it and each other Party is executing this Agreement by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

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Section 9.06. Governing Law . This Agreement (and any claims or disputes arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common Law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of Laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

Section 9.07. Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided , however , that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party hereto. Notwithstanding the foregoing, no such consent shall be required for the assignment of a party’s rights and obligations under this Agreement, the Separation and Distribution Agreement and all other Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole ( i.e. , the assignment of a party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a change of control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.

Section 9.08. Third-Party Beneficiaries . The provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder. There are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement.

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Section 9.09. Notices . All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.09 ):

If to Parent (prior to, on or after the Effective Time), to:

Varian Medical Systems, Inc.

3100 Hansen Way

Palo Alto, California 94304

Attention: General Counsel

Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David Karp

Ronald Chen

Facsimile: (212) 403-2000

If to Varex (prior to the Effective Time), to:

Varex Imaging Corporation

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Attn: General Counsel

Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David Karp

Ronald Chen

Facsimile: (212) 403-2000

If to Varex (from and after the Effective Time), to:

Varex Imaging Corporation

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Attn: General Counsel

Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attention: David Karp

Ronald Chen

Facsimile: (212) 403-2000

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A Party may, by notice to the other Party, change the address to which such notices are to be given.

Section 9.10. Severability . If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

Section 9.11. Force Majeure . No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

Section 9.12. Headings . The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 9.13. Survival of Covenants . Except as expressly set forth in this Agreement, the covenants, representations and warranties contained in this Agreement, and Liability for the breach of any obligations contained herein, shall survive the Separation and Distribution and shall remain in full force and effect.

Section 9.14. Waivers of Default . Waiver by a Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 9.15. Dispute Resolution . The dispute resolution procedures set forth in Article VII of the Separation and Distribution Agreement shall apply to any dispute, controversy or claim arising out of or relating to this Agreement.

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Section 9.16. Specific Performance . Subject to the provisions of Article VII of the Separation and Distribution Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at Law for any breach or threatened breach, including monetary damages, are inadequate compensation for any Loss and that any defense in any Action for specific performance that a remedy at Law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.

Section 9.17. Amendments . No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 9.18. Interpretation . In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement; (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by Law to close in the United States or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [●].

Section 9.19. Limitations of Liability . Notwithstanding anything in this Agreement to the contrary, neither Varex or any member of the Varex Group, on the one hand, nor Parent or any member of the Parent Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability with respect to a Third-Party Claim).

Section 9.20. Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

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[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be executed by their duly authorized representatives as of the date first written above.


VARIAN MEDICAL SYSTEMS, INC.

By:
		Name:
		Title:

VAREX IMAGING CORPORATION

By:
		Name:
		Title:

[Signature Page to Employee Matters Agreement]

Exhibit 10.4

INTELLECTUAL PROPERTY MATTERS AGREEMENT

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

DATED AS OF [●]

TABLE OF CONTENTS


ARTICLE I DEFINITIONS		1

Section 1.01	Definitions	1

ARTICLE II GRANT OF LICENSE		7

Section 2.01	Grant of License	7

Section 2.02	Sublicensing	7

Section 2.03	Deliveries; Escrow	8

Section 2.04	Destruction	9

Section 2.05	Improvements	10

Section 2.06	Retained Rights	10

ARTICLE III COVENANTS		11

Section 3.01	No Challenge to Title	11

Section 3.02	No Conflicting Grants	11

Section 3.03	Confidentiality	11

ARTICLE IV PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE		12

Section 4.01	Prosecution and Maintenance	12

Section 4.02	Enforcement and Defense	12

Section 4.03	Third Party Actions	13

ARTICLE V BANKRUPTCY		13

ARTICLE VI TERMINATION		13

Section 6.01	Termination for Material Breach	13

Section 6.02	Termination Upon Bankruptcy	14

Section 6.03	Termination by Licensee	14

Section 6.04	Effect of Termination; Survival	14

ARTICLE VII GROUP MEMBERS		14



ARTICLE VIII DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY		15

Section 8.01	Disclaimer of Representations and Warranties	15

Section 8.02	Exclusion of Certain Damages	15

ARTICLE IX INDEMNIFICATION		15

Section 9.01	Indemnification	15

Section 9.02	Indemnification Procedures	16

ARTICLE X MISCELLANEOUS		16

Section 10.01	Further Assurances	16

Section 10.02	Counterparts; Entire Agreement; Corporate Power	16

Section 10.03	Governing Law	17

Section 10.04	Assignability	17

Section 10.05	Third-Party Beneficiaries	17

Section 10.06	Notices	18

Section 10.07	Severability	19

Section 10.08	Force Majeure	19

Section 10.09	No Set-Off	19

Section 10.10	Expenses	19

Section 10.11	Headings	19

Section 10.12	Waivers of Default	19

Section 10.13	Dispute Resolution	20

Section 10.14	Specific Performance	20

Section 10.15	Amendments	20

Section 10.16	Interpretation	20

Section 10.17	Mutual Drafting	21

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Schedule A: Varex Licensed Software
Schedule B: Varian Licensed Accelerator Technology
Schedule C: Exemplary Excluded Accelerator Technology
Schedule D: Varian Licensed Software
Schedule E: Varex Deliverable Items
Schedule F: Varian Deliverable Items

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INTELLECTUAL PROPERTY MATTERS AGREEMENT

This INTELLECTUAL PROPERTY MATTERS AGREEMENT, dated as of [●] (this “ Agreement ”), is by and between Varian Medical Systems, Inc., a Delaware corporation (“ Varian ”), and Varex Imaging Corporation, a Delaware corporation (“ Varex ”).

R E C I T A L S:

WHEREAS, the board of directors of Varian (the “ Varian Board ”) has determined that it is in the best interests of Varian and its stockholders to create a new publicly traded company that shall operate the Varex Business;

WHEREAS, in furtherance of the foregoing, the Varian Board has determined that it is appropriate and desirable to separate the Varex Business from the Varian Business (the “ Separation ”) and, following the Separation, make a distribution, on a pro rata basis, to holders of Varian Shares on the Record Date of all the outstanding Varex Shares owned by Varian (the “ Distribution ”);

WHEREAS, in order to effectuate the Separation and the Distribution, Varian and Varex have entered into a Separation and Distribution Agreement, dated as of the date hereof (the “ Separation and Distribution Agreement ”); and

WHEREAS, the Varex Group desires to receive (and the Varian Group is willing to grant to the Varex Group) certain licenses and rights under the Varian Licensed IP, and the Varian Group desires to receive (and the Varex Group is willing to grant to the Varian Group) certain licenses and rights under the Varex Licensed IP, in each case on the terms and subject to the conditions set forth in this Agreement.

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

(a) “ Accelerator Technology ” has the meaning set forth in the Separation and Distribution Agreement.

(b) “ Action ” has the meaning set forth in the Separation and Distribution Agreement.

(d) “ Agreement ” has the meaning set forth in the Preamble.

(e) “ Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

(f) “ Applicable Terms ” has the meaning set forth in Section 2.02.

(g) “ Assets ” has the meaning set forth in the Separation and Distribution Agreement.

(h) “ Attila4MC Module ” shall mean the object code software module consisting of Attila4MC, SpaceClaim for Attila and SpaceClaim CAD Data Package II.

(i) “ Attila EULA ” shall mean Varex’s standard form of Attila Product Line End User License and Maintenance Agreement, with certain changes thereto agreed by the Parties.

(j) “ Attila Program ” shall mean the full Attila product suite owned by Varian immediately prior to the Separation and Distribution.

(k) “ Control ” shall mean, with respect to any Patent, any item of Software or Technology or any other intellectual property right, possession of the right, whether by ownership, license or otherwise (other than by operation of the licenses and sublicenses granted under this Agreement), to grant a license or sublicense under such Patent, item of Software or Technology or other intellectual property right as provided for herein without violating the terms of, or triggering any payment obligations under, any agreement with any Third Party.

(l) “ Derivative Work ” shall mean a work that is based upon one or more preexisting works, and which is a derivative work, including any revision, modification, translation, abridgment, condensation, expansion, collection, compilation and any other form in which such preexisting works may be recast, transformed or adapted, and that, if prepared without authorization by the owner of a preexisting work, would constitute copyright infringement.

(m) “ Dispute ” has the meaning set forth in Section 10.13.

(n) “ Disclosing Party ” has the meaning set forth in Section 3.03(a).

(o) “ Distribution ” has the meaning set forth in the Recitals.

(p) “ Distribution Date ” shall mean the date of the consummation of the Distribution, which shall be determined by the Varian Board in its sole and absolute discretion.

(q) “ Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

(r) “ Excluded Accelerator Technology Materials ” has the meaning set forth in Section 2.04(a).

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(s) “ Exploit ” shall mean to make, have made, import, use, sell or offer for sale, including to research, develop, commercialize, register, manufacture, have manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of.

(t) “ Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

(u) “ Group ” shall mean either the Varex Group or the Varian Group, as the context requires.

(v) “ Improvements ” shall mean any improvements, additions, modifications, developments, variations, refinements, enhancements, compilations, collective works or Derivative Works.

(w) “ IP Agreement Information ” has the meaning set forth in Section 3.03(a).

(x) “ Law ” has the meaning set forth in the Separation and Distribution Agreement.

(y) “ Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

(z) “ Licensed IP ” shall mean the Varex Licensed IP or the Varian Licensed IP, as the context may require.

(aa) “ Licensee ” shall mean (i) with respect to the Varian Licensed IP, Varex, and (ii) with respect to the Varex Licensed IP, Varian.

(bb) “ Licensor ” shall mean (i) with respect to the Varian Licensed IP, Varian, and (ii) with respect to the Varex Licensed IP, Varex.

(cc) “ Licensor Indemnitees ” has the meaning set forth in Section 9.01.

(dd) “ Limited Sublicense ” has the meaning set forth in Section 2.02.

(ee) “ Parent Assets ” has the meaning set forth in the Separation and Distribution Agreement.

(ff) “ Parties ” shall mean the parties to this Agreement.

(gg) “ Patents ” has the meaning set forth in the Separation and Distribution Agreement.

(hh) “ Person ” has the meaning set forth in the Separation and Distribution Agreement.

(ii) “ Receiving Party ” has the meaning set forth in Section 3.03(a).

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(jj) “ Record Date ” has the meaning set forth in the Separation And Distribution Agreement.

(kk) “ Representatives ” has the meaning set forth in the Separation and Distribution Agreement.

(ll) “ Separation ” has the meaning set forth in the Recitals.

(mm) “ Separation and Distribution Agreement ” has the meaning set forth in the Recitals.

(nn) “ Software ” has the meaning set forth in the Separation and Distribution Agreement.

(oo) “ Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

(pp) “ Technology ” has the meaning set forth in the Separation and Distribution Agreement.

(qq) “ Third Party ” has the meaning set forth in the Separation and Distribution Agreement.

(rr) “ Trademarks ” has the meaning set forth in the Separation and Distribution Agreement.

(ss) “ Varex ” has the meaning set forth in the Preamble.

(tt) “ Varex Assets ” has the meaning set forth in the Separation and Distribution Agreement.

(uu) “ Varex Business ” has the meaning set forth in the Separation and Distribution Agreement.

(vv) “ Varex Field ” shall mean products and services used in the Varex Operating Activities, but excluding the Varian Field.

(ww) “ Varex Group ” has the meaning set forth in the Separation and Distribution Agreement.

(xx) “ Varex Invention Disclosures ” has the meaning set forth the Separation and Distribution Agreement.

(yy) “ Varex Licensed Invention Disclosures ” shall mean any Varex Invention Disclosure that is included in the Varex Licensed Technology.

(zz) “ Varex Licensed IP ” shall mean, collectively, (i) the Varex Licensed Patents, (ii) the Varex Licensed Software and (iii) the Varex Licensed Technology.

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(aaa) “ Varex Licensed Patents ” shall mean (i) any Patents Controlled by the Varex Group as of the Effective Time (after giving effect to the Separation and Distribution); (ii) any patent issuing on any patent application included in clause (i) above; (iii) any patent claims issuing on any patent application that claims priority from, and that cover exclusively subject matter that is entitled to priority to, any patent or patent application included in clause (i) above (including any divisional, continuation, continuation-in-part, reissue, reexamination, or extension) with a priority date that is on or before the Distribution Date; (iv) any foreign counterpart of any of the foregoing patents and patent applications with a priority date that is on or before the Distribution Date; and (v) any claim of any patent or patent application if the subject matter of such claim is disclosed by one or more Varex Licensed Invention Disclosures entered into the patent database maintained by Varian’s legal department on or before the Distribution Date. For clarity, except as provided in clauses (ii) through (v) above, Varex Licensed Patents shall not include any patents or patent applications filed with any patent authority after the Effective Time.

(bbb) “ Varex Licensed Software ” shall mean only the specific items of Software set forth on Schedule A , in each case in the form in which such items exist as of the Effective Time.

(ccc) “ Varex Licensed Technology ” shall mean any Technology (other than Trademarks) Controlled by the Varex Group as of the Effective Time (after giving effect to the Separation and Distribution), in each case in the form in which such Technology exists as of the Effective Time.

(ddd) “ Varex Operating Activities ” has the meaning set forth in the Separation and Distribution Agreement.

(eee) “ Varex Shares ” shall mean the shares of common stock, par value $0.01 per share, of Varex.

(fff) “ Varex Deliverable Items ” has the meaning set forth in Section 2.03(a).

(ggg) “ Varian ” has the meaning set forth in the Preamble.

(hhh) “ Varian Board ” has the meaning set forth in the Recitals.

(iii) “ Varian Business ” shall mean the Parent Business (as such term is defined in the Separation and Distribution Agreement).

(jjj) “ Varian Field ” shall mean products and services used in oncology therapy, radiation therapy and radiation medicine, including medical devices and software for treating cancer with radiotherapy, radiosurgery, proton therapy and brachytherapy and imaging technology and information technology related to oncology therapy, radiation therapy and radiation medicine.

(kkk) “ Varian Group ” has the meaning set forth in the Separation and Distribution Agreement.

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(lll) “ Varian Invention Disclosures ” shall mean the Parent Invention Disclosures (as such term is defined in the Separation and Distribution Agreement).

(mmm) “ Varian Licensed Accelerator Technology ” shall mean only the specific items of Accelerator Technology set forth on Schedule B , in each case in the form in which such items exist as of the Effective Time. For clarity, without expanding the foregoing, Varian Licensed Accelerator Technology excludes the Accelerator Technology set forth on Schedule C .

(nnn) “ Varian Licensed Invention Disclosures ” shall mean any Varian Invention Disclosure that is included in the Varian Licensed Technology.

(ooo) “ Varian Licensed IP ” shall mean, collectively, (i) the Varian Licensed Patents, (ii) the Varian Licensed Software and (iii) the Varian Licensed Technology.

(ppp) “ Varian Licensed Patents ” shall mean (i) any Patents Controlled by the Varian Group as of the Effective Time (after giving effect to the Separation and Distribution); (ii) any patent issuing on any patent application included in clause (i) above; (iii) any patent claims issuing on any patent application that claims priority from, and that cover exclusively subject matter that is entitled to priority to, any patent or patent application included in clause (i) above (including any divisional, continuation, continuation-in-part, reissue, reexamination, or extension) with a priority date that is on or before the Distribution Date; (iv) any foreign counterpart of any of the foregoing patents and patent applications with a priority date that is on or before the Distribution Date; and (v) any claim of any patent or patent application if the subject matter of such claim is disclosed by one or more Varian Licensed Invention Disclosures entered into the patent database maintained by Varian’s legal department on or before the Distribution Date. For clarity, except as provided in clauses (ii) through (v) above, Varian Licensed Patents shall not include any patents or patent applications filed with any patent authority after the Effective Time.

(qqq) “ Varian Licensed Software ” shall mean only the specific items of Software set forth on Schedule D , in each case in the form in which such items exist as of the Effective Time.

(rrr) “ Varian Licensed Technology ” shall mean any Technology (other than Trademarks) Controlled by the Varian Group as of the Effective Time (after giving effect to the Separation and Distribution), in each case in the form in which such Technology exists as of the Effective Time; provided, however, that Varian Licensed Technology shall not include any Accelerator Technology other than the Varian Licensed Accelerator Technology.

(sss) “ Varian Shares ” shall mean the common shares, par value $1.00 per share, of Varian.

(ttt) “ Varian Deliverable Items ” has the meaning set forth in Section 2.03(b).

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ARTICLE II

GRANT OF LICENSE

Section 2.01 Grant of License .

(a) Subject to the terms and conditions of this Agreement, and subject to any rights of Third Parties that may be in effect, effective as of the Effective Time, Varex (and each other member of the Varex Group) hereby grants to Varian (and each other member of the Varian Group) a nonexclusive, perpetual (except to the extent terminated in accordance with the provisions of this Agreement), fully paid-up, worldwide, non-sublicensable (except as set forth in Section 2.02), non-assignable (except as provided in Section 10.04), royalty-free and irrevocable (except to the extent terminated in accordance with the provisions of this Agreement) license or sublicense, as applicable, under all of Varex’s (and such Varex Group member’s) right, title and interest in and to the Varex Licensed IP, to use (including to reproduce, distribute, perform, display and prepare Derivative Works based upon) the Varex Licensed IP, solely for the purpose of Exploiting products and services in the Varian Field.

(b) Subject to the terms and conditions of this Agreement, and subject to any rights of Third Parties that may be in effect, effective as of the Effective Time, Varian (and each other member of the Varian Group) hereby grants to Varex (and each other member of the Varex Group) a nonexclusive, perpetual (except to the extent terminated in accordance with the provisions of this Agreement), fully paid-up, worldwide, non-sublicensable (except as set forth in Section 2.02), non-assignable (except as provided in Section 10.04), royalty-free and irrevocable (except to the extent terminated in accordance with the provisions of this Agreement) license or sublicense, as applicable, under all of Varian’s (and such Varian Group member’s) right, title and interest in and to the Varian Licensed IP, to use (including to reproduce, distribute, perform, display and prepare Derivative Works based upon) the Varian Licensed IP, solely for the purpose of Exploiting products and services in the Varex Field.

(c) Notwithstanding anything to the contrary herein, and except as permitted by the Attila EULA or any other agreement between the Parties or any members of their respective Groups, (i) Varian and the other members of its Group shall have the right hereunder to use the source code to the Attila Program solely for the purposes of (x) researching and developing Varian’s and its Group members’ own products and services in the Varian Field and (y) performing shielding calculation services in the Varian Field for Third Parties (and, for clarity, Varian and the other members of its Group shall not have the right hereunder to sell or license any product or software-as-a-service consisting of or including any source code or object code to the Attila Program, it being understood that the performance by Varian or any member of its Group of shielding calculation services in the Varian Field for Third Parties shall not be considered the sale or license of any product or software-as-a-service for purposes of this clause (i)), (ii) Varex and the other members of its Group shall not have the right hereunder to sell or otherwise commercialize any product or service consisting of, including or using the Varian Licensed Software other than products and services in the Varex Field that use the Varian Licensed Software in conjunction with, and solely in conjunction with, a flat panel detector sold by Varex or any member of its Group and (iii) neither Licensee nor any member of its Group shall sell, transfer, disclose or otherwise provide or make available to any Third Party any source code that is included in Licensor’s Licensed IP or otherwise delivered under Section 2.03 of this Agreement.

Section 2.02 Sublicensing . Licensee and its Group members shall have the right to grant have-made rights and sublicenses under the licenses and sublicenses granted to them hereunder solely to their contractors for the sole purpose of Exploiting Licensee’s and its Group

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members’ own products and services in the Varex Field or the Varian Field, as applicable (“ Limited Sublicenses ”); provided, however, that (a) any such Limited Sublicense shall exclude the right to grant further have-made rights or sublicenses, (b) any such Limited Sublicense shall be made pursuant to a written agreement (i) that is consistent with, and subject and subordinate to, the terms and conditions of this Agreement (including the requirement in this Section 2.02 that such Limited Sublicense be for the sole purpose of Exploiting Licensee’s and its Group members’ own products and services in the Varex Field or the Varian Field, as applicable) and (ii) pursuant to which the grantee agrees to be bound by any applicable terms or conditions of this Agreement, including any restrictions on Licensee’s use of Licensor’s Licensed IP and any confidentiality obligations of Licensee hereunder (the “ Applicable Terms ”), and (c) Licensee shall remain responsible to Licensor for the performance of Licensee’s obligations under this Agreement and shall be responsible to Licensor for any failure of any such grantee to comply with the Applicable Terms.

Section 2.03 Deliveries; Escrow .

(a) In connection with the Separation, subject to the license grant in Section 2.01(a) of this Agreement, Varian shall have the right to retain (i) each item of Varex Licensed Software and (ii) each of the items listed on Schedule E (the “ Varex Deliverable Items ”), in each case ((i) and (ii)) in the form, condition and format in which such Varex Licensed Software or Varex Deliverable Item exists as of the Effective Time, and upon Varian’s request (which request must be made no later than 180 days following the Distribution Date), Varex shall provide to Varian a copy of any such Varex Licensed Software or Varex Deliverable Item that is not in Varian’s possession as of the Distribution Date.

(b) Subject to the license grant in Section 2.01(b) of this Agreement, no more than 30 days following the Distribution Date, Varian shall provide to Varex (i) each item of Varian Licensed Software and (ii) each of the items listed on Schedule F (the “ Varian Deliverable Items ”), in each case ((i) and (ii)) in the form, condition and format in which such Varian Licensed Software or Varian Deliverable Item exists as of the Effective Time.

(c) If Licensee at any time reasonably believes that a patent issuing after Effective Time contains any claim described in clause (v) of the definition of Varian Licensed Patents (in the case of Varex as Licensee) or clause (v) of the definition of Varex Licensed Patents (in the case of Varian as Licensee), then, upon Licensee’s written request to Licensor identifying such patent, Licensor shall inform Licensee of Licensor’s good faith belief as to whether or not any claims of such patent are described in such clause and, if Licensor believes in good faith that any claims of such patent are described in such clause, provide Licensee with a list of such claims.

(d) Subject to Section 2.03(a), Section 2.03(b) and Section 2.03(c) above and clauses (ii) and (iii) of Section 6.1(a) of the Separation and Distribution Agreement, neither Licensor nor any other member of its Group shall have any obligation under this Agreement or the Separation and Distribution Agreement to, or use any efforts to, provide or make available, or cause to be provided or made available, to Licensee or any member of Licensee’s Group any information or materials related to Licensor’s Licensed IP.

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(e) On or promptly after the Distribution Date, the Parties shall enter into the Attila EULA, covering one copy of the object code to the Attila Program and one copy of the Attila4MC Module, in each case for (i) a perpetual license, at no charge, and (ii) annual maintenance, at no charge for the initial year and thereafter at Varex’s standard rates.

(f) After the Distribution Date, the Parties shall enter into a mutually agreeable escrow arrangement, pursuant to which Varian will place the Acuros CTS source code into escrow. The material terms of the escrow agreement will be set forth on Schedule G .

(g) Nothing in this Section 2.03 shall transfer ownership of any Assets or otherwise affect or change the ownership of Assets set forth in the Separation and Distribution Agreement. Without limiting the foregoing, (i) Section 2.03(a) shall not cause any of the Varex Licensed Software or Varex Deliverable Items to be Parent Assets under Section 2.2(b)(i) of the Separation and Distribution Agreement and (ii) Section 2.03(b) shall not cause any of the Varian Licensed Software or Varian Deliverable Items to be Varex Assets under Section 2.2(a)(iv) of the Separation and Distribution Agreement.

Section 2.04 Destruction .

(a) In connection with the Separation (and in any event within 14 business days after the Distribution Date), Varex shall (i) use its reasonable best efforts to identify any documents or materials, including any drawings, subdrawings and content related thereto in the possession or under the control of Varex or any member of its Group, in each case in any form whatsoever (including all copies thereof and all notes, extracts or summaries based thereon), that in any way contain, disclose or describe any Accelerator Technology other than (1) the Varian Licensed Accelerator Technology or (2) any Accelerator Technology that is a Varex Asset (“ Excluded Accelerator Technology Materials ”) and (ii) either deliver to Varian or destroy (1) any Excluded Accelerator Technology Materials set forth on Schedule C and (2) any other Excluded Accelerator Technology Materials identified pursuant to clause (i) above (and, notwithstanding anything to the contrary in the Separation and Distribution Agreement, neither Varex nor any member of its Group shall retain any electronic back-up versions of any such Excluded Accelerator Technology Materials on any computer system backup tapes, disks or other backup storage devices or in any other manner). Promptly following the completion of such delivery and destruction, Varex shall deliver to Varian written confirmation of compliance with its obligations under this Section 2.04(a), which confirmation shall be signed by an authorized representative of Varex.

(b) Without limiting Varex’s obligations under Section 2.04(a), if at any time after the Distribution Date Varex or any member of its Group becomes aware of, or Varian notifies Varex of, any Excluded Accelerator Technology Materials that were not delivered to Varian or destroyed pursuant to Section 2.04(a), then Varex shall promptly (i) deliver to Varian or destroy such Excluded Accelerator Technology Materials (and, notwithstanding anything to the contrary in the Separation and Distribution Agreement, neither Varex nor any member of its Group shall retain any electronic back-up versions of such Excluded Accelerator Technology Materials on any computer system backup tapes, disks or other backup storage devices or in any other manner) and (ii) deliver to Varian written confirmation of compliance with its obligations under this Section 2.04(b) with respect to such Excluded Accelerator Technology Materials, which confirmation shall be signed by an authorized representative of Varex.

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(c) For a period of four (4) years after the Distribution Date, Varian shall have the right to cause a Third Party auditor selected by Varian and reasonably acceptable to Varex, upon reasonable notice, during regular business hours and under customary obligations of confidence to Varex, to audit the records and databases of Varex and the other members of its Group to confirm that Varex has complied with its obligations under Section 2.04(a) and Section 2.04(b) and to identify any Excluded Accelerator Technology Materials that have not otherwise been delivered to Varian or destroyed. Varex and the other members of its Group shall reasonably cooperate with any such audit, including by making their personnel reasonably available to provide information and assistance reasonably required by the Third Party auditor. Upon completion of any such audit, the Third Party auditor shall prepare and deliver to the Parties a report (i) stating whether the audit identified any Excluded Accelerator Technology Materials that have not otherwise been delivered to Varian or destroyed and (ii) if the audit identified any such Excluded Accelerator Technology Materials, a description thereof. Except as provided in the preceding sentence, the Third Party auditor shall not provide Varian with any information regarding the audited records and databases. Without limiting Varex’s obligations under Section 2.04(a) or Section 2.04(b), if the audit identifies any Excluded Accelerator Technology Materials that have not otherwise been delivered to Varian or destroyed, then Varex shall promptly (x) deliver to Varian or destroy such Excluded Accelerator Technology Materials (and, notwithstanding anything to the contrary in the Separation and Distribution Agreement, neither Varex nor any member of its Group shall retain any electronic back-up versions of such Excluded Accelerator Technology Materials on any computer system backup tapes, disks or other backup storage devices or in any other manner) and (y) deliver to Varian written confirmation of compliance with its obligations under this sentence with respect to such Excluded Accelerator Technology Materials, which confirmation shall be signed by an authorized representative of Varex. Varian shall pay the costs of the Third Party auditor, unless the audit identifies any breach of Varex’s obligations under Section 2.04(a) or Section 2.04(b), in which case (without limiting any other rights or remedies that may be available to Varian) Varex shall pay the costs of the Third Party auditor.

Section 2.05 Improvements . Licensee and the other members of its Group shall have the right to make Improvements to Licensor’s Licensed IP. As between the Parties, Licensee and the other members of its Group shall own all right, title and interest in and to any Improvements to Licensor’s Licensed IP made by or on behalf of Licensee or any member of its Group after the Effective Time; provided, however, that nothing in this Section 2.05 is intended or shall be construed to grant to Licensee or any member of its Group any rights to Licensor’s Licensed IP in addition to those otherwise granted to them under this Agreement.

Section 2.06 Retained Rights . As between the Parties, subject to the rights, licenses and sublicenses granted to Licensee and the other members of its Group hereunder, Licensor and the other members of its Group are and shall be the sole and exclusive owners of Licensor’s Licensed IP. Except as expressly provided herein, Licensor and the other members of its Group grant no rights, licenses or sublicenses to Licensee or any member of its Group hereunder. Without limiting the foregoing, except to the extent authorized pursuant to any other written agreement between the Parties or any members of their Groups, neither Licensee nor any

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member of its Group shall (a) use any of Licensor’s Licensed IP in any manner that exceeds the scope of the licenses and sublicenses granted to Licensee and the other members of its Group hereunder or (b) use in any manner any Software or Technology owned or controlled by Licensor or any member of its Group other than Licensor’s Licensed IP.

ARTICLE III

COVENANTS

Section 3.01 No Challenge to Title . Neither Licensee nor any member of its Group shall do, or license, authorize or otherwise enable or assist any Third Party to do, any of the following: (a) represent to any Person in any manner that it owns or has any ownership rights in or to any of Licensor’s Licensed IP; (b) apply for any federal, state, national or supranational registration of any of Licensor’s Licensed IP; or (c) impair, dispute or in any way contest or challenge the validity or enforceability of any of Licensor’s Licensed IP or any right, title or interest of Licensor or any member of its Group therein or thereto.

Section 3.02 No Conflicting Grants . Neither Licensor nor any member of its Group shall grant any right, license or sublicense to any Third Party that would conflict with any license or sublicense granted to Licensee or any member of its Group hereunder; provided, however, that this Section 3.02 is not intended and shall not be construed to restrict Licensor or any member of its Group from licensing, assigning or otherwise transferring Licensor’s Licensed IP or any of its rights therein to any Person, or using Licensor’s Licensed IP for any purpose, in each case subject to the licenses and sublicenses granted hereunder.

Section 3.03 Confidentiality . Without limiting any other rights or obligations of the Parties under the Separation and Distribution Agreement or any other Ancillary Agreement:

(a) Any information or materials relating to the Licensed IP of a Party (the “ Disclosing Party ”) that is disclosed or provided by the Disclosing Party or any member of its Group or their respective Representatives to the other Party (the “ Receiving Party ”) or any member of the Receiving Party’s Group or their respective Representatives under or in connection with this Agreement, or is otherwise is in the possession or under the control of the Receiving Party or any member of the Receiving Party’s Group (such information and materials, collectively, “ IP Agreement Information ”), shall be deemed confidential and proprietary information concerning the Disclosing Party or a member of the Disclosing Party’s Group or their respective businesses for purposes of Section 6.9(a) of the Separation and Distribution Agreement;

(b) The Receiving Party’s use and disclosure of IP Agreement Information to the extent reasonably required to exercise its rights (including pursuant to Section 2.01) or perform its obligations under this Agreement shall be deemed a purpose expressly permitted under this Agreement for purposes of Section 6.9(a) of the Separation and Distribution Agreement;

(c) The Receiving Party’s disclosure of IP Agreement Information to the extent required to file, prosecute or maintain registrations or applications for registration with respect to its intellectual property or to prosecute or defend against litigation shall be deemed purposes expressly permitted under this Agreement for purposes of Section 6.9(a) of the

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Separation and Distribution Agreement; provided, however, that the Receiving Party shall use reasonable best efforts to secure confidential treatment any IP Agreement Information disclosed pursuant to this clause (c); and

(d) The Receiving Party’s disclosure of IP Agreement Information in communications with bona fide existing or prospective acquirers, merger partners, lenders, investors, licensees, sublicensees or collaborators, in each case solely on a need to know basis and under confidentiality restrictions substantially equivalent to those applicable to the Receiving Party under this Agreement and the Separation and Distribution Agreement, shall be deemed a purpose expressly permitted under this Agreement for purposes of Section 6.9(a) of the Separation and Distribution Agreement; provided, however, that the Receiving Party shall be responsible to the Disclosing Party for any violation of such confidentiality restrictions by any Person receiving IP Agreement Information under this clause (d).

For clarity, nothing in this Section 3.03 is intended or shall be construed to permit Licensee or any member of its Group to sell, transfer, disclose or otherwise provide or make available to any Third Party any source code that is included in Licensor’s Licensed IP or otherwise delivered under Section 2.03 of this Agreement.

ARTICLE IV

PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE

Section 4.01 Prosecution and Maintenance . As between the Parties, Licensor shall have the sole right, but not any obligation, to prepare, file, prosecute and maintain any registrations or applications for registration with respect to Licensor’s Licensed IP and to take any actions in connection with any proceedings related to such registrations or applications for registration, in each case, at Licensor’s sole cost and expense; provided, however, that if reasonably requested by Licensor, Licensee and the other members of its Group shall reasonably cooperate with Licensor in connection with any such activities, at Licensor’s cost and expense. For clarity, Licensor (or any member of its Group) may at any time discontinue maintenance of or otherwise abandon any registrations or applications for registration with respect to Licensor’s Licensed IP, without any obligation whatsoever to Licensee or any member of its Group.

Section 4.02 Enforcement and Defense .

(a) Licensee shall advise Licensor reasonably promptly if (and in no event later than 10 business days after) Licensee or any member of its Group becomes aware of any unauthorized Third-Party use of Licensor’s Licensed IP. Neither Licensee nor any member of its Group shall take any steps to contact any Third Party with respect to any such unauthorized use.

(b) As between the Parties, Licensor shall have the sole right, but not any obligation, to determine whether and in what manner to respond to any unauthorized Third-Party use of Licensor’s Licensed IP and shall be exclusively entitled to any remedies, including monetary damages, related thereto or resulting therefrom. As between the Parties, Licensor shall have the sole right, but not any obligation, to defend and control the defense of the validity and enforceability of Licensor’s Licensed IP. If reasonably requested by Licensor, Licensee and the other members of its Group shall reasonably cooperate with Licensor in connection with any such activities, at Licensor’s cost and expense.

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Section 4.03 Third Party Actions . Licensee shall advise Licensor promptly if Licensee or any member of its Group becomes aware of any allegations, claims or demands (actual or threatened) that any use of Licensor’s Licensed IP by Licensee or any member of its Group infringes any rights of any Third Party. Neither Licensee nor any member of its Group shall enter into any settlement, admit any liability or consent to any judgment that would adversely affect the rights or interest of Licensor or any member of its Group with respect to Licensor’s Licensed IP without the prior written consent of Licensor. Licensor shall have the right to employ separate counsel and participate in the defense of any such action, at Licensor’s own cost and expense.

ARTICLE V

BANKRUPTCY

The rights and licenses granted under this Agreement are intended and shall be deemed to be a license of “intellectual property” within the meaning of Section 365(n) of the United States Bankruptcy Code (and any analogous provision of applicable Law outside the United States). If Section 365(n) of the United States Bankruptcy Code (or any analogous provision of applicable Law outside the United States) is applicable and the trustee or debtor-in-possession has rejected this Agreement and Licensee (or any other member of its Group) has elected pursuant to Section 365(n) of the United States Bankruptcy Code (or any analogous provision of applicable Law outside the United States) to retain its rights hereunder, then upon the written request of Licensee, the trustee or debtor-in-possession shall provide to Licensee a complete duplicate of (or complete access to, as appropriate) any such intellectual property (including embodiments thereof) held or controlled by the trustee or debtor-in-possession.

ARTICLE VI

TERMINATION

Section 6.01 Termination for Material Breach .

(a) Licensor may terminate this Agreement with respect to any item of Licensor’s Licensed IP in the event of a material breach of this Agreement by Licensee or any member its Group with respect to such item, if such breach is not cured within 30 days following Licensee’s receipt of written notice of such breach from Licensor.

(b) Varian may terminate this Agreement with respect to the Varian Licensed Accelerator Technology in the event of a material breach of this Agreement by Varex or any member of its Group with respect to the Accelerator Technology, if such breach is not cured within 30 days following Varex’s receipt of written notice of such breach from Varian.

(c) Varex may terminate this Agreement with respect to the license of the Attila Program in the event of a material breach of this Agreement by Varian or any member of its Group with respect to the Attila Program (and, for clarity, Varian and the other members of its Group will be deemed to have committed such a material breach if they sell or license any product or software-as-a-service consisting of or including any source code or object code to the Attila Program, except as permitted by the Attila EULA or any other agreement between the Parties or any members of their respective Groups, it being understood that the performance by Varian or any member of its Group of shielding calculation services in the Varian Field for Third

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Parties shall not be considered the sale or license of any product or software-as-a-service for purposes of this sentence), if such breach is not cured within 30 days following Varian’s receipt of written notice of such breach from Varex.

Section 6.02 Termination Upon Bankruptcy . Licensor may terminate this Agreement with respect to all of Licensor’s Licensed IP by written notice to Licensee in the event of: (a) Licensee’s making a general assignment for the benefit of its creditors or filing a voluntary petition under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import; or (b) the filing of an involuntary petition against Licensee under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under any law of like import, which petition remains un-dismissed or un-stayed for a period of sixty (60) days; or (c) the appointment of a trustee or receiver for Licensee or its property.

Section 6.03 Termination by Licensee . Licensee may terminate this Agreement with respect to any item of Licensor’s Licensed IP upon written notice of such termination to Licensor.

Section 6.04 Effect of Termination; Survival . Upon termination of this Agreement with respect to any item of Licensor’s Licensed IP, (a) any license or sublicense granted to Licensee or any member of its Group under Section 2.01 with respect to such item shall terminate, (b) any rights of Licensee or any member of its Group under Section 2.02 to grant Limited Sublicenses with respect to such item shall terminate (and any Limited Sublicenses with respect to such item previously granted by Licensee or any member of its Group under Section 2.02 shall automatically terminate), (c) any obligations of Licensor under Section 2.03(c) with respect to such item shall terminate, (d) any rights of Licensee or any member of its Group under Section 2.05 to make Improvements to such item shall terminate, (e) neither Licensor nor any member of its Group shall have any further restrictions under Section 3.02 with respect to such item, (f) Licensee’s obligation under the first sentence of Section 4.02(a) with respect to such item shall terminate, and (g) subject to clauses (a) through (e) above, all other rights and obligations of the Parties under this Agreement shall survive and remain in full force and effect. No termination of this Agreement shall affect any rights or obligations that may have accrued prior to such termination or limit any rights or remedies that may otherwise be available to a Party at law or in equity.

ARTICLE VII

GROUP MEMBERS

Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any other member of such Party’s Group.

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ARTICLE VIII

DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY

Section 8.01 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, (A) ALL LICENSED IP IS LICENSED, SUBLICENSED AND FURNISHED HEREUNDER “AS IS,” WITHOUT ANY SUPPORT, ASSISTANCE, MAINTENANCE OR WARRANTIES OF ANY KIND WHATSOEVER, (B) LICENSEE AND THE OTHER MEMBERS OF ITS GROUP ASSUME TOTAL RESPONSIBILITY AND RISK FOR ITS AND THEIR USE OF ANY OF LICENSOR’S LICENSED IP AND (C) NEITHER LICENSOR NOR ANY OTHER MEMBER OF ITS GROUP MAKES (AND LICENSOR AND THE OTHER MEMBERS OF ITS GROUP HEREBY EXPRESSLY DISCLAIM) ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND WHATSOEVER WITH RESPECT TO LICENSOR’S LICENSED IP, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES OF TITLE OR NON-INFRINGEMENT, OR ANY WARRANTY THAT LICENSOR’S LICENSED IP IS “ERROR FREE.”

Section 8.02 Exclusion of Certain Damages . IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER PARTY IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, EACH OTHER MEMBER OF ITS GROUP AND ITS AND THEIR REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE; PROVIDED, HOWEVER, THAT THE FOREGOING EXCLUSION SHALL NOT APPLY IN RESPECT OF ANY LIABILITY ARISING OUT OF OR IN CONNECTION WITH (A) ANY BREACH OF A PARTY’S CONFIDENTIALITY OBLIGATIONS WITH RESPECT TO IP AGREEMENT INFORMATION, (B) ANY BREACH BY VAREX OR ANY MEMBER OF ITS GROUP OF ANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO ACCELERATOR TECHNOLOGY, (C) ANY GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OF OR BY A PARTY, OR (D) ANY CLAIMS FOR INDEMNIFICATION IN RESPECT OF THIRD-PARTY CLAIMS UNDER ARTICLE IX.

ARTICLE IX

INDEMNIFICATION

Section 9.01 Indemnification . In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement or any other Ancillary Agreement, to the fullest extent permitted by Law, Licensee shall (and shall cause the other members of its Group to) indemnify, defend and hold harmless Licensor, each of the other members of Licensor’s Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Licensor Indemnitees ”), from and against any and all Liabilities of the Licensor Indemnitees in connection with any suit, investigation, claim or demand of any Third Party to the extent relating to, arising out of or resulting from (i) any breach of this Agreement by Licensee or any member

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of its Group, (ii) any use by Licensee or any member of its Group of Licensor’s Licensed IP or (iii) any gross negligence or willful misconduct of Licensee or any member of its Group, or any of their directors, officers, employees or agents, in connection with this Agreement.

Section 9.02 Indemnification Procedures . The applicable procedures for indemnification set forth in Sections 4.5, 4.6 and 4.7 of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement.

ARTICLE X

MISCELLANEOUS

Section 10.01 Further Assurances . Each Party shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments, that the other Party may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 10.02 Counterparts; Entire Agreement; Corporate Power .

(b) This Agreement, the Separation and Distribution Agreement and the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. The Separation and Distribution Agreement and the Ancillary Agreements, including this Agreement, together govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

(c) Varian represents on behalf of itself and each other member of the Varian Group and Varex represents on behalf of itself and each other member of the Varex Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

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adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

Section 10.03 Governing Law . This Agreement (and any Dispute arising out of or related hereto or to the transactions contemplated hereby or to the inducement of any Party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and remedies.

Section 10.04 Assignability . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that neither Party may assign its rights or delegate its obligations under this Agreement without the express prior written consent of the other Party. Notwithstanding the foregoing, no such consent shall be required (a) (i) for the assignment of all of a Party’s rights and obligations under this Agreement in connection with a change of control of such Party, or a sale of all or substantially all of the assets of such Party, or (ii) for the assignment of certain rights and obligations of a Party under this Agreement that relate to any business segment of such Party in connection with a sale of such business segment, or of all or substantially all of the assets of such business segment, in either case ((i) or (ii)) so long as the resulting, surviving or transferee Person is not a competitor of the non-assigning Party, assumes the applicable rights and obligations by operation of Law or pursuant to a written agreement for the benefit of the non-assigning Party and exercises any assigned license or sublicense rights only in connection with the assets acquired from the assigning Party in such transaction, or (b) for the assignment of Licensor’s rights and obligations under this Agreement with respect to any item of Licensor’s Licensed IP in connection with a sale or other transfer of such item or Licensor’s (or its applicable Group member’s) rights therein, so long as the assignee’s rights in such item remain subject to the licenses and sublicenses granted to Licensee and the other members of its group hereunder.

Section 10.05 Third-Party Beneficiaries . Except as provided in ARTICLE IX with respect to the Licensor Indemnitees in their capacities as such and to the extent that a Party’s rights and licenses under this Agreement extend to other members of its Group, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder and (b) there are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other Person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

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Section 10.06 Notices . All notices, requests, claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, or by facsimile with receipt confirmed to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.06):

If to Varian, to:


Varian Medical Systems, Inc. 3100 Hansen Way Palo Alto, California 94304
Attention:		General Counsel
Facsimile:		[●]

with a copy to:

Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019
Attention:		David C. Karp
		Ronald C. Chen
Facsimile:		(212) 403-2000

and a copy to:

Osborn McDerby LLP 333 Bush Street, 21st Floor San Francisco, California 94104
Attention:		Stephen Osborn
Facsimile:		(415) 237-6714

If to Varex, to:

Varex Imaging Corporation 1678 S. Pioneer Road Salt Lake City, Utah 84104
Attention:		General Counsel
Facsimile:		[●]

with a copy to:

Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019
Attention:		David C. Karp
		Ronald C. Chen
Facsimile:		(212) 403-2000

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Any Party may, by notice to the other Party, change the address to which such notices are to be given.

Section 10.07 Severability . If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.

Section 10.08 Force Majeure . No Party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

Section 10.09 No Set-Off . Except as expressly set forth in the Separation and Distribution Agreement or any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, neither Party nor any member of such Party’s Group shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or the Separation and Distribution Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any member of its Group arising out of this Agreement or the Separation and Distribution Agreement or any Ancillary Agreement.

Section 10.10 Expenses . Except as otherwise expressly set forth in this Agreement or the Separation and Distribution Agreement, or as otherwise agreed to in writing by the Parties, all fees, costs and expenses incurred in connection with the preparation, execution, delivery and implementation of this Agreement will be borne by the Party or its applicable Subsidiary incurring such fees, costs or expenses.

Section 10.11 Headings . The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

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No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

Section 10.13 Dispute Resolution . In the event of any controversy, dispute or claim (a “ Dispute ”) arising out of or relating to any Party’s rights or obligations under this Agreement (whether arising in contract, tort or otherwise) (including the interpretation or validity of this Agreement), such Dispute shall be resolved in accordance with the dispute resolution process referred to in Article VII of the Separation and Distribution Agreement.

Section 10.14 Specific Performance . In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is, or is to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are hereby waived by each of the Parties.

Section 10.15 Amendments . No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Section 10.16 Interpretation . In this Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Annexes and Exhibits hereto) and not to any particular provision of this Agreement; (c) Article, Section, Exhibit, Annex and Schedule references are to the Articles, Sections, Exhibits, Annexes and Schedules to this Agreement unless otherwise specified; (d) unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement; (e) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; (j) references in this Agreement to “Licensor’s Licensed IP” or “Licensed IP of a Party” shall be interpreted to refer to the Varex Licensed IP or the Varian Licensed IP, as applicable; and (k) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [●].

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Section 10.17 Mutual Drafting . This Agreement shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable to this Agreement.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.


VARIAN MEDICAL SYSTEMS, INC.

By:
		Name:
		Title:

VAREX IMAGING CORPORATION

By:
		Name:
		Title:

[Signature Page to Intellectual Property Matters Agreement]

Schedule A

Varex Licensed Software

Schedule B

Varian Licensed Accelerator Technology

Schedule C

Exemplary Excluded Accelerator Technology

Schedule D

Varian Licensed Software

Schedule E

Varex Deliverable Items

Schedule F

Varian Deliverable Items

Schedule G

Source Code Escrow Agreement Terms

Exhibit 10.5

TRADEMARK LICENSE AGREEMENT

BY AND BETWEEN

VARIAN MEDICAL SYSTEMS, INC.

AND

VAREX IMAGING CORPORATION

DATED AS OF [●]

TABLE OF CONTENTS


ARTICLE I DEFINITIONS			1

	Section 1.01	Definitions	1

ARTICLE II GRANT OF LICENSE			5

	Section 2.01	Grant of License	5

	Section 2.02	Sublicensing	8

	Section 2.03	Acquired Business	8

	Section 2.04	Retained Rights	8

ARTICLE III COVENANTS			9

	Section 3.01	No Challenge to Title	9

	Section 3.02	No Conflicting Grants	9

	Section 3.03	Trademark Notices	9

	Section 3.04	Goodwill	10

	Section 3.05	Quality Control; Varian Approvals	10

	Section 3.06	Compliance with Trademark Usage Guidelines	10

ARTICLE IV PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE			11

	Section 4.01	Prosecution and Maintenance	11

	Section 4.02	Enforcement and Defense	11

	Section 4.03	Third Party Actions	11

ARTICLE V BANKRUPTCY			12

ARTICLE VI TERM AND TERMINATION			12

	Section 6.01	Term	12

	Section 6.02	Termination for Material Breach	12

	Section 6.03	Termination Upon Bankruptcy	12

	Section 6.04	Termination by Varex	12

	Section 6.05	Effect of Termination; Survival	12


ARTICLE VII GROUP MEMBERS			13

ARTICLE VIII DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY			13

	Section 8.01	Disclaimer of Representations and Warranties	13

	Section 8.02	Exclusion of Certain Damages	13

ARTICLE IX INDEMNIFICATION			13

	Section 9.01	Indemnification by Varex	13

	Section 9.02	Indemnification by Varian	14

	Section 9.03	Indemnification Procedures	14

ARTICLE X MISCELLANEOUS			14

	Section 10.01	Further Assurances	14

	Section 10.02	Counterparts; Entire Agreement; Corporate Power	14

	Section 10.03	Governing Law	15

	Section 10.04	Assignability	15

	Section 10.05	Third-Party Beneficiaries	16

	Section 10.06	Notices	16

	Section 10.07	Severability	17

	Section 10.08	Force Majeure	17

	Section 10.09	No Set-Off	17

	Section 10.10	Expenses	18

	Section 10.11	Headings	18

	Section 10.12	Waivers of Default	18

	Section 10.13	Dispute Resolution	18

	Section 10.14	Specific Performance	18

	Section 10.15	Amendments	18

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Section 10.16	Interpretation	18

Section 10.17	Mutual Drafting	19

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TRADEMARK LICENSE AGREEMENT

This TRADEMARK LICENSE AGREEMENT, dated as of [●] (this “ Agreement ”), is by and between Varian Medical Systems, Inc., a Delaware corporation (“ Varian ”), and Varex Imaging Corporation, a Delaware corporation (“ Varex ”).

R E C I T A L S:

WHEREAS, the Varex Group desires to receive (and the Varian Group is willing to grant to the Varex Group) certain licenses and rights under the Licensed Marks, on the terms and subject to the conditions set forth in this Agreement.

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

(a) “ Access Rights ” has the meaning set forth in Section 3.05(c).

(b) “ Acquired Business ” has the meaning set forth in Section 2.03.

(d) “ Aftermarket Extension Products ” has the meaning set forth in Section 2.01(c).

(e) “ Agreement ” has the meaning set forth in the Preamble.

(f) “ Ancillary Agreements ” has the meaning set forth in the Separation and Distribution Agreement.

(g) “ Applicable Terms ” has the meaning set forth in Section 2.02.

(h) “ Commercial Documentation ” means Licensed Product and Licensed Services purchase order acknowledgements, shipping documents, invoices, and other Licensed Product-related commercial documents.

(i) “ Corporate Identity ” means any business or corporate entity name, trade name or other business or corporate identifier (e.g., “d/b/a”).

(j) “ Dispute ” has the meaning set forth in Section 10.13.

(k) “ Distribution ” has the meaning set forth in the Recitals.

(l) “ Distribution Date ” shall mean the date of the consummation of the Distribution, which shall be determined by the Varian Board in its sole and absolute discretion.

(m) “ Effective Time ” has the meaning set forth in the Separation and Distribution Agreement.

(n) “ Extension Products ” has the meaning set forth in Section 2.01(b).

(o) “ Force Majeure ” has the meaning set forth in the Separation and Distribution Agreement.

(p) “ Governmental Authority ” has the meaning set forth in the Separation and Distribution Agreement.

(q) “ Group ” shall mean either the Varex Group or the Varian Group, as the context requires.

(r) “ Internet Content ” means Varex’s website located at [URL] and any other Varex-controlled content on any World Wide Information Distribution Medium, including on any social media product, service, application or tool (e.g., Twitter, Facebook, etc.) or similar service (now known or hereafter known), including any of the foregoing that permits the exchange of user generated content on the internet (e.g., YouTube) existing at any time during the term of this Agreement.

(s) “ Law ” has the meaning set forth in the Separation and Distribution Agreement.

(t) “ License ” means the license granted to Varex and the other members of its Group in Section 2.01.

(u) “ License Expiration ” has the meaning set forth in Section 2.01(a).

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(v) “ Licensed Cast/Engraved Products ” means parts that (i) were manufactured by Varian as part of the Varex Business prior to the Distribution Date and (ii) are casted or engraved during manufacturing with one or more of the Licensed Marks.

(w) “ Licensed Marks ” means “VARIAN MEDICAL SYSTEMS,” “VARIAN,” and any stylized versions of the foregoing or any design elements thereof.

(x) “ Licensed Product ” means any Licensed Registered Aftermarket Product, Licensed Registered OEM Product, Licensed Cast/Engraved Product, Licensed Software Product, or Licensed Warranted Product.

(y) “ Licensed Registered Aftermarket Products ” means products that (i) were created, developed, and/or distributed by Varian as part of the Varex Business prior to the Distribution Date, (ii) are required by any OEM’s product regulatory registration with a Governmental Authority and (iii) are sold directly to end customers or as aftermarket products (non-OEM products).

(z) “ Licensed Registered OEM Products ” means products that (i) were created, developed, and/or distributed by Varian as part of the Varex Business prior to the Distribution Date, (ii) are required by any OEM’s product regulatory registration with a Governmental Authority and (iii) are sold to such OEM.

(aa) “ Licensed Service ” means any service related primarily to the installation, maintenance, repair, use, or monitoring of Licensed Products.

(bb) “ Licensed Software Products ” means software that was created, developed, and/or distributed by Varian as part of the Varex Business prior to the Distribution Date, and any updates thereto.

(cc) “ Licensed Warranted Products ” means products that (i) were shipped by Varian, prior to the Distribution Date, under a Varian warranty as part of the Varex Business and (ii) are returned to Varex, after the Distribution Date, for replacement or repair under such warranty.

(dd) “ Liabilities ” has the meaning set forth in the Separation and Distribution Agreement.

(ee) “ OEM ” means original equipment manufacturer.

(ff) “ Parties ” shall mean the parties to this Agreement.

(gg) “ Person ” has the meaning set forth in the Separation and Distribution Agreement.

(hh) “ Promotional Material ” means all product and marketing material, including data sheets (whether written or recorded in any other medium), used in the promotion of any Licensed Products or Licensed Services.

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(ii) “ Quality Standards ” has the meaning set forth in Section 3.05(a).

(jj) “ Record Date ” has the meaning set forth in the Separation and Distribution Agreement.

(kk) “ Registration Expiration ” has the meaning set forth in Section 2.01(b).

(ll) “ Remaining Warranted Products ” has the meaning set forth in Section 2.01(d).

(mm) “ Representative ” has the meaning set forth in the Separation and Distribution Agreement.

(nn) “ Separation ” has the meaning set forth in the Recitals.

(oo) “ Separation and Distribution Agreement ” has the meaning set forth in the Recitals.

(pp) “ Social Media Identifier ” means any name, mark or other identifier (either alone or in combination with any other name, mark or other identifier) used to establish an account, screen name, nickname or “handle” on, or means to locate any, social media product, service, application or tool (e.g., Twitter, Facebook, etc.) or similar service (now known or hereafter known), including any of the foregoing that permits the exchange of user generated content on the internet (e.g., YouTube).

(qq) “ Software License Expiration ” has the meaning set forth in Section 2.01(e).

(rr) “ Subsidiary ” has the meaning set forth in the Separation and Distribution Agreement.

(ss) “ Third Party ” has the meaning set forth in the Separation and Distribution Agreement.

(tt) “ Varex ” has the meaning set forth in the Preamble.

(uu) “ Varex Business ” has the meaning set forth in the Separation and Distribution Agreement.

(vv) “ Varex Group ” has the meaning set forth in the Separation and Distribution Agreement.

(ww) “ Varex Indemnitees ” has the meaning set forth in Section 9.02.

(xx) “ Varex Shares ” shall mean the shares of common stock, par value $0.01 per share, of Varex.

(yy) “ Varian ” has the meaning set forth in the Preamble.

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(zz) “ Varian Board ” has the meaning set forth in the Recitals.

(aaa) “ Varian Business ” shall mean the Parent Business (as such term is defined in the Separation and Distribution Agreement).

(bbb) “ Varian Group ” has the meaning set forth in the Separation and Distribution Agreement.

(ccc) “ Varian Indemnitees ” has the meaning set forth in Section 9.01.

(ddd) “ Varian Shares ” shall mean the common shares, par value $1.00 per share, of Varian.

(eee) “ World Wide Information Distribution Medium ” shall mean any means of simultaneously (or nearly simultaneously) distributing information to all or most countries in the world and which permits contemporaneous (or nearly contemporaneous) access to that information in those countries, including the internet.

ARTICLE II

GRANT OF LICENSE

Section 2.01 Grant of License . Varian (and each other member of the Varian Group) hereby grants to Varex (and each other member of the Varex Group) a non-exclusive, worldwide, royalty-free, limited license (the “ License ”) to the Licensed Marks as follows:

(a) Licensed Cast/Engraved Products . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on any Licensed Cast/Engraved Product in the same manner as they were used in the Varex Business prior to the Distribution Date for the remainder of the term of manufacture of such Licensed Cast/Engraved Product or until the tooling for such Licensed Cast/Engraved Product is replaced, whichever occurs first (“ License Expiration ”), subject to the remainder of this Section 2.01(a). On or before (but not more than six (6) months before) the eighth (8th) anniversary of the Distribution Date, Varex will provide Varian with a list of all Licensed Cast/Engraved Products for which the License Expiration has not occurred. Varex will have the option, exercisable by written notice to Varian on or before such eighth (8th) anniversary, to extend the License under this Section 2.01(a) as to such Licensed Cast/Engraved Product for an additional four (4) years. The License as to any Licensed Cast/Engraved Products for which Varex does not exercise its option to extend will terminate on such eighth (8th) anniversary. The foregoing extension option and termination process will be repeated every four (4) years thereafter until License Expiration has occurred for all Licensed Cast/Engraved Products and/or the License under this Section 2.01(a) has terminated for all Licensed Cast/Engraved Products.

(b) Licensed Registered OEM Products . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on any Licensed Registered OEM Product in the same manner as they were used in the Varex Business prior to the Distribution Date until the applicable product registration(s) for the applicable OEM products expire or three (3) months after new registration(s) for the applicable OEM products

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have been obtained, whichever is earlier (“ Registration Expiration ”), subject to the remainder of this Section 2.01(b). On or before (but not more than six (6) months before) the fifth (5th) anniversary of the Distribution Date, Varex will provide Varian with a list of all Licensed Registered OEM Products with respect to which Registration Expiration has not occurred (“ Extension Products ”). Varex will have the option, exercisable by written notice to Varian on or before such fifth (5th) anniversary, to extend the License under this Section 2.01(b) as to any Extension Products for an additional one (1) year. The License under this Section 2.01(b) as to any Extension Products for which Varex does not exercise its option to extend will terminate on such fifth (5th) anniversary. The foregoing extension option and termination process will be repeated every year thereafter until Registration Expiration has occurred for all Licensed Registered OEM Products and/or the License under this Section 2.01(b) has terminated for all Extension Products due to Varex’s failure to extend. Varex will ensure that any new product registrations applied for by any OEM customer of Varex after the Distribution Date will not include products using the Licensed Marks.

(c) Licensed Registered Aftermarket Products . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on any Licensed Registered Aftermarket Product in the same manner as they were used in the Varex Business prior to the Distribution Date until the Registration Expiration with respect to such Licensed Registered Aftermarket Product, subject to the remainder of this Section 2.01(c). On or before (but not more than six (6) months before) the third (3rd) anniversary of the Distribution Date, Varex will provide Varian with a list of all Licensed Registered Aftermarket Products with respect to which Registration Expiration has not occurred (“ Aftermarket Extension Products ”). Varex will have the option, exercisable by written notice to Varian on or before such third (3rd) anniversary, to extend the License under this Section 2.01(c) as to any Aftermarket Extension Products for an additional one (1) year. The License under this Section 2.01(c) as to any Licensed Registered Aftermarket Products for which Varex does not exercise its option to extend will terminate on such third (3rd) anniversary. The foregoing extension option and termination process will be repeated every year thereafter until Registration Expiration has occurred for all Licensed Registered Aftermarket Products and/or the License under this Section 2.01(c) has terminated for all Aftermarket Extension Products due to Varex’s failure to extend.

(d) Licensed Warranted Products . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on with Licensed Warranted Products in the same manner as they were used in the Varex Business prior to the Distribution Date, subject to the remainder of this Section 2.01(d). On or before (but not more than six (6) months before) the fifth (5th) anniversary of the Distribution Date, Varex will provide Varian with a list of all products shipped by Varian under a Varian warranty as part of the Varex Business prior to the Distribution Date that are still under such warranty (“ Remaining Warranted Products ”). Varex will have the option, exercisable by written notice to Varian on or before such fifth (5th) anniversary, to extend the License under this Section 2.01(d) as to any Licensed Warranted Products among the Remaining Warranted Products for an additional two (2) years. The License under this Section 2.01(d) as to any Licensed Warranted Products among the Remaining Warranted Products for which Varex does not exercise its option to extend will terminate on such fifth (5th) anniversary. The foregoing extension option and termination process will be repeated every two (2) years thereafter until there are no Remaining Warranted Products and/or the License under this Section 2.01(d) has terminated for all Licensed Warranted Products among the Remaining Warranted Products due to Varex’s failure to extend.

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(e) Licensed Software Products . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on any Licensed Software Product in the same manner as they were used in the Varex Business prior to the Distribution Date until such Licensed Software Product is no longer supported by Varex or used by any customer of Varex, whichever occurs first (“ Software License Expiration ”), subject to the remainder of this Section 2.01(e). On or before (but not more than six (6) months before) the sixth (6th) anniversary of the Distribution Date, Varex will provide Varian with a list of all Licensed Software Products for which Software License Expiration has not occurred. Varex will have the option, exercisable by written notice to Varian on or before such sixth (6th) anniversary, to extend the License under this Section 2.01(e) as to any such Licensed Software Products for an additional three (3) years. The License under this Section 2.01(e) as to any Licensed Software Products for which Varex does not exercise its option to extend will terminate on such sixth (6th) anniversary. The foregoing extension option and termination process will be repeated every three (3) years thereafter until Software License Expiration has occurred for all Licensed Software Products and/or the License under this Section 2.01(e) has terminated for all Licensed Software Products due to Varex’s failure to extend. Notwithstanding the foregoing, following the Distribution Date, Varex will use its reasonable efforts to cease use of the Licensed Marks in the Licensed Software Products, it being understood that changes in Licensed Software Products, including removal of the Licensed Marks, may require customer approval, validation, and/or regulatory work. For the avoidance of doubt, no License is granted to use the Licensed Marks on any software initially developed (i.e., not an update to a Licensed Software Product) and distributed by Varex after the Distribution Date.

(f) Product Labeling, Commercial Documentation and Licensed Services . The License granted under subsections (a) through (e) of this Section 2.01 for the Licensed Products shall extend, to the same extent and on the same terms, to any product labeling (excluding product packaging), Commercial Documentation and Licensed Services associated with the corresponding class of Licensed Products, but only to the extent necessary to exercise the License to use the Licensed Marks on the Licensed Products granted under subsections (a) through (e) of this Section 2.01. Any use of the Licensed Marks on Commercial Documentation shall be consistent with the use of the Licensed Marks on the corresponding Licensed Product, which shall be consistent with any applicable Governmental Authority’s registration requirements for such Licensed Product.

(g) Product Packaging . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on Licensed Product packaging for a period of two (2) years after the Distribution Date, with no extension option. During such two (2) year period, Varex shall ensure that any branding on any Licensed Product packaging matches the Commercial Documentation and product labeling for the corresponding Licensed Product; provided, however, that if Commercial Documentation uses the Licensed Marks, then the corresponding Licensed Product packaging may be dual branded with the Licensed Marks and Varex’s marks. For the avoidance of doubt, after such two (2) year period, if Varex desires to use any Licensed Product inventory that is in packaging using the Licensed Marks, Varex shall be required to repackage such inventory without use of the Licensed Marks.

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(h) Promotional Material . Varex (and each other member of the Varex Group) shall have the License to use and have used the Licensed Marks on Promotional Material for a period of two (2) years after the Distribution Date, with no extension option. For the avoidance of doubt, the License under this Section 2.01(h) does not extend to any Varex products first manufactured after the Distribution Date.

(i) Signage . Varex (and each other member of the Varex Group) shall have the License to use the Licensed Marks on signage on real property owned or leased by Varex (or any such member of the Varex Group) in the same manner as the Licensed Marks were used in the Varex Business prior to the Distribution Date until the date that is ninety (90) days after the Distribution Date.

(j) Non-Categorized Use . To the extent that Varex reasonably believes that a use of the Licensed Marks not provided for in this Agreement is needed for the continuity of the Varex Business by Varex after the Distribution Date and was not contemplated prior to the execution of this Agreement, Varex may request a license for such use from Varian, and Varian shall not unreasonably reject such request.

Section 2.02 Sublicensing . Neither Varex nor any member of the Varex Group has any right to grant sublicenses under the licenses granted to them hereunder without the express written approval of Varian. Notwithstanding the foregoing, Varex and the other members of its Group may, without such approval, sell, make, and have made Licensed Products bearing the Licensed Marks and provide Licensed Services under the Licensed Marks, respectively, through Third Party distributors, representatives, resellers, contractors, or service providers; provided, however, that (a) any such arrangement with any such Third Party shall be made pursuant to a written agreement (i) that is consistent with, and subject and subordinate to, the terms and conditions of this Agreement and (ii) pursuant to which such Third Party agrees to be bound by any applicable terms or conditions of this Agreement, including any restrictions on Varex’s use of the Licensed Marks hereunder (the “ Applicable Terms ”), and (b) Varex shall remain responsible to Varian for the performance of Varex’s obligations under this Agreement and shall be responsible to Varian for any failure of any such Third Party to comply with the Applicable Terms.

Section 2.03 Acquired Business . Notwithstanding anything in this Agreement to the contrary, if Varex or any member of its Group acquires a business, whether accomplished by the purchase of stock or by purchase of assets (the “ Acquired Business ”), the licenses granted to Varex and the other members of its Group hereunder shall not extend to any products or services made, used, sold, offered for sale, imported, reproduced, performed, displayed, distributed or otherwise transferred by the Acquired Business prior to the date of such acquisition (even if such products or services constitute or are of the same or similar kind as the Licensed Products or Licensed Services, and even if such products or services are made, used, sold, offered for sale, imported, reproduced, performed, displayed, distributed or otherwise transferred by Varex or any member of its Group after the date of such acquisition).

Section 2.04 Retained Rights . As between the Parties, subject to the rights and licenses granted to Varex and the other members of its Group hereunder, Varian and the other

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members of its Group are and shall be the sole and exclusive owners of the Licensed Marks. Except as expressly provided herein, Varian and the other members of its Group grant no rights or licenses to Varex or any member of its Group hereunder. Without limiting the foregoing, (a) neither Varex nor any member of its Group shall have any rights hereunder to use the Licensed Marks (i) as or as part of any Corporate Identity, Social Media Identifier, or URL directing users to any Internet Content or (ii) in any Internet Content except to the extent of nominative fair use in reference to Varex’s corporate history or to the extent that such use falls within the license granted in Section 2.01(h), and (b) except to the extent authorized pursuant to any other written agreement between the Parties or any members of their Groups, neither Varex nor any member of its Group shall (i) use any Licensed Marks in any manner that exceeds the scope of the licenses granted to them hereunder or (ii) use in any manner any marks owned or controlled by Varian or any member of its Group other than the Licensed Marks. For the avoidance of doubt, the use of the Licensed Marks on Varex Group internal documents, including drawings and documents provided to suppliers to procure products and services, are agreed not to be trademark usage and not to require a trademark license.

ARTICLE III

COVENANTS

Section 3.01 No Challenge to Title . Neither Varex nor any member of its Group shall do, or license, authorize or otherwise enable or assist any Third Party to do, any of the following: (a) represent to any Person in any manner that it owns or has any ownership rights in or to any Licensed Mark; (b) apply for any federal, state, national or supranational registration of any Licensed Mark; or (c) impair, dispute or in any way contest or challenge the validity or enforceability of any Licensed Mark or any other related mark of Varian or any member of its Group, or any right, title or interest of Varian or any member of its Group in or to any Licensed Mark or any other related mark of Varian or any member of its Group, or do or permit any act which may directly or indirectly be detrimental to the reputation and goodwill of Varian or any member of its Group, including any act which might assist or give rise to any application to cancel any registration for any Licensed Mark or any other related mark of Varian or any member of its Group.

Section 3.02 No Conflicting Grants . Neither Varian nor any member of its Group shall grant any right or license to any Third Party that would conflict with any license granted to Varex or any member of its Group hereunder; provided, however, that this Section 3.02 is not intended and shall not be construed to restrict Varian or any member of its Group from licensing, assigning or otherwise transferring the Licensed Marks or any of its rights therein to any Person, or using the Licensed Marks on any products or services, in each case subject to the licenses granted hereunder.

Section 3.03 Trademark Notices . All print and electronic displays of the Licensed Marks by Varex or any member of its Group shall include, a notice to the effect that the Licensed Marks are owned by Varian and used by Varex or such member of its Group under license from Varian.

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Section 3.04 Goodwill . All goodwill associated with any use of the Licensed Marks by Varex or any member of its Group shall inure to the sole and exclusive benefit of Varian and the other members of its Group.

Section 3.05 Quality Control; Varian Approvals .

(a) The Licensed Products manufactured, marketed and distributed by Varex and the other members of its Group shall be of the same nature as, and of a quality that is at least commensurate with the quality of, such products as they were manufactured, marketed and distributed by Varian prior to the Distribution Date (the “ Quality Standards ”). Varian shall have the right to inspect the business operations of Varex and the members of its Group, upon reasonable prior notice, for the purpose of ensuring Varex’s compliance with the Quality Standards. At Varian’s request from time to time, Varex shall submit to Varian, at no cost to Varian, samples of the Licensed Products that conform in all material respects to the Licensed Products then being manufactured, marketed and distributed by Varex and the other members of its Group. After the samples of the Licensed Products have been evaluated, the samples will be returned to Varex in usable condition, at no cost to Varex. If at any time Varian notifies Varex in writing that Varian has determined that the Licensed Products fail to meet the Quality Standards, then (i) the Parties shall promptly meet and agree upon appropriate remedial steps and (ii) Varex and the other members of its Group shall suspend all distribution activities with respect to such Licensed Products until such remedial steps have been taken to meet the Quality Standards as reasonably determined by Varian.

(b) During the term of this Agreement, if Varian notifies Varex of any notices that Varian is required to include with respect to the Licensed Marks, then Varex will ensure that any Licensed Products, Promotional Material, Licensed Product packaging, and Commercial Documentation related thereto comply with such notice requirements.

(c) Varian shall have the right, exercisable no more frequently than once per calendar year, to have a Third Party auditor, on reasonable notice to the Varex, enter, during regular business hours, any premises used by Varex or any member of its Group or any of their manufacturers for the manufacture, packaging or storage of the Licensed Products, to inspect such premises, all plant, workforce and machinery used for manufacture, packaging or storage of Licensed Products and all other aspects of the manufacture, packaging and storage of Licensed Products in each case at Varian’s expense (“ Access Rights ”). As a condition to exercising such Access Rights, Varex may require that such Third Party auditor enter into a nondisclosure agreement with Varex that (i) limits the content of any report made by such Third Party auditor to Varian to a description of the manner in which, and the conditions under which, the Licensed Products are manufactured, packaged and stored by Varex and the other members of its Group and their manufacturers; and (b) contains customary non-use and non-disclosure restrictions with respect to any trade secrets and/or confidential information of Varex.

Section 3.06 Compliance with Trademark Usage Guidelines . Varex and the other members of its Group shall comply with Varian’s current trademark usage guidelines and any other policies or requirements of Varian applicable to the Licensed Marks, including any revisions to such guidelines, policies or requirements that are provided in writing to Varex.

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ARTICLE IV

PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE

Section 4.01 Prosecution and Maintenance . As between the Parties, Varian shall have the sole right, but not any obligation, to prepare, file, prosecute and maintain any registrations or applications for registration with respect to the Licensed Marks and to take any actions in connection with any proceedings related to such registrations or applications for registration, in each case, at Varian’s sole cost and expense; provided, however, that if reasonably requested by Varian, Varex and the other members of its Group shall reasonably cooperate with Varian in connection with any such activities (including by executing any and all documents which Varian may reasonably request in support of such registrations and by providing any use evidence, testimony, or documentation that may be reasonably requested by Varian in any ex parte or inter partes administrative proceedings or prosecutions, maintenance or renewals involving registrations of the Licensed Marks), at Varian’s cost and expense. For clarity, Varian (or any member of its Group) may at any time discontinue maintenance of or otherwise abandon any registrations or applications for registration with respect to any Licensed Marks, without any obligation whatsoever to Varex or any member of its Group.

Section 4.02 Enforcement and Defense .

(a) Varex shall advise Varian reasonably promptly if (and in no event later than ten (10) business days after) Varex or any member of its Group becomes aware of any unauthorized Third-Party use of the Licensed Marks. Neither Varex nor any member of its Group shall take any steps to contact any Third Party with respect to any such unauthorized use.

(b) As between the Parties, Varian shall have the sole right, but not any obligation, to determine whether and in what manner to respond to any unauthorized Third-Party use of the Licensed Marks and shall be exclusively entitled to any remedies, including monetary damages, related thereto or resulting therefrom. As between the Parties, Varian shall have the sole right, but not any obligation, to defend and control the defense of the validity and enforceability of the Licensed Marks. If reasonably requested by Varian, Varex and the other members of its Group shall reasonably cooperate with Varian in connection with any such activities, at Varian’s cost and expense.

Section 4.03 Third Party Actions . Varex shall advise Varian promptly if Varex or any member of its Group becomes aware of any allegations, claims or demands (actual or threatened) that any use of the Licensed Marks by Varex or any member of its Group infringes any rights of any Third Party. Neither Varex nor any member of its Group shall enter into any settlement, admit any liability or consent to any judgment that would adversely affect the rights or interest of Varian or any member of its Group in and to the Licensed Marks without the prior written consent of Varian. Varian shall have the right to employ separate counsel and participate in the defense of any such action, at Varian’s own cost and expense.

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ARTICLE V

BANKRUPTCY

The rights and licenses granted under this Agreement are intended and shall be deemed to be a license of “intellectual property” within the meaning of Section 365(n) of the United States Bankruptcy Code (and any analogous provision of applicable Law outside the United States). If Section 365(n) of the United States Bankruptcy Code (or any analogous provision of applicable Law outside the United States) is applicable and the trustee or debtor-in-possession has rejected this Agreement and Varex (or any other member of its Group) has elected pursuant to Section 365(n) of the United States Bankruptcy Code (or any analogous provision of applicable Law outside the United States) to retain its rights hereunder, then upon the written request of Varex, the trustee or debtor-in-possession shall provide to Varex a complete duplicate of (or complete access to, as appropriate) any such intellectual property (including embodiments thereof) held or controlled by the trustee or debtor-in-possession.

ARTICLE VI

TERM AND TERMINATION

Section 6.01 Term . This Agreement shall take effect at the Effective Time and shall continue in effect the expiration of the last to expire license granted under Section 2.01, unless sooner terminated in accordance with the terms of this Agreement.

Section 6.02 Termination for Material Breach . Varian may terminate this Agreement in the event of a material breach of this Agreement by Varex or any member of its Group, if such breach is not cured within 30 days following Varex’s receipt of written notice of such breach from Varian.

Section 6.03 Termination Upon Bankruptcy . Varian may terminate this Agreement by written notice to Varex in the event of: (a) Varex’s making a general assignment for the benefit of its creditors or filing a voluntary petition under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under the provisions of any law of like import; or (b) the filing of an involuntary petition against Varex under any bankruptcy or insolvency law, under the reorganization or arrangement provisions of the United States Bankruptcy Code, or under any law of like import, which petition remains un-dismissed or un-stayed for a period of sixty (60) days; or (c) the appointment of a trustee or receiver for Varex or its property.

Section 6.04 Termination by Varex . Varex may terminate this Agreement at any time upon written notice of such termination to Varian.

Section 6.05 Effect of Termination; Survival . Upon any expiration or termination of this Agreement, (a) the licenses granted to Varex and the other members of its Group under Section 2.01 shall terminate, (b) any rights of Varex or any member of its Group to grant any rights under Section 2.02 shall terminate (and any rights previously granted by Varex or any member of its Group to any Third Party under Section 2.02 shall automatically terminate), (c) neither Varian nor any member of its Group shall have any further restrictions under Section 3.02, (d) the rights and obligations of the Parties under Section 3.05 and Section 3.06 shall terminate, (e) Varex’s obligation under the first sentence of Section 4.02(a) shall terminate, and

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(f) subject to clauses (a) through (e) above, all other rights and obligations of the Parties under this Agreement shall survive and remain in full force and effect. No termination of this Agreement shall affect any rights or obligations that may have accrued prior to such termination or limit any rights or remedies that may otherwise be available to a Party at law or in equity.

ARTICLE VII

GROUP MEMBERS

Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any other member of such Party’s Group.

ARTICLE VIII

DISCLAIMER OF WARRANTIES; LIMITATION OF LIABILITY

Section 8.01 Disclaimer of Representations and Warranties . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, (A) THE LICENSED MARKS ARE LICENSED HEREUNDER “AS IS,” WITHOUT ANY SUPPORT, ASSISTANCE, MAINTENANCE OR WARRANTIES OF ANY KIND WHATSOEVER, (B) VAREX AND THE OTHER MEMBERS OF ITS GROUP ASSUME TOTAL RESPONSIBILITY AND RISK FOR ITS AND THEIR USE OF ANY LICENSED MARKS AND (C) NEITHER VARIAN NOR ANY OTHER MEMBER OF ITS GROUP MAKES (AND VARIAN AND THE OTHER MEMBERS OF ITS GROUP HEREBY EXPRESSLY DISCLAIM) ANY EXPRESS OR IMPLIED WARRANTIES OF ANY KIND WHATSOEVER WITH RESPECT TO THE LICENSED MARKS, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR WARRANTIES OF TITLE OR NON-INFRINGEMENT.

Section 8.02 Exclusion of Certain Damages . IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, PUNITIVE, EXEMPLARY, REMOTE, SPECULATIVE OR SIMILAR DAMAGES IN EXCESS OF COMPENSATORY DAMAGES OF THE OTHER PARTY IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, EACH OTHER MEMBER OF ITS GROUP AND ITS AND THEIR REPRESENTATIVES ANY CLAIM FOR SUCH DAMAGES, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE; PROVIDED, HOWEVER, THAT THE FOREGOING EXCLUSION SHALL NOT APPLY IN RESPECT OF ANY LIABILITY ARISING OUT OF OR IN CONNECTION WITH (A) ANY GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OF OR BY A PARTY, OR (B) CLAIMS FOR INDEMNIFICATION IN RESPECT OF THIRD-PARTY CLAIMS UNDER ARTICLE IX.

ARTICLE IX

INDEMNIFICATION

Section 9.01 Indemnification by Varex . In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement or any other Ancillary Agreement, to the fullest extent permitted by Law, Varex shall (and shall cause the other members of its Group to) indemnify, defend and hold harmless Varian,

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each of the other members of Varian’s Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Varian Indemnitees ”), from and against any and all Liabilities of the Varian Indemnitees in connection with any suit, investigation, claim or demand of any Third Party to the extent relating to, arising out of or resulting from (i) any breach of this Agreement by Varex or any member of its Group, (ii) any use by Varex or any member of its Group of the Licensed Marks or any exploitation by Varex or any member of its Group of Licensed Products or (iii) any gross negligence or willful misconduct of Varex or any member of its Group, or any of their directors, officers, employees or agents, in connection with this Agreement.

Section 9.02 Indemnification by Varian . In addition to (but not in duplication of) its other indemnification obligations (if any) under the Separation and Distribution Agreement or any other Ancillary Agreement, to the fullest extent permitted by Law, Varian shall (and shall cause the other members of its Group to) indemnify, defend and hold harmless Varex, each of the other members of Varex’s Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ Varex Indemnitees ”), from and against any and all Liabilities of the Varex Indemnitees in connection with any suit, investigation, claim or demand of any Third Party to the extent relating to, arising out of or resulting from (i) any breach of this Agreement by Varian or any member of its Group, or (ii) any gross negligence or willful misconduct of Varian or any member of its Group, or any of their directors, officers, employees or agents, in connection with this Agreement.

Section 9.03 Indemnification Procedures . The applicable procedures for indemnification set forth in Sections 4.5, 4.6 and 4.7 of the Separation and Distribution Agreement shall govern claims for indemnification under this Agreement.

ARTICLE X

MISCELLANEOUS

Section 10.02 Counterparts; Entire Agreement; Corporate Power .

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between the Parties other than those set forth or referred to herein or therein. The Separation and Distribution Agreement and the Ancillary Agreements, including this Agreement, together govern the arrangements in connection with the Separation and Distribution and would not have been entered independently.

(c) Varian represents on behalf of itself and each other member of the Varian Group and Varex represents on behalf of itself and each other member of the Varex Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms hereof.

(d) Each Party acknowledges and agrees that delivery of an executed counterpart of a signature page to this Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by email in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by email in portable document format (PDF)) made in its respective name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

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business segment, in either case ((i) or (ii)) so long as the resulting, surviving or transferee Person is not a competitor of the non-assigning Party, assumes the applicable rights and obligations by operation of Law or pursuant to a written agreement for the benefit of the non-assigning Party and exercises any assigned license or sublicense rights only in connection with the assets acquired from the assigning Party in such transaction, or (b) for the assignment of Varian’s rights and obligations under this Agreement with respect to any Licensed Mark in connection with a sale or other transfer of such Licensed Mark or Varian’s (or its applicable Group member’s) rights therein, so long as the assignee’s rights in such Licensed Mark remain subject to the licenses granted to Varex and the other members of its group hereunder.

Section 10.05 Third-Party Beneficiaries . Except as provided in ARTICLE IX with respect to the Varex Indemnitees and the Varian Indemnitees in their capacities as such and to the extent that a Party’s rights and licenses under this Agreement extend to other members of its Group, (a) the provisions of this Agreement are solely for the benefit of the Parties and are not intended to confer upon any other Person except the Parties any rights or remedies hereunder and (b) there are no other third-party beneficiaries of this Agreement and this Agreement shall not provide any other third person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.


If to Varian, to:

Varian Medical Systems, Inc.
3100 Hansen Way
Palo Alto, California 94304
Attention:		General Counsel
Facsimile:		[●]

with a copy to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention:		David C. Karp
		Ronald C. Chen
Facsimile:		(212) 403-2000

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If to Varex, to:

Varex Imaging Corporation
1678 S. Pioneer Road
Salt Lake City, Utah 84104
Attention: General Counsel
Facsimile: [●]

with a copy to:

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention:		David C. Karp
		Ronald C. Chen
Facsimile:		(212) 403-2000

Any Party may, by notice to the other Party, change the address to which such notices are to be given.

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Section 10.12 Waivers of Default . Waiver by any Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the waiving Party. No failure or delay by any Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

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“including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references to “business day” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions are generally authorized or required by law to close in the United States or New York, New York; (i) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; and (j) unless expressly stated to the contrary in this Agreement, all references to “the date hereof,” “the date of this Agreement,” “hereby” and “hereupon” and words of similar import shall all be references to [●].

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.


VARIAN MEDICAL SYSTEMS, INC.

By:
		Name:
		Title:

VAREX IMAGING CORPORATION

By:
		Name:
		Title:

[Signature Page to Trademark License Agreement]

Exhibit 10.6

Varex Imaging Corporation

2016 Deferred Compensation Plan

Plan Document

Effective November 1, 2016

TABLE OF CONTENTS


		Page
ARTICLE 1	DEFINITIONS		1

ARTICLE 2	SELECTION/ENROLLMENT/ELIGIBILITY		6

2.1	Eligibility		6
2.2	Enrollment Requirements		6
2.3	Commencement of Participation		6
2.4	Termination of Participation and/or Deferrals		6

ARTICLE 3	DEFERRAL COMMITMENTS/COMPANY CONTRIBUTIONS/CREDITING/TAXES		7

3.1	Minimum Deferral		7
3.2	Maximum Deferral		7
3.3	Election to Defer/Effect of Election Form		7
3.4	Withholding of Annual Deferral Amounts		8
3.5	Annual Company Discretionary Contribution Amount		8
3.6	Investment of Trust Assets		9
3.7	Vesting		9
3.8	Crediting/Debiting of Account Balances		10
3.9	Payroll Reductions and Taxes		12
3.10	Distributions		13
3.11	Offset for Obligations to Employer		13

ARTICLE 4	SHORT-TERM PAYOUT/UNFORESEEABLE FINANCIAL EMERGENCIES		13

4.1	Short-Term Payout		13
4.2	Other Benefits Take Precedence Over Short-Term Payout		14
4.3	Withdrawal Payout/Termination of Deferral Election for Unforeseeable Financial Emergencies		14

ARTICLE 5	TERMINATION BENEFIT		15

5.1	Termination Benefit		15
5.2	Payment of Termination Benefit		15

ARTICLE 6	SURVIVOR BENEFIT		16

6.1	Pre-Termination Survivor Benefit		16
6.2	Payment of Pre-Termination Survivor Benefit		16
6.3	Death Prior to Completion of Termination Benefit		16

ARTICLE 7	BENEFICIARY DESIGNATION		17

7.1	Beneficiary		17
7.2	Beneficiary Designation/Change		17
7.3	Acknowledgment		17
7.4	No Beneficiary Designation		17
7.5	Doubt as to Beneficiary		17

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7.6	Discharge of Obligations	17

ARTICLE 8	TERMINATION/AMENDMENT/MODIFICATION	18

8.1	Termination	18
8.2	Amendment	18
8.3	Plan Agreement	19
8.4	Effect of Payment	19
8.5	Amendment to Ensure Proper Characterization of the Plan	19

ARTICLE 9	ADMINISTRATION	19

9.1	Administrator Duties	19
9.2	Agents	20
9.3	Binding Effect of Decisions	20
9.4	Indemnity of Administrator	20
9.5	Employer Information	21

ARTICLE 10	OTHER BENEFITS AND AGREEMENTS	21

10.1	Coordination With Other Benefits	21

ARTICLE 11	CLAIMS PROCEDURES	21

11.1	Scope of Claims Procedures	21
11.2	Initial Claim	21
11.3	Review Procedures	23
11.4	Calculation of Time Periods	24
11.5	Legal Action	24

ARTICLE 12	TRUST	25

12.1	Establishment of the Trust	25
12.2	Interrelationship of the Plan and the Trust	25
12.3	Distributions From the Trust	25

ARTICLE 13	MISCELLANEOUS	25

13.1	Status of Plan	25
13.2	Unsecured General Creditor	25
13.3	Employer’s Liability	26
13.4	Nonassignability	26
13.5	Not a Contract of Continued Service	26
13.6	Furnishing Information	26
13.7	Terms	26
13.8	Captions	26
13.9	Governing Law	27
13.10	Notice	27
13.11	Successors	27
13.12	Spouse’s Interest	27
13.13	Validity	27
13.14	Incompetent	27
13.15	Court Order	28

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13.16	Acceleration of Distribution	28
13.17	Delay in Payment	28
13.18	Prohibited Acceleration/Distribution Timing	29
13.19	Insurance	29
13.20	Aggregation of Employers	29
13.21	Aggregation of Plans	29
13.22	USERRA	29

APPENDIX A		30

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Varex Imaging Corporation

2016 Deferred Compensation Plan

Effective November 1, 2016

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 the Company, 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. This Plan is being adopted in contemplation of the spin-off of the Company from Varian Medical Systems, Inc. (the “Spin-off”) and is effective commencing with the deferral elections made during the open enrollment period commencing November 1, 2016 by those eligible employees and nonemployee directors of Varian Medical Systems, Inc. (“VMS”) that are expected to become employees and nonemployee directors of the Company after the Spin-off. Effective at the time of the Spin-off, all deferrals made under the Varian Medical Systems, Inc. 2005 Deferred Compensation Plan (the “VMS Plan”) by those employees and nonemployee directors that are employees or nonemployee directors of the Company immediately after the Spin-off shall be assumed hereunder and shall be subject to the terms of the Plan (as supplemented by Appendix A hereto) and the deferral elections made, and the deferral elections rules, under the VMS Plan (which are hereby incorporated by reference). Deferrals under the VMS Plan made by persons who are not employed or engaged by Varex Imaging Corporation at the time of the Spin-off shall not be assumed under this Plan and shall remain an obligation of the VMS Plan.

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 and (ii) the 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 3.5.

1.4	“Annual Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary and/or Directors’ Fees that a Participant elects to have, and is deferred, in accordance with Article 3, for any one Plan Year.

1.5

“Base Annual Salary” shall mean the annual base 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 before 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.

1.6	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 7, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.7

“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).

1.8	“Board” shall mean the board of directors of the Company.

1.9	“Claimant” shall have the meaning set forth in Section 11.2.

1.10	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.11	“Committee” shall mean the compensation committee of the Board (or, prior to the Spin-off, the Compensation and Management Development Committee of VMS).

1.12	“Company” shall mean Varex Imaging Corporation, a Delaware corporation, and any successor.

1.13

“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.

1.14

“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 reasonably anticipates that, if any distribution hereunder were made as scheduled, the Employer’s deduction with respect to that distribution would not be permitted by reason of the limitation under Code Section 162(m), then the Employer may delay that distribution, provided that all distributions that could be deferred in accordance with this Section 1.14 are so deferred, and provided further that the Employer treats payments to all similarly situated Participants on a reasonably consistent basis. Any amounts delayed pursuant to this limitation shall continue to be credited or debited with additional amounts in accordance with Section 3.8 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) during the Participant’s first taxable year in which the Employer reasonably anticipates, or reasonably should anticipate, that if the distribution is made its deductibility will not be limited by Code Section 162(m), or, if later, following the Participant’s Separation from Service in accordance with Treasury Regulation Section 1.409A-2(b)(7)(i).

1.15

“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.

1.16	“Director” shall mean any member of the Board (or, for the open enrollment period commencing November 1, 2016 only, any member of the Board of Directors of VMS that is selected to participate in the Plan).

1.17	“Directors’ Fees” shall mean the fees paid by the Employer, including retainer fees and meetings fees, as compensation for serving on the Board or, if applicable, the Board of Directors of VMS.

1.18	“Effective Date” shall mean the effective date of the Plan and of this amendment and restatement of the Plan, which is November 1, 2016.

1.19

“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).

1.20	“Employee” shall mean a person who is an employee of the Employer or, for the open enrollment period commencing November 1, 2016 only, any employee of VMS or its subsidiaries selected to participate in the Plan.

1.21	“Employer” shall mean the Company and/or any of its subsidiaries and affiliates (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” and “affiliate” shall include entities required to be aggregated with the Company pursuant to Section 13.20 including, prior to the Spin-off, VMS.

1.22	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.23	“Measurement Funds” shall have the meaning set forth in Section 3.8(d).

1.24

“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.

1.25	“Plan” shall mean this 2016 Deferred Compensation Plan, as evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

1.26

“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.

1.27	“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.

1.28	“Pre-Termination Survivor Benefit” shall mean the benefit set forth in Article 6.

1.29	“Section 409A” shall mean Code Section 409A and the Treasury regulations or other authoritative guidance issued thereunder.

1.30	“Separation from Service” shall mean the Participant’s separation from service, within the meaning of Section 409A treating as a Separation from Service an anticipated permanent reduction in the level of bona fide services to twenty percent (20%) or less of

the average level of bona fide services performed over the immediately preceding thirty-six (36) month period (or the full period during which the Participant performed services for the Employer, if that is less than thirty-six (36) months). For this purpose, upon a sale or other disposition of the assets of the Employer to an unrelated purchaser, the Committee reserves the right to the extent permitted by Section 409A to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction have experienced a Separation from Service.

1.31	“Short-Term Payout” shall mean the payout set forth in Section 4.1.

1.32	“Termination Benefit” shall mean the benefit set forth in Article 5.

1.33	“Trust” shall mean the trust established pursuant to this Plan after the Spin-off, as amended from time to time. The assets of the Trust shall be the property of the Employer.

1.34

“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, the Participant’s dependent (as defined in Code Section 152, without regard to Code Section 152(b)(1), (b)(2) or (d)(1)(B)) or the Participant’s Beneficiary, (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, dependent or the Participant’s Beneficiary), 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).

1.35

“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 3.10): 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 during the calendar month containing the date of reference unless otherwise provided herein. The date of reference with respect to the first yearly installment payment shall be the first day of the month provided in Section 5.2 and the date of reference with respect to subsequent yearly installment payments shall be the anniversary of such date.

The installment payout alternative available for election by the Participant with respect to his or her Termination Benefit is substantially equal annual installments of between two (2) and ten (10) 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. During the calendar month containing the anniversary of the date of reference for 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.

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).

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.

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, to the extent permitted under Section 409A, from being credited with any further Annual Company Supplemental Contribution Amounts or Annual Company Discretionary Contribution Amounts.

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 and/or Directors’ Fees (in the case of a Participant who is also a Director) in the following minimum percentages for each deferral elected:


Deferral		Minimum Amount
Base Annual Salary		5%
Directors’ Fees		5%

Notwithstanding the foregoing, the Administrator may, in its sole discretion, establish for any Plan Year different minimum percentage(s) which differ from that set forth above. Subject to Section 409A, if an election is made for less than the stated minimum percentage, 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 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:


Deferral		Maximum Amount
Base Annual Salary		50%
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 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 and/or Directors’ Fees, as applicable, to be deferred are to be performed. For these purposes, 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.

In addition, notwithstanding the preceding, but subject to Section 13.21, in the case of the first Plan Year in which an Employee or Director first becomes eligible to become a Participant (or again becomes eligible after having been ineligible for at least twenty four (24) months), 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 and/or Directors’ Fees (as applicable) for services to be performed after the election.

(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 the deadline(s) for making a deferral election for a Plan Year (as set forth in Section 3.3(a)) has passed, 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 a change and/or revocation of deferral elections (such as, for example, to cancel a deferral election upon the Participant’s disability (as defined in Section 1.409A-3(j)(4)(xii) of the Treasury regulations), or, as provided in Section 1.409A-3(j)(4) of the Treasury regulations, following an Unforeseeable Financial Emergency or a hardship distribution pursuant to Section 1.401(k)-1(d)(3) of the Treasury regulations).

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 Directors’ Fees portion of the Annual Deferral Amount shall be withheld at the time the 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 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 by no later than the date on which the Participant acquires a legally binding right to have an Annual Company Discretionary Contribution Amount credited on his or her behalf.

3.6	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.

3.7	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)

Notwithstanding anything to the contrary contained in this Section 3.7, 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 3.7, a “Change in Control” shall be deemed to have occurred if:

(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 immediately following the Spin-off 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.

3.8

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 Section 5.2 hereof.

(b)

Election of Measurement Funds . Subject to Section 3.8(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 3.8(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 3.8(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).

(d)

Measurement Funds . Subject to Section 3.8(f) below, the Participant may elect one or more of the Measurement Funds established by the Administrator (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 after the Administrator gives Participants advance written notice of such change at such time determined by the Administrator and communicated to Participants. 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 pay, at the closing price on such date; (iii) any 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 3.8 to a Participant shall be deemed to include, where applicable, a reference to a Beneficiary.

3.9	Payroll Reductions and 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 pay 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 3.9. In addition, the Administrator may reduce the Annual Deferral

Amount as permitted by Section 409A to the extent necessary to make any other payroll reductions elected by the Participant or required under any other benefit plan of the Employer (e.g., reductions for contributions to a cafeteria plan (as defined in Code Section 125(d)).

(b)

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 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 3.9.

3.10

Distributions . Notwithstanding anything herein to the contrary, any payments made to a Participant or Beneficiary under this Plan shall be in cash form, and the Employer, or the trustee of the Trust, shall withhold from any payments made 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 3.11, any 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 and the trustee of the Trust. Any payment made to a Participant or Beneficiary under this Plan shall be made on or during the period after the payment date or event specified herein; provided, however, such payment shall not be made later than the later of (i) the last day of the calendar year in which the payment date or event occurs, or, if later, the fifteenth (15 ^th ) day of the third (3 ^rd ) calendar month following the date of the payment date or event, or (ii) the last day of such other, extended period as the IRS may prescribe, such as in the case of disputed payments or refusals to pay, provided the conditions of such extension have been satisfied. If a Participant who experiences a Separation from Service is rehired, his or her distributions hereunder may not be suspended.

3.11

Offset for Obligations to Employer . If, at the time a Participant or his or her Beneficiary becomes entitled to a payment hereunder, the Participant has a debt, obligation or other liability to the Employer due and owing which has been incurred in the ordinary course of the service relationship, the Employer or trustee of the Trust may offset the amount owed to the Employer against the amount otherwise payable hereunder, provided that the entire offset in an taxable year does not exceed five thousand dollars ($5,000) and the offset is taken at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

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 elect to receive a future “Short-Term Payout” from the Plan. The Participant’s Short-Term Payout election must

be made by the deadline(s) set forth in Section 3.3(a) for making a deferral election in respect of the Base Annual Salary and/or Directors’ Fees to which it relates, and is irrevocable after that deadline has passed. 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 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. Subject to the Deduction Limitation and the other terms and conditions of this Plan, each Short-Term Payout elected by the Participant shall be paid out during the first sixty (60) days of the Plan Year designated by the Participant in the applicable Election Form. The Administrator shall determine the earliest commencement date that may be elected by the Participant for each Short-Term Payout, which shall be designated on the Election Form. 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 in accordance with Treasury Regulation Section 1.409A-2(b); 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 or 6 (or Articles 2, 3, or 4 of Appendix A for deferrals to which Appendix A applies) 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 the Participant to the extent permitted by 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. 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 3.10, but shall not be subject to the Deduction Limitation. Notwithstanding anything set forth in this Section 4.3, a Participant may not receive a payout pursuant to this Section 4.3 to the extent such payout would not be permitted under Section 409A.

ARTICLE 5

Termination Benefit

5.1	Termination Benefit . Subject to the Deduction Limitation and to Section 3.10, a Participant who Separates from Service shall receive, as a Termination Benefit, his or her vested Account Balance (or applicable portion thereof).

5.2

Payment of Termination 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 Termination Benefit attributable to the Annual Deferral Amount in a lump sum, or pursuant to one of the available Yearly Installment Methods. The lump sum payment shall be made, or installments shall commence, (i) if the Participant’s Separation from Service occurs during January through June of any Plan Year, during the January of the Plan Year following the Plan Year of the Participant’s Separation from Service; (ii) if the Participant’s Separation from Service occurs during July through December of any Plan Year, during the July of the Plan Year following the Plan Year of the Participant’s Separation from Service.

The Participant may change his or her election to an allowable alternative payout period date by submitting a new Election Form to the Administrator in accordance with Treasury Regulation Section 1.409A-2(b), provided that any such Election Form will not take effect until one (1) year after it is made and will be null and void unless accepted by the Administrator no later than one (1) year prior to the date of the Participant’s Separation from Service and provides for a distribution (or commencement of distributions) date which is at least five (5) years from the distribution (or commencement of distributions) date then in effect. Subject to the foregoing, the Election Form most recently accepted by the Administrator shall govern the payout of the Termination Benefit with respect to the portion of the Participant ^’ s Account Balance to which it pertains.

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 (or to an different Yearly Installment Method) will require that the lump sum (or first installment) be postponed until a date which is at least five (5) years from the previously 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 Termination Benefit, then such portion shall be paid in a lump sum: (i) if the Participant’s Separation from Service occurs during January through June of any Plan Year, during the January of the Plan Year following the Plan Year of the Participant’s Separation from Service; (ii) if the Participant’s Separation from Service occurs during July through December of any Plan Year, during the July of the Plan Year following the Plan Year of the Participant’s Separation from Service.

Any payment made shall be subject to Section 3.10 and to the Deduction Limitation.

Any amounts credited to the Participant’s Company Discretionary Contribution Account shall be payable under the Plan solely in the form of a lump sum (in accordance with the timing rule set forth in the last sentence of the first paragraph of this Section 5.2) and shall not be eligible for installment distribution.

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 vested Account Balance if the Participant dies before he or she experiences a Separation from Service.

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 at the time of the Participant’s death, provided the Administrator receives proof that is satisfactory to the Administrator of the Participant’s death. Any payment made hereunder shall be subject to Section 3.10, but shall not be subject to the Deduction Limitation.

6.3

Death Prior to Completion of Termination Benefit . If a Participant dies after his or her Separation from Service but before the Termination Benefit is paid in full, the Participant ^’ s unpaid Termination Benefit shall be paid to the Participant’s Beneficiary in a lump sum at the time of the Participant’s death, provided the Administrator receives proof that is satisfactory to the Administrator of the Participant’s death. Any payment made hereunder shall be subject to Section 3.10, but shall not be subject to the Deduction Limitation.

ARTICLE 7

Beneficiary Designation

7.1

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.

7.2

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.

7.3	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.

7.4

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in Sections 7.1, 7.2 and 7.3 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.

7.5

Doubt as to Beneficiary . Subject to any limitations imposed by Section 409A, 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.

7.6

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 8

Termination/Amendment/Modification

8.1

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 Company 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 termination of the Plan in accordance with the requirements, restrictions and limitations of Section 1.409A-3(j)(4)(ix) of the Treasury regulations, the Plan Agreements of the affected Participants shall terminate and they shall be paid in a single lump sum distribution their vested Account Balances (but not to commence before or end after any distribution period required by Section 409A). If, due to the circumstances surrounding the Plan termination, a distribution of a Participant ^’ s vested 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. Except by reason of changing the time and form of payment of a Participant’s benefit under the Plan, 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.

8.2

Amendment . The Company 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 Separation from Service 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.

8.3	Plan Agreement . Despite the provisions of Sections 8.1 and 8.2 above, 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.

8.4	Effect of Payment . The full payment of the applicable benefit under Articles 4, 5 or 6 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.

8.5

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).

ARTICLE 9

Administration

9.1

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 not listed below 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;

(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 in order to permit the deferral of bonuses, sales commissions or other incentives and/or to permit other forms and timing of distributions under the Plan.

(e)

the appropriate management personnel may make other Plan amendments under Article 9, but only to the extent such amendments are required by applicable law or do not materially increase the Employer’s liability and/or costs associated with the Plan;

(f)

the appropriate management personnel may change service providers used in connection with the Plan;

(g)

the appropriate management personnel may allocate expenses associated with the Plan’s administration among Participants’ Account Balances;

(h)

the appropriate management personnel may change the deemed investment alternatives available under the Plan.

9.2

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.

9.3

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.

9.4

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.

9.5

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 death or employment termination of the Participants, and such other pertinent information as the Administrator may reasonably require.

ARTICLE 10

Other Benefits and Agreements

10.1

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 11

Claims Procedures

11.1

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.

For purposes of this Article, references to disability benefit claims are intended to describe claims made by Participants in connection with a revocation of a deferral election pursuant to Section 3.3(c), but only if and to the extent that such claims require an independent determination by the Administrator that the Participant is or is not suffering from a disability, within the meaning Section 1.409A-3(j)(4)(xii) of the Treasury regulations. If the Administrator’s determination is based entirely on a disability determination made by another party, such as the Social Security Administration or another federal or state agency or an insurer with respect to a disability insurance policy covering the Participant, the Participant’s claim shall not be treated as a disability claim for purposes of the special provisions of this Article that apply to claims for which an independent determination of disability is required.

11.2	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)

Benefit Claims that do not Require a Determination of Disability . If the claim is for a benefit other than one that requires a determination by the Committee of a Participant’s disability, 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)

Disability Benefit Claims . In the case of a benefits claim that requires an independent determination by the Administrator of a Participant’s disability status, the Administrator shall notify the Claimant of the Plan’s adverse benefit determination within a reasonable period of time, but not later than forty-five (45) days after receipt of the claim. If, due to matters beyond the control of the Plan, the Administrator needs additional time to process a claim, the Claimant will be notified, within forty-five (45) days after the Administrator receives the claim, of those circumstances and of when the Administrator expects to make its decision but not beyond seventy-five (75) days. If, prior to the end of the extension period, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making the determination may be extended for up to one hundred five (105) days, provided that the Administrator notifies the Claimant of the circumstances requiring the extension and the date as of which the Plan expects to render a decision. The extension notice shall specifically explain the standards on which the determination of a disability is based, the unresolved issues that prevent a decision on the claim and the additional information needed from the Claimant to resolve those issues, and the Claimant shall be afforded at least forty-five (45) days within which to provide the specified information.

(c)

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;

(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.

In addition, in the case of a denial of benefits on the basis of the Administrator’s independent determination of the Participant’s disability status, the Administrator will provide a copy of any rule, guideline, protocol, or other similar criterion relied upon in making the adverse determination (or a statement that the same will be provided upon request by the Claimant and without charge).

11.3	Review Procedures .

(a)

Benefit Claims that do not Require a Determination of Disability . Except for claims requiring an independent determination of a Participant’s Disability status, 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)

Disability Benefit Claims . In addition to having the right to review documents and submit comments as described in (a) above, a Claimant whose claim for benefits requires an independent determination by the Administrator of the Participant’s disability status has at least one hundred eighty (180) days following receipt of a notification of an adverse benefit determination within which to request a review of the initial determination. In such cases, the review will meet the following requirements:

(i)

The Plan will provide a review that does not afford deference to the initial adverse benefit determination and that is conducted by an appropriate named fiduciary of the Plan who did not make the initial determination that is the subject of the appeal, nor by a subordinate of the individual who made the determination.

(ii)

The appropriate named fiduciary of the Plan will consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment before making a decision on review of any adverse initial determination based in whole or in part on a medical judgment. The professional engaged for purposes of a consultation in the preceding sentence shall not be an individual who was consulted in connection with the initial determination that is the subject of the appeal or the subordinate of any such individual.

(iii)

The Plan will identify to the Claimant the medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the review, without regard to whether the advice was relied upon in making the benefit review determination.

(iv)

The decision on review will be made within forty-five (45) days after the Committee’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 ninety (90) days after receipt of a request for review. A notice of such an extension must be provided to the Claimant within the initial forty-five (45) day period and must explain the special circumstances and provide an expected date of decision.

(c)

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;

(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.

11.4

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.

11.5	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.

ARTICLE 12

Trust

12.1

Establishment of the Trust . The Company intends to establish the Trust after the Spin-off, 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.

12.2

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.

12.3	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 13

Miscellaneous

13.1

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.

13.2

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.

13.3

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.

13.4

Nonassignability . Subject to Sections 3.10 and 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 Sections 3.11 and 13.15, 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.

13.5

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.

13.6

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.

13.7

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.

13.8	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.

13.9	Governing Law . Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Utah without regard to its conflicts of laws principles.

13.10

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

1678 S. Pioneer Rd.

Salt Lake City, UT 84104

With Copy To:

General Counsel

1678 S. Pioneer Rd.

Salt Lake City, UT 84104

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.

13.11

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.

13.12

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.

13.13

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; except to the extent that Section 409A requires that this Section 13.13 be disregarded because it purports to nullify Plan terms that are not in compliance with Section 409A.

13.14

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.

13.15

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.

13.16

Acceleration of Distribution .

(a)

In General . The Employer may, in its discretion (without any direct or indirect election on the part of any Participant), accelerate the date of distribution or commencement of distributions hereunder, or accelerate installment payments by paying the vested 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 Section 1.409A-3(j)(4) of the Treasury regulations, to comply with domestic relations orders or certain conflict of interest rules, to pay employment taxes, to make a lump sum cashout of certain de minimus amounts that are less than the applicable dollar amount under Code Section 402(g)(1)(B), 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.

13.17

Delay in Payment . If the Employer reasonably anticipates that any payment scheduled to be made hereunder would violate securities laws (or other applicable laws) or jeopardize the ability of the Employer to continue as a going concern if paid as scheduled, then the Administrator may defer that payment, provided the Employer treats payments to all similarly situated Participants on a reasonably consistent basis and does so in compliance with Section 409A. In addition, the Employer may, in its discretion, delay a payment upon such other events and conditions as the IRS may prescribe in compliance with Section 409A, provided the Employer treats payments to all similarly situated Participants on a reasonably consistent basis. Any amounts deferred pursuant to this Section shall continue to be credited or debited with additional amounts in accordance with Section 3.8 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 on which the Administrator reasonably anticipates that such violation or material harm would be avoided or as otherwise prescribed by the IRS.

13.18

Prohibited Acceleration/Distribution Timing . This Section shall take precedence over any other provision of the Plan or this Article 14 to the contrary. 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; except to the extent that Section 409A requires that this Section be disregarded because it purports to nullify Plan terms that are not in compliance with Section 409A.

13.19

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.

13.20

Aggregation of Employers . If the Employer is a member of a controlled group of corporations or a group of trades or business under common control, all members of the group shall be treated as a single Employer for purposes of whether there has occurred a Separation from Service to the extent required under Section 409A and for any other purposes under the Plan as Section 409A shall require.

13.21

Aggregation of Plans . If the Employer offers other account balance deferred compensation plans in addition to the Plan, those plans together with the Plan shall be treated as a single plan to the extent required under Section 409A for purposes of determining whether an Employee or Director may make a deferral election pursuant to Section 3.3(a) within thirty (30) days of becoming eligible to participate in the Plan, for purposes of cashing out de minimus amounts pursuant to Section 13.16 and for any other purposes under the Plan as Section 409A shall require.

13.22

USERRA . Notwithstanding anything herein to the contrary, any deferral or distribution election provided to a Participant as necessary to satisfy the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended, shall be permissible hereunder.

Appendix A

The following provisions shall modify the corresponding provisions of the Plan with respect to deferrals made by employees and nonemployee directors under the VMS Plan and assumed hereunder (the “Assumed VMS Deferrals”). Capitalized terms defined in this Appendix A shall apply to the Assumed VMS Deferrals. Capitalized terms that are used in this Appendix A but are not defined in this Appendix A shall have the meaning set forth in the Plan. For the avoidance of doubt, the spin-off of Varex Imaging Corporation from VMS shall not constitute a termination of employment for any purpose with respect to the Assumed VMS Deferrals or with respect to deferrals made under the Plan. The assumption of the Assumed VMS Deferrals is intended to preserve the economic rights of the applicable Participants and comply with Section 409A (including, without limitation, preserving the time and form of payment), and shall be interpreted accordingly.

ARTICLE 1

Definitions

1.1

“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 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.

1.2	“Annual Company Discretionary Contribution Amount” shall mean, for the Plan Year of reference, the amount determined in accordance with Section 3.6 of the VMS Plan and credited to such account prior to the Spin-off.

1.3	“Annual Company Supplemental Contribution Amount” shall mean, for the Plan Year of reference, the amount determined in accordance with Section 3.5 of the VMS Plan and credited to such account prior to the Spin-off.

1.4	“Annual Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary, Incentive Payments and/or Directors’ Fees that a Participant elected to have deferred under the VMS Plan for any one Plan Year.

1.5	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with the VMS Plan or the Plan, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.6

“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 and the VMS 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 and the VMS Plan that relate to the Participant’s Company Discretionary Contribution Account.

1.7

“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 and the VMS 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 and the VMS Plan that relate to the Participant’s Company Supplemental Contribution Account. A Participant shall at all times be 100% vested in his or her Company Supplemental Contribution Account.

1.8

“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 and the VMS 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 and the VMS Plan that relate to his or her Deferral Account.

1.9	“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.

1.10	“Participant” shall mean a person having Assumed VMS Deferrals.

1.11	“Pre-Termination Survivor Benefit” shall mean the benefit set forth in Section 3 of this Appendix A.

1.12	“Regular Termination” shall mean Separation from Service, voluntarily or involuntarily, for any reason other than Retirement or death.

1.13	“Regular Termination Benefit” shall mean the benefit set forth in Article 4 of this Appendix A.

1.14

“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an employee, Separation from Service for any reason other than death on or after the attainment of 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 attainment of 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 on or after the attainment of age fifty-five (55) with ten (10) Years of Service.

1.15	“Retirement Benefit” shall mean the benefit set forth in Article 2 of this Appendix A.

1.16

“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 and the VMS Plan, calculated as follows (subject to Section 3.10): 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 during the calendar month containing the date of reference unless otherwise provided herein. The date of reference with respect to the first yearly installment payment shall be the first day of the month provided in Section 2.2 of this Appendix A and the date of reference with respect to subsequent yearly installment payments shall be the anniversary of such date.

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. During the calendar month containing the anniversary of the date of reference for 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

1.17

“Years of Service” shall mean the total number of full years in which a Participant has been employed by VMS (or one or more of its subsidiaries that qualified as an “Employer” under the VMS Plan) or 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

Retirement Benefit

2.1	Retirement Benefit . Subject to the Deduction Limitation and to Section 3.10, a Participant who Retires shall receive, as a Retirement Benefit, his or her vested Account Balance (or applicable portion thereof).

2.2

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 2008 shall be considered as part of the Participant’s 2009 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, during the January 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, during the July 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 in accordance with Treasury Regulation Section 1.409A-2(b), provided that any such Election Form will be null and void unless accepted by the Administrator no later than one (1) year prior to the date of the Participant’s Retirement and provides for a distribution (or commencement of distributions) date which is at least five (5) years from the distribution (or commencement of distributions) 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 (or to an different Yearly Installment Method) will require that the lump sum (or first installment) be postponed until a date which is at least five (5) years from the previously 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, during the January 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, during the July of the Plan Year following the Plan Year of the Participant’s Retirement.

Any payment made shall be subject to Section 3.10 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 (in accordance with the timing rule set forth in the last sentence of the first paragraph of this Section 2.2) and shall not be eligible for installment distribution.

ARTICLE 3

Survivor Benefit

3.1	Pre-Termination Survivor Benefit . The Participant’s Beneficiary shall receive a Pre-Termination Survivor Benefit equal to the Participant’s vested Account Balance if the Participant dies before he or she experiences a Retirement or a Regular Termination.

3.2

3.3

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 at the time of the Participant’s death, provided the Administrator receives proof that is satisfactory to the Administrator of the Participant’s death. Any payment made hereunder shall be subject to Section 3.10, but shall not be subject to the Deduction Limitation.

ARTICLE 4

Regular Termination Benefit

4.1

Regular Termination Benefit . Subject to the Deduction Limitation and to Section 3.10, 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.

4.2

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, during the January 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, during the July of the Plan Year following the Plan Year of the Participant’s Regular Termination. Any payment made shall be subject to Section 3.10 and the Deduction Limitation.

IN WITNESS WHEREOF , the Employer has adopted this amended and restated Plan document effective as of November 1, 2016.


VAREX IMAGING CORPORATION



By:		/s/ Clarence Verhoef


Print Name:		Clarence Verhoef


Title:		CFO
Date:		10/25/16

OTHER SPONSORING EMPLOYERS:


By:


Print Name:


Title:
Date:


By:


Print Name:


Title:
Date:

Exhibit 10.7

LOGO

VAREX IMAGING CORPORATION

Master Plan Document

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TABLE OF CONTENTS


		Page
ARTICLE 1	DEFINITIONS		1

ARTICLE 2	SELECTION, ENROLLMENT, ELIGIBILITY		7

2.1	Selection by Committee		7

2.2	Enrollment Requirements		8

2.3	Eligibility; Commencement of Participation		8

2.4	Termination of Participation and/or Deferrals		8

2.5	Freeze of Participation		8

ARTICLE 3	DEFERRAL COMMITMENTS/COMPANY MATCHING/CREDITING/TAXES		8

3.1	Minimum Deferrals		8

3.2	Maximum Deferral		9

3.3	Election to Defer; Effect of Election Form		10

3.4	Withholding of Annual Deferral Amounts		10

3.5	Annual Company Contribution Amount		10

3.6	Annual Company Matching Amount		11

3.7	No Further Deferrals or Contributions		11

3.7	Unvested Amount as of December 31, 2004		11

3.9	Investment of Trust Assets		11

3.10	Vesting		11

3.11	Crediting/Debiting of Account Balances		12

3.12	FICA and Other Taxes		14

3.13	Distributions		14

3.14	Deferrals from Other Plans		14

3.15	Prior Plan		15

ARTICLE 4	SHORT-TERM PAYOUT; UNFORESEEABLE FINANCIAL EMERGENCIES; WITHDRAWAL ELECTION		15

4.1	Short-Term Payout		15

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		Page
4.2	Other Benefits Take Precedence Over Short-Term Payout		15

4.3	Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies		16

4.4	Withdrawal Election		16

ARTICLE 5	RETIREMENT BENEFIT		16

5.1	Retirement Benefit		16

5.2	Payment of Retirement Benefit		16

5.3	Death Prior to Completion of Retirement Benefit		17

ARTICLE 6	PRE-RETIREMENT SURVIVOR BENEFIT		17

6.1	Pre-Retirement Survivor Benefit		17

6.2	Payment of Pre-Retirement Survivor Benefit		17

ARTICLE 7	TERMINATION BENEFIT		18

7.1	Termination Benefit		18

7.2	Payment of Termination Benefit		18

ARTICLE 8	DISABILITY WAIVER AND BENEFIT		18

8.1	Disability Waiver		18

8.2	Continued Eligibility; Disability Benefit		19

ARTICLE 9	BENEFICIARY DESIGNATION		19

9.1	Beneficiary		19

9.2	Beneficiary Designation; Change; Spousal Consent		19

9.3	Acknowledgment		19

9.4	No Beneficiary Designation		20

9.5	Doubt as to Beneficiary		20

9.6	Discharge of Obligations		20

ARTICLE 10	LEAVE OF ABSENCE		20

10.1	Paid Leave of Absence		20

10.2	Unpaid Leave of Absence		20

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TABLE OF CONTENTS

(continued)


		Page
ARTICLE 11	TERMINATION, AMENDMENT OR MODIFICATION		20

11.1	Termination		20

11.2	Amendment		21

11.3	Plan Agreement		22

11.4	Effect of Payment		22

11.5	Grandfathered Status under American Jobs Creation Act of 2004		22

ARTICLE 12	ADMINISTRATION		22

12.1	Committee Duties		22

12.2	Agents		22

12.3	Binding Effect of Decisions		22

12.4	Indemnity of Committee		23

12.5	Employer Information		23

ARTICLE 13	OTHER BENEFITS AND AGREEMENTS		23

13.1	Coordination with Other Benefits		23

ARTICLE 14	CLAIMS PROCEDURES		23

14.1	Presentation of Claim		23

14.2	Notification of Decision		23

14.3	Review of a Denied Claim		24

14.4	Decision on Review		24

14.5	Legal Action		24

ARTICLE 15	TRUST		25

15.1	Establishment of the Trust		25

15.2	Interrelationship of the Plan and the Trust		25

15.3	Distributions from the Trust		25

ARTICLE 16	MISCELLANEOUS		25

16.1	Status of Plan		25

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16.2	Unsecured General Creditor		25

16.3	Employer’s Liability		25

16.4	Nonassignability		26

16.5	Not a Contract of Employment		26

16.6	Furnishing Information		26

16.7	Terms		26

16.8	Captions		26

16.9	Governing Law		26

16.10	Notice		27

16.11	Successors		27

16.12	Spouse’s Interest		27

16.13	Validity		27

16.14	Incompetent		27

16.15	Court Order		28

16.16	Distribution in the Event of Taxation		28

16.17	Insurance		28

16.18	Legal Fees To Enforce Rights After Change in Control		28

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VAREX IMAGING CORPORATION

FROZEN DEFERRED COMPENSATION PLAN

Purpose

This Plan is being adopted in connection with the spin-off (the “Spin-off”) of the Company from Varian Medical Systems, Inc. (“VMS”) and is effective on the effective date of the Spin-off (the “Effective Date”). Effective at the time of the Spin-off, all deferrals made under the Varian Medical Systems, Inc. Frozen Deferred Compensation Plan (the “Frozen VMS Plan”) by those employees and nonemployee directors that are employees or nonemployee directors of the Company immediately after the Spin-off shall be assumed hereunder and subject to the terms of this Plan and the deferral elections made under the Frozen VMS Plan (which are hereby incorporated by reference). Deferrals under the Frozen VMS Plan made by persons who are not employed or engaged by the Company at the time of the Spin-off shall not be assumed under this Plan and shall remain an obligation of the Frozen VMS Plan. It is the intent of the Company that this Plan mirror the terms of the Frozen VMS Plan, and the Plan shall be interpreted accordingly.

For the purpose of clarity, the Spin-off will not result in any Employee or Director experiencing a Termination of Employment or being paid a Termination Benefit under the terms of the Frozen VMS Plan or this Plan.

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

“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 vested Company Contribution Account balance and (iii) the Company Matching 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.

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1.2	“Annual Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.5 of the Frozen VMS Plan and credited to such account prior to the Spin-off.

1.3	“Annual Company Matching Amount” for any one Plan Year shall be the amount determined in accordance with Section 3.6 of the Frozen VMS Plan and credited to such account prior to the Spin-off.

1.4

“Annual Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary, Incentive Payments, Directors Fees, plus amounts deferred, if any, pursuant to Section 3.12 of the Frozen VMS Plan, that a Participant elects to have, and is deferred, in accordance with Article 3 of the Frozen VMS Plan, for any one Plan Year. In the event of a Participant’s Retirement, Disability (if deferrals cease in accordance with Section 8.1), death or a Termination of Employment prior to the end of a Plan Year, such year’s Annual Deferral Amount shall be the actual amount withheld prior to such event.

1.5

“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.

1.6	“Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 9 of the Frozen VMS Plan or this Plan, that are entitled to receive benefits under this Plan upon the death of a Participant.

1.7	“Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.

1.8	“Board” shall mean the board of directors of the Company.

1.9	“Change in Control” shall be deemed to have occurred if:

(a)

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

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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

(b)

Continuing Directors cease to constitute at least a majority of the Board; or

(c)

(d)

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 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.

1.10	“Claimant” shall have the meaning set forth in Section 14.1.

1.11	“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.12	“Committee” shall mean the committee described in Section 12.1.

1.13	“Company” shall mean Varex Imaging Corporation a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

1.14

“Company Contribution Account” shall mean (i) the sum of the Participant’s Annual Company Contribution Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Frozen VMS Plan and this Plan that relate to the Participant’s Company Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to the Frozen VMS Plan and this Plan that relate to the Participant’s Company Contribution Account.

1.15

“Company Matching Account” shall mean (i) the sum of all of a Participant’s Annual Company Matching Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Frozen VMS Plan and this Plan that relate to the Participant’s Company Matching Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to the Frozen VMS Plan and this Plan that relate to the Participant’s Company Matching Account.

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1.16

“Continuing Directors” shall mean the Directors of the Company in office immediately following the Spin-off 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 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.

1.17

“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 prior to a Change in Control 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 prior to the Change in Control is deductible, the Employer may defer all or any portion of a distribution under this Plan. Any amounts deferred pursuant to this limitation shall continue to be credited/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 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 Section 162(m), or if earlier, the effective date of a Change in Control. Notwithstanding anything to the contrary in this Plan, the Deduction Limitation shall not apply to any distributions made after a Change in Control.

1.18

“Deferral Account” shall mean (i) the sum of all of a Participant’s Annual Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Frozen VMS Plan and 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 the Frozen VMS Plan and this Plan that relate to his or her Deferral Account.

1.19	“Director” shall mean any member of the Board.

1.20	“Directors Fees” shall mean the fees paid by VMS, including retainer fees and meetings fees, as compensation for serving on the Board of Directors of VMS.

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1.21

“Disability” shall mean a period of disability during which a Participant qualifies for permanent disability benefits under the Participant’s Employer’s long-term disability plan, or, if a Participant does not participate in such a plan, a period of disability during which the Participant would have qualified for permanent disability benefits under such a plan had the Participant been a participant in such a plan, as determined in the sole discretion of the Committee. If the Participant’s Employer does not sponsor such a plan, or discontinues to sponsor such a plan, Disability shall be determined by the Committee in its sole discretion.

1.22	“Disability Benefit” shall mean the benefit set forth in Article 8.

1.23	“Election Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make an election under the Plan.

1.24	“Employee” shall mean a person who is an employee of the Employer.

1.25	“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.

1.26	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.27	“First Plan Year” shall mean the period beginning September 30, 2000 and ending December 31, 2000.

1.28	“401(k) Plan” shall be that certain Varian Medical Systems, Inc. Retirement Plan, dated October 2, 1999.

1.29

“Incentive Payments” shall mean any compensation paid to a Participant under VMS’s Management Incentive Plan, Employee Incentive Plan or any Marketing, Sales or Service Incentive Plan of VMS, 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.

1.30	“Maximum 401(k) Amount” with respect to a Participant, shall be the maximum amount of elective contributions that can be made by such Participant, consistent with Code Section 402(g) and the limitations of Code Section 401(k)(3), for a given plan year under the 401(k) Plan.

1.31

“Participant” shall mean any person whose deferrals under the Frozen VMS Plan were assumed under this Plan in connection with the Spin-off. 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, even if he or she has an interest in the Participant’s benefits under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.

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1.32	“Plan” shall mean the Company’s Frozen Deferred Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

1.33

“Plan Agreement” shall mean a written agreement, 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.

1.34	“Plan Year” shall, except for the First Plan Year, mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

1.35	“Pre-Retirement Survivor Benefit” shall mean the benefit set forth in Article 6.

1.36

“Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an Employee, severance from employment from the Employer for any reason other than a leave of absence, death or Disability 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, severance of his or her directorships with the Employer on or after the later of (a) the attainment of age seventy (70), or (b) in the sole discretion of the Committee, 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; provided, however, that such a Participant may elect, at least three years prior to Retirement and in accordance with the policies and procedures established by the Committee, to Retire for purposes of this Plan at the time he or she Retires as an Employee, which Retirement shall be deemed to be a Retirement as an Employee.

1.37	“Retirement Benefit” shall mean the benefit set forth in Article 5.

1.38	“Short-Term Payout” shall mean the payout set forth in Section 4.1.

1.39	“Termination Benefit” shall mean the benefit set forth in Article 7.

1.40	“Termination of Employment” shall mean the severing of employment with the Employer, or service as a Director of the Employer, voluntarily or involuntarily, for any reason other than Retirement, Disability, death or an authorized leave of absence. If a Participant is both an

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Employee and a Director, a Termination of Employment shall occur only upon the termination of the last position held; provided, however, that such a Participant may elect, at least three years before Termination of Employment and in accordance with the policies and procedures established by the Committee, to be treated for purposes of this Plan as having experienced a Termination of Employment at the time he or she ceases employment with the Employer as an Employee.

1.41	“Trust” shall mean one or more trusts that may be established hereunder between the Company and the trustee named therein, as amended from time to time.

1.42

“Unforeseeable Financial Emergency” shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant that would result in severe financial hardship to the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, (ii) a loss of the Participant’s property due to casualty, or (iii) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Committee.

1.43

“Yearly Installment Method” shall be a yearly installment payment over the number of years selected by the Participant in accordance with this Plan, calculated as follows: The Account Balance of the Participant shall be calculated as of the close of business on the last business day of the year. The yearly installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one, and the denominator of which is the remaining number of yearly payments due the Participant. By way of example, if the Participant elects a 10 year Yearly Installment Method, the first payment shall be 1/10 of the Account Balance, calculated as described in this definition. The following year, the payment shall be 1/9 of the Account Balance, calculated as described in this definition. Each yearly installment shall be paid on or as soon as practicable after the last business day of the applicable year.

1.44

“Years of Service” shall mean the total number of full years in which a Participant has been employed by VMS (or one or more of its subsidiaries that qualified as an “Employer” under the Frozen VMS Plan) or 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

Selection by Committee . Participation in the Plan shall be limited to a select group of management and highly compensated Employees and Directors of the Employer, as determined by the Committee in its sole discretion. From that group, the Committee shall select, in its sole discretion, Employees and Directors to participate in the Plan.

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2.2

Enrollment Requirements . As a condition to participation, each selected Employee or Director shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form, all within 30 days after he or she is selected to participate in the Plan. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

2.3

Eligibility; Commencement of Participation . Provided an Employee or Director selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period, that Employee or Director shall commence participation in the Plan on the first day of the month following the month in which the Employee or Director completes all enrollment requirements. If an Employee or a Director fails to meet all such requirements within the 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 Plan Year following the delivery to and acceptance by the Committee of the required documents.

2.4

Termination of Participation and/or Deferrals . If the Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Committee shall 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, (ii) prevent the Participant from making future deferral elections and/or (iii) immediately distribute the Participant’s then Account Balance as a Termination Benefit and terminate the Participant’s participation in the Plan.

2.5	Freeze of Participation . Notwithstanding any other provision of this Plan, no individual shall become a Participant in this Plan after the Effective Date.

ARTICLE 3

Deferral Commitments/Company Matching/Crediting/Taxes

3.1	Minimum Deferrals .

(a)

Base Annual Salary, Incentive Payments, Directors Fees, Stock Option Gain . For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary, Incentive Payments, Directors Fees (in the case of a Participant who is also a Director), and/or stock option gain, if any, in the following minimum amounts for each deferral elected:

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Deferral	Minimum Amount
Base Annual Salary	$	2,000
Incentive Payments	$	2,000
Directors Fees	$	0
Stock Option Gain	$	20,000

If an election is made for less than stated minimum amounts, or if no election is made, the amount deferred shall be zero.

(b)

Short Plan Year . Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, or in the case of the First Plan Year of the Plan itself, the minimum Base Annual Salary deferral shall be an amount equal to the minimum set forth above, multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year and the denominator of which is 12.

Notwithstanding anything in this Plan to the contrary, deferrals of stock option gains may only take place after the Committee has determined to permit Participants to make such deferrals to this Plan.

3.2	Maximum Deferral .

(a)

Base Annual Salary, Incentive Payments, Directors Fees, Stock Option Gain . For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary, Incentive Payments, Directors Fees (in the case of a Participant who is also a Director) and/or stock option gain, if any, up to the following maximum percentages for each deferral elected:


Deferral	Minimum Amount
Base Annual Salary		75	%
Incentive Payments		100	%
Directors Fees		100	%
Stock Option Gain		100	%

(b)

Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, or in the case of the First Plan Year of the Plan itself, the maximum Annual Deferral Amount, with respect to Base Annual Salary, Incentive

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Payments, Directors Fees and/or stock option gain, if any, shall be limited to the amount of compensation not yet earned by the Participant as of the date the Participant submits a Plan Agreement and Election Form to the Committee for acceptance. The preceding sentence is not intended to limit any deferral accepted under other arrangements sponsored by the Company pursuant to Section 3.12.

3.3	Election to Defer; Effect of Election Form .

(a)

First Plan Year . In connection with a Participant’s commencement of participation in the Plan, the Participant shall make an irrevocable deferral election for the Plan Year in which the Participant commences participation in the Plan, along with such other elections as the Committee deems necessary or desirable under the Plan. For these elections to be valid, the Election Form must be completed and signed by the Participant, timely delivered to the Committee (in accordance with Section 2.2 above) and accepted by the Committee.

(b)

Subsequent Plan Years . For each succeeding Plan Year, an irrevocable deferral election for that Plan Year, and such other elections as the Committee deems necessary or desirable under the Plan, shall be made by timely delivering to the Committee, in accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year for which the election is made, a new Election Form. If no such Election Form is timely delivered for a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year.

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 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 Contribution Account under this Plan, which amount shall be for that Participant the Annual Company 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 Contribution Amount for that Plan Year. The

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Annual Company Contribution Amount, if any, shall be credited as of the last day of the 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 Contribution Amount for that Plan Year shall be zero.

3.6

Annual Company Matching Amount . A Participant’s Annual Company Matching Amount for any Plan Year shall be equal to 6% of the Participant’s Base Annual Salary and/or the applicable Incentive Payments that are earned for such Plan Year, reduced by the amount of any matching contributions that would be made to the 401(k) Plan on his or her behalf for the plan year of the 401(k) Plan that corresponds to the Plan Year if the Participant had contributed the Maximum 401(k) Amount for that Plan Year. If a Participant is not employed by the Employer, or is no longer providing services as a Director, as of the last day of the calendar quarter of a Plan Year other than by reason of his or her Retirement or death, the Annual Company Matching Amount for such calendar quarter of the Plan Year shall be zero. In the event of Retirement or death, a Participant shall be credited with the Annual Company Matching Amount for the calendar quarter of the Plan Year in which he or she Retires or dies. The Annual Company Matching Amount shall be credited as of the close of business on the last business day of each calendar quarter of the Plan Year to which it relates.

3.7

No Further Deferrals or Contributions. Notwithstanding any other provision of this Plan, no deferrals shall be permitted under the Plan. In addition, notwithstanding any other provision of this Plan, no Annual Company Contribution Amounts or Annual Company Matching Amounts shall be credited on behalf of any Participant (other than those assumed hereunder from the Frozen VMS Plan).

3.8

Unvested Amount as of December 31, 2004 . With respect to any amounts in a Participant’s Account attributable to Annual Company Contribution Amounts which had not become vested as of December 31, 2004, such amounts ceased to be maintained under the Frozen VMS Plan, and, as of December 31, 2004, were debited from the Participant’s Account and credited to his or her account under the Varian Medical Systems, Inc. 2005 Deferred Compensation Plan, effective January 1, 2005 (the “2005 Plan”). Such amounts became subject to the terms of the 2005 Plan, but continued to be subject to the same vesting schedule as under the Frozen VMS Plan with vesting service under the Frozen VMS Plan credited under the 2005 Plan. This debiting from the Frozen VMS Plan and crediting to the 2005 Plan was automatic, with no Participant volition.

3.9

Investment of Trust Assets . The trustee of the Trust shall be authorized, upon written instructions received from the Committee or investment manager appointed by the Committee, to invest and reinvest the assets of the Trust in accordance with the applicable Master Trust Agreement, including the disposition of stock and reinvestment of the proceeds in one or more investment vehicles designated by the Committee.

3.10	Vesting .

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(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% vested in his or her Company Contribution Account unless a vesting schedule is approved and documented by the Committee at the time the Annual Company Contribution Amount is credited to the Participant’s Company Contribution Account for that Plan Year.

(c)

A Participant shall at all times be 100% vested in his or her Company Matching 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 Contribution Account shall immediately become 100% vested (if it is not already vested in accordance with a vesting schedule).

3.11	Crediting/Debiting of Account Balances . In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, amounts shall be credited or debited to a Participant’s Account Balance in accordance with the following rules:

(a)

Election of Measurement Funds . 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, one or more Measurement Fund(s) (as described in Section 3.9(c) below) to be used to determine the additional amounts to be credited to his or her Account Balance for the first business day or portion thereof in which the Participant commences participation in the Plan and continuing thereafter for each subsequent business day in which the Participant participates in the Plan, unless changed in accordance with the next sentence. Commencing with the first business day that follows the Participant’s commencement of participation in the Plan and continuing thereafter for each subsequent business day in which the Participant participates in the Plan, the Participant may (but is not required to) elect daily, by submitting an Election Form to the Committee that is accepted by the Committee (which submission may take the form of an electronic transmission, if required or permitted by the Committee), to add or delete one or more Measurement Fund(s) to be used to determine the additional amounts to be credited to his or her Account Balance, or to change the portion of his or her Account Balance allocated to each previously or newly elected Measurement Fund. 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 in which the Participant participates in the Plan, unless changed in accordance with the previous sentence.

(b)

Proportionate Allocation . In making any election described in Section 3.9(a) above, the Participant shall specify on the Election Form, in increments of five percentage

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points (5%), the percentage of his or her Account Balance 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).

(c)

Measurement Funds . The Participant may elect one or more of the measurement funds set forth on Schedule A (the “Measurement Funds”), for the purpose of crediting additional amounts to his or her Account Balance. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund. Each such action will take effect as of the first day of the calendar quarter that follows by thirty (30) days the day on which the Committee gives Participants advance written notice of such change.

(d)

Crediting or Debiting Method . The performance of each elected Measurement Fund (either positive or negative) will be determined by the Committee, 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 Committee in its sole discretion, as though (i) a Participant’s Account Balance were invested in the Measurement Fund(s) 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 Fund(s) 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, and Directors Fees through reductions in his or her payroll, at the closing price on such date; and (iii) any distribution made to a Participant that decreases such Participant’s Account Balance ceased being invested in the Measurement Fund(s), in the percentages applicable to such calendar month, no earlier than three (3) business days prior to the distribution, at the closing price on such date.

(e)

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 to 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 Company 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 Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.

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3.12	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 Participant’s Employer(s) shall withhold from that portion of the Participant’s Base Annual Salary, Incentive Payments and Directors Fees 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 Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.10.

(b)

Annual Company Matching Amounts . When a Participant becomes vested in a portion of his or her Company Matching Account, the Participant’s Employer shall 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 Committee may reduce the vested portion of the Participant’s Company Matching Account in order to comply with this Section 3.10.

(c)

Annual Company Contribution Amounts . When a Participant becomes vested in his or her Company Contribution Account, the Employer shall 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 committee may reduce the vested portion of the Participant’s Company Contribution Account in order to comply with this Section 3.10.

3.13

Distributions . The Participant’s 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, in amounts and in a manner to be determined in the sole discretion of the Employer and the trustee of the Trust.

3.14

Deferrals from Other Plans . The Plan may accept the transfer of amounts or assets deferred by a Participant under any other deferral arrangement provided by the Company, including without limitation any shares of common stock of the Employer which but for such deferral would (i) be issued to the Participant upon the exercise of a stock option granted by the Company or (ii) be vested and nonforfeitable in the case of restricted stock issued to the Participant. Any amounts deferred representing shares of Company common stock shall be accounted for on a share by share basis, with appropriate adjustments to reflect changes in the capital structure of the Company, and shall, when distributed, be distributed in the form

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of common stock from the Company. In addition, any dividends that would have been paid on such shares of Company common stock if such shares were outstanding, shall be credited to the Deferral Account. Notwithstanding any of the provisions of the Plan to the contrary, the Participant shall not have any right to elect to have any amounts deferred in the form of Company stock measured by reference to any Measurement Fund.

3.15

Prior Plan . Participants in this Plan who were participants under the Varian Medical Systems, Inc. Amended and Restated Supplemental Retirement Plan (the “SRP”) and later became participants under the Frozen VMS Plan and their respective Company Matching Accounts shall be credited with their respective account balances under the SRP. Such account balances shall be payable at Retirement and shall not be treated as Short-Term Payout amounts under Section 4.1 of this Plan.

ARTICLE 4

Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal Election

4.1

Short-Term Payout . In connection with each election to defer an Annual Deferral Amount, a Participant may irrevocably elect to receive a future “Short-Term Payout” from the Plan with respect to such Annual Deferral Amount. Subject to the Deduction Limitation, the Short-Term Payout shall be a lump sum payment in an amount that is equal to the Annual Deferral Amount, plus amounts credited or debited in the manner provided in Section 3.9 above on that amount, plus related Annual Company Contribution Amounts, determined at the time that the Short-Term Payout becomes payable (rather than the date of a Termination of Employment). 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 Plan Years after the Plan Year in which the Annual Deferral Amount is actually deferred, as specifically elected by Participant. By way of example, if a three year Short-Term Payout is elected for Annual Deferral Amounts that are deferred in the Plan Year commencing January 1, 2001, the three year Short-Term Payout would become payable during a sixty (60) day period commencing January 1, 2005. Notwithstanding the preceding sentences or any other provision of this Plan that may be construed to the contrary, a Participant who is an active Employee may, with respect to each Short-Term Payout, in a form determined by the Committee, make no more than one additional deferral election (a “Second Election”) to defer payment of such Short-Term Payout to a Plan Year subsequent to the Plan Year originally elected; provided, however, any such Second Election will be null and void unless accepted by the Committee no later than one (1) year prior to the first day of the Plan Year originally elected by the Participant for payment of such Short-Term Payout, and such Second Election is at least two (2) Plan Years from the Plan Year originally elected.

4.2	Other Benefits Take Precedence Over Short-Term Payout . Should an event occur that triggers a benefit under Article 5, 6, 7 or 8, any Annual Deferral Amount, plus amounts

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credited or debited thereon, that is 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/Suspensions for Unforeseeable Financial Emergencies . If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee to (i) suspend any deferrals required to be made by a Participant and/or (ii) receive a partial or full payout from the Plan. The payout shall not exceed the lesser of the Participant’s Account Balance, calculated as if such Participant were receiving a Termination Benefit, or the amount reasonably needed to satisfy the Unforeseeable Financial Emergency. If, subject to the sole discretion of the Committee, the petition for a suspension and/or payout is approved, suspension 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 not be subject to the Deduction Limitation.

4.4

Withdrawal Election . A Participant (or, after a Participant’s death, his or her Beneficiary) may elect, at any time, to withdraw all of his or her Account Balance, calculated as if there had occurred a Termination of Employment as of the day of the election, less a withdrawal penalty equal to 10% of such amount (the net amount shall be referred to as the “Withdrawal Amount”). This election can be made at any time, before or after Retirement, Disability, death or Termination of Employment, and whether or not the Participant (or his or her Beneficiary) is in the process of being paid pursuant to an installment payment schedule. If made before Retirement, Disability or death, a Participant’s Withdrawal Amount shall be his or her Account Balance calculated as if there had occurred a Termination of Employment as of the day of the election. No partial withdrawals of the Withdrawal Amount shall be allowed. The Participant (or his or her Beneficiary) shall make this election by giving the Committee advance written notice of the election in a form determined from time to time by the Committee. The Participant (or his or her Beneficiary) shall be paid the Withdrawal Amount within sixty (60) days of his or her election. Once the Withdrawal Amount is paid, the Participant’s participation in the Plan shall terminate and the Participant shall not be eligible to participate in the Plan for one year from the date of the withdrawal election. The payment of this Withdrawal Amount shall not be subject to the Deduction Limitation.

ARTICLE 5

Retirement Benefit

5.1	Retirement Benefit . Subject to the Deduction Limitation, a Participant who Retires shall receive, as a Retirement Benefit, his or her Account Balance.

5.2	Payment of Retirement Benefit . A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive the Retirement Benefit in a lump sum or pursuant to a Yearly Installment Method of five (5), ten (10) or fifteen (15)

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years. The Participant may annually change his or her election to an allowable alternative payout period by submitting a new Election Form to the Committee, provided that any such Election Form is submitted at least one (1) year prior to the Participant’s Retirement and is accepted by the Committee in its sole discretion. The Election Form most recently accepted by the Committee shall govern the payout of the Retirement Benefit. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such benefit shall be payable in a lump sum. The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the last day of the Plan Year in which the Participant Retires. Any payment made shall be subject to the Deduction Limitation.

5.3

Death Prior to Completion of Retirement Benefit . If a Participant dies after Retirement but before the Retirement Benefit is paid in full, the Participant’s unpaid Retirement Benefit payments shall continue and shall be paid to the Participant’s Beneficiary (a) over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived, or (b) in a lump sum, if requested by the Beneficiary and allowed in the sole discretion of the Committee, that is equal to the Participant’s unpaid remaining Account Balance.

ARTICLE 6

Pre-Retirement Survivor Benefit

6.1

Pre-Retirement Survivor Benefit . Subject to the Deduction Limitation, the Participant’s Beneficiary shall receive a Pre-Retirement Survivor Benefit equal to the Participant’s Account Balance if the Participant dies before he or she Retires, experiences a Termination of Employment or suffers a Disability.

6.2

Payment of Pre-Retirement Survivor Benefit . A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form whether the Pre-Retirement Survivor Benefit shall be received by his or her Beneficiary in a lump sum or pursuant to a Yearly Installment Method of five (5), ten (10) or fifteen (15) years. The Participant may annually change this election to an allowable alternative payout period by submitting a new Election Form to the Committee, which form must be accepted by the Committee in its sole discretion. The Election Form most recently accepted by the Committee prior to the Participant’s death shall govern the payout of the Participant’s Pre-Retirement Survivor Benefit. If a Participant does not make any election with respect to the payment of the Pre-Retirement Survivor Benefit, then such benefit shall be paid in a lump sum. Despite the foregoing, if the Participant’s Account Balance at the time of his or her death is less than $50,000, payment of the Pre-Retirement Survivor Benefit may be made, in the sole discretion of the Committee, in a lump sum or pursuant to a Yearly Installment Method of not more than five (5) years. The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the last day of the Plan Year in which the Committee is provided with proof that is satisfactory to the Committee of the Participant’s death. Any payment made shall be subject to the Deduction Limitation.

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ARTICLE 7

Termination Benefit

7.1	Termination Benefit . Subject to the Deduction Limitation, the Participant shall receive a Termination Benefit, which shall be equal to the Participant’s Account Balance if a Participant experiences a Termination of Employment prior to his or her Retirement, death or Disability.

7.2

Payment of Termination Benefit . If the Participant’s Account Balance at the time of his or her Termination of Employment is less than $50,000, payment of his or her Termination Benefit shall be paid in a lump sum. If his or her Account Balance at such time is equal to or greater than that amount, the Committee, in its sole discretion, may cause the Termination Benefit to be paid in a lump sum or pursuant to a Yearly Installment Method of not more than five (5) years. The lump sum payment shall be made, or installment payments shall commence, no later than 60 days after the last day of the Plan Year in which the Participant experiences the Termination of Employment. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 8

Disability Waiver and Benefit

8.1	Disability Waiver .

(a)

Waiver of Deferral . A Participant who is determined by the Committee to be suffering from a Disability shall be excused from fulfilling that portion of the Annual Deferral Amount commitment that would otherwise have been withheld from a Participant’s Base Annual Salary, Incentive Payments and/or Directors Fees for the Plan Year during which the Participant first suffers a Disability. During the period of Disability, the Participant shall not be allowed to make any additional deferral elections, but will continue to be considered a Participant for all other purposes of this Plan.

(b)

Return to Work . If a Participant returns to employment, or service as a Director, with the Employer, after a Disability ceases, the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his or her return to employment or service and for every Plan Year thereafter while a Participant in the Plan; provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.3 above.

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8.2

Continued Eligibility; Disability Benefit . A Participant suffering a Disability shall, for benefit purposes under this Plan, continue to be considered to be employed, or in the service of the Employer as a Director, and shall be eligible for the benefits provided for in Articles 4, 5, 6 or 7 in accordance with the provisions of those Articles. Notwithstanding the above, the Committee shall have the right to, in its sole and absolute discretion and for purposes of this Plan only, and must in the case of a Participant who is otherwise eligible to Retire, deem the Participant to have experienced a Termination of Employment, or in the case of a Participant who is eligible to Retire, to have Retired, at any time (or in the case of a Participant who is eligible to Retire, as soon as practicable) after such Participant is determined to be suffering a Disability, in which case the Participant shall receive a Disability Benefit equal to his or her Account Balance at the time of the Committee’s determination; provided, however, that should the Participant otherwise have been eligible to Retire, he or she shall be paid in accordance with Article 5. The Disability Benefit shall be paid in a lump sum within sixty (60) days of the Committee’s exercise of such right. Any payment made shall be subject to the Deduction Limitation.

ARTICLE 9

Beneficiary Designation

9.1

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 to a beneficiary 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.

9.2

Beneficiary Designation; Change; Spousal Consent . A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee 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 Committee’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 Committee, must be signed by that Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.

9.3	Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Committee or its designated agent.

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9.4

No Beneficiary Designation . If a Participant fails to designate a Beneficiary as provided in Sections 9.1, 9.2 and 9.3 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. 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.

9.5

Doubt as to Beneficiary . If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant’s Employer to withhold such payments until this matter is resolved to the Committee’s satisfaction.

9.6

Discharge of Obligations . The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge the Employer and the Committee 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.

ARTICLE 10

Leave of Absence

10.1

Paid Leave of Absence . If a Participant is authorized by the Participant’s Employer for any reason to take a paid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Annual Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with Section 3.4.

10.2

Unpaid Leave of Absence . If a Participant is authorized by the Participant’s Employer for any reason to take an unpaid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Participant shall be excused from making deferrals until the earlier of the date the leave of absence expires or the Participant returns to a paid employment status. Upon such expiration or return, deferrals shall resume for the remaining portion of the Plan Year in which the expiration or return occurs, based on the deferral election, if any, made for that Plan Year. If no election was made for that Plan Year, no deferral shall be withheld.

ARTICLE 11

Termination, Amendment or Modification

11.1

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

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respect to any or all of its participating Employees and Directors, by action of its Board. Upon the termination of the Plan with respect to the Employer, the Plan Agreements of the affected Participants who are employed by the Employer, or in the service of the Employer as Directors, shall terminate and their Account Balances, determined as if they had experienced a Termination of Employment on the date of Plan termination or, if Plan termination occurs after the date upon which a Participant was eligible to Retire, then with respect to that Participant as if he or she had Retired on the date of Plan termination, shall be paid to the Participants as follows: Prior to a Change in Control, if the Plan is terminated with respect to all of its Participants, the Employer shall have the right, in its sole discretion, and notwithstanding any elections made by the Participant, to pay such benefits in a lump sum or pursuant to a Yearly Installment Method of up to fifteen (15) years, with amounts credited and debited during the installment period as provided herein. If the Plan is terminated with respect to less than all of its Participants, the Employer shall be required to pay such benefits in a lump sum. After a Change in Control, the Employer shall be required to pay such benefits in a lump sum. 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; provided however, that the Employer shall have the right to accelerate installment payments without a premium or prepayment penalty by paying the Account Balance in a lump sum or pursuant to a Yearly Installment Method using fewer years (provided that the present value of all payments that will have been received by a Participant at any given point of time under the different payment schedule shall equal or exceed the present value of all payments that would have been received at that point in time under the original payment schedule). Notwithstanding the preceding or anything herein that suggests otherwise, if such payment upon Plan termination or any other payment hereunder would give rise to a “material modification”, within the meaning of Code Section 409A and the American Jobs Creation Act of 2004, benefits shall instead be paid as they otherwise become due hereunder.

11.2

Amendment . The Employer may, at any time, amend or modify the Plan in whole or in part with respect to the Employer by the action of its Board; provided, however, that no amendment or modification shall be effective to decrease or restrict the value of a Participant’s Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Termination of Employment 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 to Retire, 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; provided, however, that the Employer shall have the right to accelerate installment payments by paying the Account Balance in a lump sum or pursuant to a Yearly Installment Method using fewer years (provided that the present value of all payments that will have been received by a Participant at any given point of time under the different payment schedule shall equal or exceed the present value of all payments that would have been received at that point in time under the original payment schedule).

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11.3	Plan Agreement . Despite the provisions of Sections 11.1 and 11.2 above, 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.

11.4	Effect of Payment . The full payment of the applicable benefit under Articles 4, 5, 6, 7 or 8 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.

11.5

Grandfathered Status under American Jobs Creation Act of 2004 . Notwithstanding anything in this Plan to the contrary, any Plan amendment and/or any other election taken with respect to the Plan that constitutes a “material modification” of the Plan as defined in the American Jobs Creation Act of 2004, and the authoritative guidance issued thereunder, shall be void and without effect.

ARTICLE 12

Administration

12.1

Committee Duties . This Plan shall be administered by a Committee which shall consist of a Committee of the Board which initially shall be the Organization and Compensation Committee, or such committee as the Board shall designate or appoint from time to time. Members of the Committee may be Participants under this Plan. The Committee shall also 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 on the Committee 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 Committee shall be entitled to rely on information furnished by a Participant or the Company.

12.2

Agents . In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to the Employer.

12.3

Binding Effect of Decisions . The decision or action of the Committee 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.

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12.4

Indemnity of Committee . The Employer shall indemnify and hold harmless the members of the Committee, and any Employee to whom the duties of the Committee 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 Committee or any of its members or any such Employee.

12.5

Employer Information . To enable the Committee to perform its functions, each Employer shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Committee may reasonably require.

ARTICLE 13

Other Benefits and Agreements

13.1

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 of the Participant’s Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 14

Claims Procedures

14.1

Presentation of Claim . Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within one hundred and eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

14.2	Notification of Decision . The Committee shall consider a Claimant’s claim within a reasonable time, and shall notify the Claimant in writing:

(a)

that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

(b)

that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

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(i)

the specific reason(s) for the denial of the claim, or any part of it;

(ii)

specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

(iii)

a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and

(iv)

an explanation of the claim review procedure set forth in Section 14.3 below.

14.3

Review of a Denied Claim . Within sixty (60) days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. Thereafter, but not later than thirty (30) days after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):

(a)

may review pertinent documents;

(b)

may submit written comments or other documents; and/or

(c)

may request a hearing, which the Committee, in its sole discretion, may grant.

14.4

Decision on Review . The Committee shall render its decision on review promptly, and not later than sixty (60) days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee’s decision must be rendered within one hundred and twenty (120) days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(a)

specific reasons for the decision;

(b)

specific reference(s) to the pertinent Plan provisions upon which the decision was based; and

(c)

such other matters as the Committee deems relevant.

14.5	Legal Action . A Claimant’s compliance with the foregoing provisions of this Article 14 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.

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ARTICLE 15

Trust

15.1

Establishment of the Trust . The Company shall establish the Trust, and the Employer shall at least annually transfer over to the Trust such assets as the Employer determines, in its sole discretion, are necessary to provide, on a present value basis, for its respective future liabilities created with respect to the Annual Deferral Amounts, Annual Company Contribution Amounts, and Company Matching Amounts for the Employer’s Participants for all periods prior to the transfer, as well as any debits and credits to the Participants’ Account Balances for all periods prior to the transfer, taking into consideration the value of the assets in the Trust at the time of the transfer.

15.2

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 Employers, Participants and the creditors of the Employers to the assets transferred to the Trust. The Employer shall at all times remain liable to carry out its obligations under the Plan.

15.3	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 16

Miscellaneous

16.1

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 employee” 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.

16.2

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.

16.3

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.

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16.4

Nonassignability . 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. 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.

16.5

Not a Contract of Employment . The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Employer and the Participant. Such employment is hereby acknowledged to be an “at will” employment 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 agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Employer, either as an Employee or a Director, or to interfere with the right of the Employer to discipline or discharge the Participant at any time.

16.6

Furnishing Information . A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee 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 Committee may deem necessary.

16.7

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.

16.8	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.

16.9	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.

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16.10

Notice . Any notice or filing required or permitted to be given to the Committee 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

1678 S. Pioneer Rd.

Salt Lake City, UT 84104

With Copy To:

General Counsel

1678 S. Pioneer Rd.

Salt Lake City, UT 84104

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.

16.11

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.

16.12

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.

16.13

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.

16.14

Incompetent . If the Committee 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 Committee 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 Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of

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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.

16.15

Court Order . The Committee is authorized to make any payments directed by court order in any action in which the Plan or the Committee 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 Committee, in its sole discretion, 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.

16.16

Distribution in the Event of Taxation .

(a)

In General . If, for any reason, all or any portion of a Participant’s benefits under this Plan becomes taxable to the Participant prior to receipt, a Participant may petition the Committee before a Change in Control, or the trustee of the Trust after a Change in Control, for a distribution of that portion of his or her benefit that has become taxable. Upon the grant of such a petition, which grant shall not be unreasonably withheld (and, after a Change in Control, shall be granted), a Participant’s Employer shall distribute to the Participant immediately available funds in an amount equal to the taxable portion of his or her benefit (which amount shall not exceed a Participant’s unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution shall be made within ninety (90) days of the date when the Participant’s petition is granted. Such a distribution shall affect and reduce the benefits to be paid under this Plan.

(b)

Trust . If the Trust terminates in accordance with Section 3.6(e) of the Trust and benefits are distributed from the Trust to a Participant in accordance with that Section, the Participant’s benefits under this Plan shall be reduced to the extent of such distributions.

16.17

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 submit to medical examinations and 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.

16.18

Legal Fees To Enforce Rights After Change in Control . The Company and the Employer is aware that upon the occurrence of a Change in Control, the Board or the board of directors of

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a Participant’s Employer (which might then be composed of new members) or a shareholder of the Company or the Participant’s Employer, or of any successor corporation might then cause or attempt to cause the Company, the Participant’s Employer or such successor to refuse to comply with its obligations under the Plan and might cause or attempt to cause the Company or the Participant’s Employer to institute, or may institute, litigation seeking to deny Participants the benefits intended under the Plan. In these circumstances, the purpose of the Plan could be frustrated. Accordingly, if, following a Change in Control, it should appear to any Participant that the Company, the Participant’s Employer or any successor corporation has failed to comply with any of its obligations under the Plan or any agreement thereunder or, if the Company, the Employer or any other person takes any action to declare the Plan void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from any Participant the benefits intended to be provided, then the Company and the Participant’s Employer irrevocably authorize such Participant to retain counsel of his or her choice at the expense of the Company and the Participant’s Employer (who shall be jointly and severally liable) to represent such Participant in connection with the initiation or defense of any litigation or other legal action, whether by or against the Company, the Participant’s Employer or any Director, officer, shareholder or other person affiliated with the Company, the Participant’s Employer or any successor thereto in any jurisdiction.

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IN WITNESS WHEREOF, the Company has signed this Plan document as of October 25, 2016.

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Exhibit 10.8

FORM OF

VAREX IMAGING CORPORATION

2017 OMNIBUS STOCK PLAN

TABLE OF CONTENTS


		Page
SECTION 1	BACKGROUND AND PURPOSE		1

1.1	Effective Date		1
1.2	Purpose of the Plan		1

SECTION 2	DEFINITIONS		1

2.1	“1934 Act		1
2.2	“Affiliate		1
2.3	“Award		1
2.4	“Award Agreement		1
2.5	“Board		1
2.6	“Code		1
2.7	“Committee		1
2.8	“Company		2
2.9	“Consultant		2
2.10	“Deferred Stock Unit		2
2.11	“Director		2
2.12	“Disability		2
2.13	“EBIT		2
2.14	“EBITDA		2
2.15	“Earnings Per Share		2
2.16	“Employee		2
2.17	“Exercise Price		2
2.18	“Fair Market Value		2
2.19	“Fiscal Year		2
2.20	“Grant Date		2
2.21	“Incentive Stock Option		3
2.22	“Net Income		3
2.23	“Net Orders		3
2.24	“Non-employee Director		3
2.25	“Non-qualified Stock Option		3
2.26	“Operating Cash Flow		3
2.27	“Option		3
2.28	“Participant		3
2.29	“Performance Goals		3
2.30	“Performance Period		3
2.31	“Performance Share		4
2.32	“Performance Unit		4
2.33	“Period of Restriction		4
2.34	“Plan		4
2.35	“Restricted Stock		4
2.36	“Restricted Stock Units		4
2.37	“Retirement		4
2.38	“Return on Assets		4
2.39	“Return on Equity		4
2.40	“Return on Sales		4
2.41	“Revenue		4
2.42	“Rule 16b-3		4
2.43	“Section 16 Person		4
2.44	“Shareholder Return		4
2.45	“Shares		4
2.46	“Stock Appreciation Right		5

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TABLE OF CONTENTS

(continued)


		Page
2.47	“Subsidiary		5
2.48	“Termination of Service		5
2.49	“Varian Stock Awards		5

SECTION 3	ADMINISTRATION		5

3.1	The Committee		5
3.2	Authority of the Committee		5
3.3	Delegation by the Committee		6
3.4	Non-employee Directors		6
3.5	Decisions Binding		6

SECTION 4	SHARES SUBJECT TO THE PLAN		6

4.1	Number of Shares		6
4.2	Lapsed Awards		6
4.3	Shares Not Available for Subsequent Issuance		6
4.4	Adjustments in Awards and Authorized Shares		6

SECTION 5	STOCK OPTIONS		7

5.1	Grant of Options		7
5.2	Award Agreement		7
5.3	Exercise Price		7
5.3.1	Non-qualified Stock Options		7
5.3.2	Incentive Stock Options		7
5.3.3	Substitute Options		7
5.4	Expiration of Options		8
5.4.1	Expiration Dates		8
5.4.2	Death of Participant		8
5.4.3	Committee Discretion		8
5.5	Exercisability of Options		8
5.6	Payment		8
5.7	Restrictions on Share Transferability		9
5.8	Certain Additional Provisions for Incentive Stock Options		9
5.8.1	Exercisability		9
5.8.2	Termination of Service		9
5.8.3	Company and Subsidiaries Only		9
5.8.4	Expiration		9

SECTION 6	STOCK APPRECIATION RIGHTS		9

6.1	Grant of SARs		9
6.2	Exercise Price and Other Terms		9
6.3	SAR Agreement		9
6.4	Expiration of SARs		10
6.5	Payment of SAR Amount		10
6.6	Payment Upon Exercise of SAR		10

SECTION 7	RESTRICTED STOCK AND RESTRICTED STOCK UNITS		10

7.1	Grant of Restricted Stock and Restricted Stock Units		10
7.2	Restricted Stock and Restricted Stock Units Agreement		10
7.3	Transferability		10
7.4	Other Restrictions		10
7.4.1	General Restrictions		10
7.4.2	Section 162(m) Performance Restrictions		10

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TABLE OF CONTENTS

(continued)


		Page
7.4.3	Legend on Certificates		11
7.5	Removal of Restrictions		11
7.6	Voting Rights		11
7.7	Dividends and Other Distributions		11
7.8	Return of Restricted Stock to Company		11

SECTION 8	PERFORMANCE UNITS AND PERFORMANCE SHARES		11

8.1	Grant of Performance Units and Shares		11
8.2	Initial Value		11
8.3	Performance Objectives and Other Terms		12
8.3.1	General Performance Objectives		12
8.3.2	Section 162(m) Performance Objectives		12
8.4	Earning of Performance Units and Performance Shares		12
8.5	Form and Timing of Payment		12
8.6	Cancellation		12

SECTION 9	NON-EMPLOYEE DIRECTORS		12

9.1	Limitation on Grants to Non-Employee Directors		12
9.2	Non-Employee Director Options		13
9.3	Terms of Options		13
9.3.1	Option Agreement		13
9.3.2	Exercise Price		13
9.3.3	Exercisability		13
9.3.4	Expiration of Options		13
9.3.5	Death of Director		13
9.3.6	Not Incentive Stock Options		13
9.3.7	Other Terms		13
9.4	Substitute Options		13
9.5	Elections by Non-employee Directors		14
9.6	Deferred Stock Units		14
9.7	Terms of Deferred Stock Units		14
9.7.1	Deferred Stock Unit Agreement		14
9.7.2	Vesting		14
9.7.3	Payment		14
9.7.4	Other Terms		14

SECTION 10	MISCELLANEOUS		14

10.1	No Effect on Employment or Service		14
10.2	Participation		14
10.3	Indemnification		15
10.4	Successors		15
10.5	Beneficiary Designations		15
10.6	Nontransferability of Awards		15
10.7	No Rights as Stockholder		15
10.8	Withholding Requirements		15
10.9	Withholding Arrangements		16
10.10	Deferrals		16
10.11	Dividend Equivalents		16
10.12	Prohibition on Repricings		16
10.13	Maximum Term of Options and SARs		16
10.14	Restatement of Financial Results		16

SECTION 11	CORPORATE TRANSACTIONS		17

-iii-

TABLE OF CONTENTS

(continued)


		Page
11.1	Effect of Corporate Transaction on Awards		17
11.2	Authority of the Committee		17

SECTION 12	AMENDMENT, TERMINATION AND DURATION		17

12.1	Amendment, Suspension or Termination		17
12.2	Duration of the Plan		18

SECTION 13	LEGAL CONSTRUCTION		18

13.1	Gender and Number		18
13.2	Severability		18
13.3	Requirements of Law		18
13.4	Governing Law		18
13.5	Captions		18

-iv-

VAREX IMAGING CORPORATION

2017 OMNIBUS STOCK PLAN

SECTION 1

BACKGROUND AND PURPOSE

1.1 Effective Date . The Varex Imaging Corporation 2017 Omnibus Stock Plan was adopted by the Board on [ ] (the “Adoption Date”), effective on the day immediately prior to the spin-off of the Company from Varian Medical Systems, Inc. (“Varian”), and approved by Varian, as the sole stockholder of the Company on [ ].

1.2 Purpose of the Plan . The Plan is intended to increase incentives and to encourage Share ownership on the part of (1) employees of the Company and its Affiliates, (2) consultants who provide significant services to the Company and its Affiliates, and (3) directors of the Company who are employees of neither the Company nor any Affiliate. The Plan also is intended to further the growth and profitability of the Company. The Plan is intended to permit the grant of Awards that qualify as performance-based compensation under section 162(m) of the Code.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

2.1 “ 1934 Act ” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.2 “ Affiliate ” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.

2.3 “ Award ” means, individually or collectively, a grant under the Plan of Non-qualified Stock Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares or Deferred Stock Units, including without limitation, stock awards granted in substitution of Varian Stock Awards.

2.4 “ Award Agreement ” means the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan.

2.5 “ Board ” means the Board of Directors of the Company.

2.6 “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.7 “ Committee ” means the committee appointed by the Board (pursuant to Section 3.1) to administer the Plan.

2.8 “ Company ” means Varex Imaging Corporation, a Delaware corporation, or any successor thereto.

2.9 “ Consultant ” means any consultant, independent contractor, or other person who provides significant services to the Company or its Affiliates that is a natural person, but who is neither an Employee nor a Director.

2.10 “ Deferred Stock Unit ” means a Deferred Stock Unit granted pursuant to Section 9.6.

2.11 “ Director ” means any individual who is a member of the Board.

2.12 “ Disability ” means a permanent and total disability within the meaning of section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Committee in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Committee from time to time. Notwithstanding the foregoing, to the extent “Disability” is used to establish a payment event with respect to any Award subject to section 409A of the Code, “Disability” shall have the meaning set forth in section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.

2.13 “ EBIT ” means as to any Performance Period, the Company’s or a business unit’s income before reductions for interest and taxes, determined in accordance with generally accepted accounting principles.

2.14 “ EBITDA ” means as to any Performance Period, the Company’s or a business unit’s income before reductions for interest, taxes, depreciation and amortization, determined in accordance with generally accepted accounting principles.

2.15 “ Earnings Per Share ” means as to any Performance Period, the Company’s or a business unit’s Net Income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles.

2.16 “ Employee ” means any employee of the Company or of an Affiliate, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

2.17 “ Exercise Price ” means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option.

2.18 “ Fair Market Value ” means the last quoted per share selling price for Shares on an established securities market on the relevant date, or if there were no sales on such date, the last quoted per share price for Shares on the next date on which there were sales of Shares. Notwithstanding the preceding, for federal, state and local income tax reporting purposes, fair market value shall be determined by the Committee in accordance with uniform and nondiscriminatory standards adopted by it from time to time.

2.19 “ Fiscal Year ” means the fiscal year of the Company.

2.20 “ Grant Date ” means, with respect to an Award, the date that the Award was granted.

2.21 “ Incentive Stock Option ” means an Option to purchase Shares which is designated as an Incentive Stock Option and is intended to meet the requirements of section 422 of the Code.

2.22 “ Net Income ” means as to any Performance Period, the Company’s or a business unit’s income after taxes, determined in accordance with generally accepted accounting principles.

2.23 “ Net Orders ” means as to any Performance Period, the Company’s or a business unit’s net orders calculated (and reviewed by the Company’s external independent auditors in accordance with agreed standard procedures) for and reported in the Company’s quarterly financial earnings press release filed by the Company on a Current Report on Form 8-K.

2.24 “ Non-employee Director ” means a Director who is an employee of neither the Company nor of any Affiliate.

2.25 “ Non-qualified Stock Option ” means an option to purchase Shares which is not intended to be an Incentive Stock Option.

2.26 “ Operating Cash Flow ” means as to any Performance Period, the Company’s or a business unit’s sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles.

2.27 “ Option ” means an Incentive Stock Option or a Non-qualified Stock Option.

2.28 “ Participant ” means an Employee, Consultant, or Non-employee Director who has an outstanding Award.

2.29 “ Performance Goals ” means the goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Committee, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) EBIT, (b) EBITDA, (c) Earnings Per Share, (d) Net Income, (e) Operating Cash Flow, (f) Return on Assets, (g) Return on Equity, (h) Return on Sales, (i) Revenue, (j) Shareholder Return, (k) orders or Net Orders, (l) expenses, (m) cost of goods sold, (n) profit/loss or profit margin, (o) working capital, (p) operating income, (q) cash flow, (r) market share, (s) return on equity, (t) economic value add, (u) stock price of the Company’s stock, (v) price/earning ratio, (w) debt or debt-to-equity ratio, (x) accounts receivable, (y) cash, (z) write-off, (aa) assets, (bb) liquidity, (cc) operations, (dd) intellectual property ( e.g. , patents), (ee) product development, (ff) regulatory activities, (gg) manufacturing, production or inventory, (hh) mergers, acquisitions or divestitures, (ii) financings, (jj) days sales outstanding, (kk) backlog, (ll) deferred revenue, and (mm) employee headcount. The Performance Goals may differ from Participant to Participant and from Award to Award. Prior to the Determination Date, the Committee shall determine whether any significant element(s) shall be included in or excluded from the calculation of any Performance Goal with respect to any Participant. “Determination Date” means the latest possible date that will not jeopardize an Award’s qualification as performance-based compensation under section 162(m) of the Code. Notwithstanding the previous sentence, for Awards not intended to qualify as performance-based compensation, “Determination Date” shall mean such date as the Committee may determine in its discretion.

2.30 “ Performance Period ” means any fiscal period not to exceed three consecutive Fiscal Years, as determined by the Committee in its sole discretion.

2.31 “ Performance Share ” means a Performance Share granted to a Participant pursuant to Section 8.

2.32 “ Performance Unit ” means a Performance Unit granted to a Participant pursuant to Section 8.

2.33 “ Period of Restriction ” means the period during which shares of Restricted Stock are subject to forfeiture and/or restrictions on transferability.

2.34 “ Plan ” means the Varex Imaging Corporation 2017 Omnibus Stock Plan, as set forth in this instrument and as hereafter amended from time to time.

2.35 “ Restricted Stock ” means an Award granted to a Participant pursuant to Section 7.

2.36 “ Restricted Stock Units ” means a Restricted Stock Unit granted to a Participant pursuant to Section 7.

2.37 “ Retirement ” means, in the case of an Employee or a Non-employee Director, “Retirement” as defined pursuant to the Company’s or the Board’s Retirement Policies, as they may be established from time to time. With respect to a Consultant, no Termination of Service shall be deemed to be on account of “Retirement.”

2.38 “ Return on Assets ” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s EBIT before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles.

2.39 “ Return on Equity ” means as to any Performance Period, the percentage equal to the Company’s Net Income divided by average stockholder’s equity, determined in accordance with generally accepted accounting principles.

2.40 “ Return on Sales ” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s EBIT before incentive compensation, divided by the Company’s or the business unit’s, as applicable, Revenue, determined in accordance with generally accepted accounting principles.

2.41 “ Revenue ” means as to any Performance Period, the Company’s or a business unit’s net sales, determined in accordance with generally accepted accounting principles.

2.42 “ Rule 16b-3 ” means Rule 16b-3 promulgated under the 1934 Act, as amended, and any future regulation amending, supplementing or superseding such regulation.

2.43 “ Section 16 Person ” means a person who, with respect to the Shares, is subject to section 16 of the 1934 Act.

2.44 “ Shareholder Return ” means as to any Performance Period, the total return (change in share price plus reinvestment of any dividends) of a Share.

2.45 “ Shares ” means shares of the Company’s common stock.

2.46 “ Stock Appreciation Right ” or “ SAR ” means an Award, granted alone, in connection or in tandem with a related Option, that pursuant to Section 6 is designated as a SAR.

2.47 “ Subsidiary ” means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

2.48 “ Termination of Service ” means (a) in the case of an Employee, a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Retirement, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate; (b) in the case of a Consultant, a cessation of the service relationship between a Consultant and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, or the disaffiliation of an Affiliate, but excluding any such termination where there is a simultaneous re-engagement of the consultant by the Company or an Affiliate; and (c) in the case of a Non-employee Director, a cessation of the Non-employee Director’s service on the Board for any reason. Notwithstanding the foregoing, to the extent that “Termination of Service” is used to establish a payment event with respect to any Award subject to section 409A of the Code, “Termination of Service” shall have the same meaning as “separation from service” as that term is defined in section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.

2.49 “ Varian Stock Awards ” means stock awards granted under the Varian Medical Systems, Inc. Third Amended and Restated 2005 Omnibus Stock Plan to Employees, Directors and Consultants prior to the Spin-off becoming effective.

SECTION 3

ADMINISTRATION

3.1 The Committee . The Plan shall be administered by the Committee. The Committee shall consist of not less than two (2) Directors. The members of the Committee shall be appointed from time to time by, and serve at the pleasure of, the Board. Each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b) an “independent director” under NASDAQ Listing Rule 5605(a)(2), and (c) an “outside director” under section 162(m) of the Code. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid to the extent permitted by law despite such failure to qualify.

3.2 Authority of the Committee . It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees and Consultants shall be granted Awards, (b) prescribe the terms and conditions of the Awards (other than the Options granted to Non-employee Directors pursuant to Section 9), (c) interpret the Plan and the Awards, (d) adopt such procedures, agreements, arrangements, sub plans and terms as are necessary or appropriate to permit participation in the Plan by Employees, Consultants and Directors who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules. Notwithstanding any contrary provision of the Plan, the Committee may reduce the amount payable under any Award (other than an Option) after the grant of such Award.

3.3 Delegation by the Committee . The Committee, in its sole discretion and on such terms and conditions as comply with applicable law, may delegate all or any part of its authority and powers under the Plan to a committee of one or more directors and/or to officers of the Company; provided, however, that the Committee may not delegate its authority and powers (a) with respect to Section 16 Persons, (b) in any way which would jeopardize the Plan’s qualification under Rule 16b-3, or (c) with respect to Awards which are intended to qualify as performance-based compensation under section 162(m) of the Code.

3.4 Non-employee Directors . Notwithstanding any contrary provision of this Section 3, the Board shall administer Section 9 of the Plan, and the Committee shall exercise no discretion with respect to Section 9. In the Board’s administration of Section 9 and the Awards and any Shares granted to Non-employee Directors, the Board shall have all of the authority and discretion otherwise granted to the Committee with respect to the administration of the Plan.

3.5 Decisions Binding . All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

SECTION 4

SHARES SUBJECT TO THE PLAN

4.1 Number of Shares . Subject to adjustment as provided in Section 4.4, the total number of Shares available for issuance under the Plan shall not exceed (i) [ ] Shares, plus (ii) such number of Shares that are subject to Awards that are granted in substitution for Varian Stock Awards in connection with the Spin-off, with the maximum number of Shares that are subject to such Awards not to exceed [ ] Shares, plus (iii) such number of Shares that are granted pursuant to substitute Awards in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c). Shares issued under the Plan may be authorized but unissued Shares, treasury Shares or reacquired Shares, including Shares repurchased by the Company on the open market. For purposes of this Section 4.1, any Shares that are subject to Awards of Options or Stock Appreciation Rights shall be counted against the limit stated in this Section 4.1 as one (1) Share for every (1) Share issued, and any shares issued in connection with Awards other than Options and Stock Appreciation Rights shall be counted against the limit stated in this Section 4.1 as [ ] Shares for every one (1) Share issued. All of the Shares available for issuance under the Plan may be issued as Incentive Stock Options.

4.2 Lapsed Awards . If an Award terminates, expires, or lapses for any reason, any Shares subject to such Award (plus the number of additional shares, if any, that counted against the share pool using the share counting rule in effect at the time the Award was granted) again shall be available to be the subject of an Award. In addition, Shares issued pursuant to Awards assumed or issued in substitution of other awards in connection with the acquisition by the Company of an unrelated entity shall not reduce the maximum number of Shares issuable under Section 4.1.

4.3 Shares Not Available for Subsequent Issuance . If any Shares subject to an Award are not delivered to a Participant because the Award is exercised through a reduction of Shares subject to the Award (i.e., “net exercised”), the number of Shares that are not delivered to the Participant shall not remain available for issuance under the Plan. Also, any Shares reacquired by the Company to satisfy tax withholding obligations pursuant to Section 10.8 or as consideration for the exercise of an Option shall not again become available for issuance under the Plan. In addition, the number of Shares with respect to which a SAR is exercised shall not again become available for issuance under the Plan.

4.4 Adjustments in Awards and Authorized Shares . 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, the Committee shall adjust the number and class of Shares which may be delivered under the Plan, the number, class, and price of Shares subject to outstanding Awards, and the numerical limit in Sections 5.1, 6.1., 7.1, and 8.1 in such manner as the Committee (in its sole discretion) shall determine to be appropriate to prevent the dilution or diminution of such Awards. In the case of Awards granted to Non-employee Directors, the foregoing adjustments shall be made by the Board. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

5.1 Grant of Options . Subject to the terms and provisions of the Plan, Options may be granted to Employees and Consultants at any time and from time to time as determined by the Committee in its sole discretion. The Committee, in its sole discretion, shall determine the number of Shares subject to each Option, provided that during any Fiscal Year, no Participant shall be granted Options covering more than [ ] Shares. The Committee may grant Incentive Stock Options, Non-qualified Stock Options, or a combination thereof. Non-Qualified Stock Options may be granted under the Plan pursuant to Section 9 to Non-employee Directors by the Board, which shall determine the terms of such Options.

5.2 Award Agreement . Each Option shall be evidenced by an Award Agreement that shall specify the Exercise Price, the expiration date of the Option, the number of Shares to which the Option pertains, any conditions to exercise of the Option, and such other terms and conditions as the Committee, in its discretion, shall determine. The Award Agreement shall specify whether the Option is intended to be an Incentive Stock Option or a Non-qualified Stock Option.

5.3 Exercise Price . Subject to the provisions of this Section 5.3, the Exercise Price for each Option shall be determined by the Committee in its sole discretion.

5.3.1 Non-qualified Stock Options . In the case of a Non-qualified Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.

5.3.2 Incentive Stock Options . In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date; provided, however, that if on the Grant Date, the Employee (together with persons whose stock ownership is attributed to the Employee pursuant to section 424(d) of the Code) owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price shall be not less than one hundred and ten percent (110%) of the Fair Market Value of a Share on the Grant Date.

5.3.3 Substitute Options . Notwithstanding the provisions of Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Employees or Consultants on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Committee, in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options.

5.4 Expiration of Options .

5.4.1 Expiration Dates . Subject to Section 10.13, except as set forth in each Award Agreement, each Option shall terminate no later than the first to occur of the following events:

(a) The expiration of seven (7) years from the Grant Date; or

(b) The expiration of three (3) months from the date of the Participant’s Termination of Service for a reason other than the Participant’s death, Disability or Retirement; or

(d) The expiration of three (3) years from the date of the Participant’s Retirement (subject to Section 5.8.2 regarding Incentive Stock Options); or

(e) The date of the Participant’s Termination of Service by the Company for cause (as determined by the Company).

5.4.2 Death of Participant . Subject to Section 10.13, notwithstanding Section 5.4.1, if a Participant who is an Employee dies prior to the expiration of his or her Options, his or her Options shall be exercisable until the expiration of three (3) years after the date of death. If a Participant who is a Consultant dies prior to the expiration of his or her Options, the Committee, in its discretion, may provide that his or her Options shall be exercisable for up to three (3) years after the date of death.

5.4.3 Committee Discretion . Subject to the limits of Sections 5.4.1, 5.4.2 and 10.13, the Committee, in its sole discretion, (a) shall provide in each Award Agreement when each Option expires and becomes unexercisable, and (b) may, after an Option is granted and before such Option expires, extend the maximum term of the Option (subject to Section 5.8.4 regarding Incentive Stock Options).

5.5 Exercisability of Options . Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall determine in its sole discretion. After an Option is granted, the Committee, in its sole discretion, may accelerate the exercisability of the Option. If a Participant dies while an Employee, the exercisability of his or her Options shall be fully accelerated to the date of Termination of Service.

5.6 Payment . Options shall be exercised by the Participant’s delivery of a written notice of exercise to the Secretary of the Company (or its designee), setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

Upon the exercise of any Option, the Exercise Price shall be payable to the Company in full in cash or its equivalent. The Committee, in its sole discretion, also may permit exercise (a) by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (b) by any other means which the Committee, in its sole discretion, determines both to provide legal consideration for the Shares and to be consistent with the purposes of the Plan.

As soon as practicable after receipt of a written notification of exercise and full payment for the Shares purchased, the Company shall deliver to the Participant (or the Participant’s designated broker) Share certificates (which may be in book entry form) representing such Shares.

5.7 Restrictions on Share Transferability . The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option as it may deem advisable, including, but not limited to, restrictions related to applicable Federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws.

5.8 Certain Additional Provisions for Incentive Stock Options .

5.8.1 Exercisability . The aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000.

5.8.2 Termination of Service . If any portion of an Incentive Stock Option is exercised more than three (3) months after the Participant’s Termination of Service for any reason other than Disability or death (unless (a) the Participant dies during such three-month period, and (b) the Award Agreement or the Committee permits later exercise), the portion so exercised shall be deemed a Non-qualified Stock Option.

5.8.3 Company and Subsidiaries Only . Incentive Stock Options may be granted only to persons who are employees of the Company or a Subsidiary on the Grant Date.

5.8.4 Expiration . No Incentive Stock Option may be exercised after the expiration of seven (7) years from the Grant Date; provided, however, that if the Option is granted to an Employee who, together with persons whose stock ownership is attributed to the Employee pursuant to section 424(d) of the Code, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of the stock of the Company or any of its Subsidiaries, the Option may not be exercised after the expiration of five (5) years from the Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1 Grant of SARs . Subject to the terms and conditions of the Plan, SARs may be granted to Employees and Consultants at any time and from time to time as shall be determined by the Committee, in its sole discretion. The Committee shall have complete discretion to determine the number of SARs granted to any Participant, provided that during any Fiscal Year, no Participant shall be granted SARs covering more than [ ] Shares.

6.2 Exercise Price and Other Terms . The Committee, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan. However, the exercise price of a SAR shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Grant Date.

6.3 SAR Agreement . Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Committee, in its sole discretion, shall determine.

6.4 Expiration of SARs . A SAR granted under the Plan shall expire upon the date determined by the Committee, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4 and 10.13 also shall apply to SARs.

6.5 Payment of SAR Amount . Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

(a) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

(b) The number of Shares with respect to which the SAR is exercised.

6.6 Payment Upon Exercise of SAR . At the discretion of the Committee, payment for a SAR may be in cash, Shares or a combination thereof.

SECTION 7

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

7.1 Grant of Restricted Stock and Restricted Stock Units . Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock or Restricted Stock Units to Employees and Consultants in such amounts as the Committee, in its sole discretion, shall determine. The Committee, in its sole discretion, shall determine the number of Shares to be granted to each Participant, provided that during any Fiscal Year, no Participant shall be granted more than [ ] Shares of Restricted Stock or Restricted Stock Units.

7.2 Restricted Stock and Restricted Stock Units Agreement . Each Award of Restricted Stock or Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares granted, any price to be paid for the Shares, and such other terms and conditions as the Committee, in its sole discretion, shall determine. Unless the Committee determines otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on such Shares have lapsed.

7.3 Transferability . Shares of Restricted Stock or Restricted Stock Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

7.4 Other Restrictions . The Committee, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock or Restricted Stock Units as it may deem advisable or appropriate, in accordance with this Section 7.4.

7.4.1 General Restrictions . The Committee may set restrictions based upon the achievement of specific performance objectives (Company-wide, business unit or individual), applicable federal or state securities laws, or any other basis determined by the Committee in its discretion.

7.4.2 Section 162(m) Performance Restrictions. For purposes of qualifying grants of Restricted Stock and Restricted Stock Units as “performance-based compensation” under section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock or Restricted Stock Units to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Restricted Stock or Restricted Stock Units which are intended to qualify as “performance-based

compensation” under section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure such qualification (e.g., in determining the Performance Goals).

7.4.3 Legend on Certificates . The Committee, in its discretion, may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. For example, the Committee may determine that some or all certificates representing Shares of Restricted Stock shall bear the following legend:

“The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Varex Imaging Corporation 2017 Omnibus Stock Plan, and in a Restricted Stock Agreement. A copy of the Plan and such Restricted Stock Agreement may be obtained from the Secretary of Varex Imaging Corporation”

7.5 Removal of Restrictions . Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan shall be released from escrow as soon as practicable after the last day of the Period of Restriction. The Committee, in its discretion, may accelerate the time at which any restrictions shall lapse, and remove any restrictions. After the restrictions have lapsed, the Participant shall be entitled to have any legend or legends under Section 7.4 removed from his or her Share certificate, and the Shares shall be freely transferable by the Participant.

7.6 Voting Rights . During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless otherwise provided in the Award Agreement.

7.7 Dividends and Other Distributions . During the Period of Restriction, Participants holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

7.8 Return of Restricted Stock to Company . On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall become available for grant under the Plan.

SECTION 8

PERFORMANCE UNITS AND PERFORMANCE SHARES

8.1 Grant of Performance Units and Shares . Performance Units and Performance Shares may be granted to Employees and Consultants at any time and from time to time, as shall be determined by the Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance Units and Performance Shares granted to any Participant, provided that during any Fiscal Year, no more than [ ] Performance Shares or Performance Units may be granted to any Participant.

8.2 Initial Value . Each Performance Unit shall have an initial value that is established by the Committee on or before the Grant Date, provided that such value shall not exceed the Fair Market Value of a Share on the Grant Date. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date.

8.3 Performance Objectives and Other Terms . The Committee shall set performance objectives in its discretion, which, depending on the extent to which they are met, will determine the number or value of Performance Units or Shares that will be paid out to the Participants. The Committee may set performance objectives based upon the achievement of Company-wide, business unit, or individual goals, or any other basis determined by the Committee in its discretion. The time period during which the performance objectives must be met shall be called the “Performance Period.” Each Award of Performance Units or Shares shall be evidenced by an Award Agreement that shall specify the Performance Period, and such other terms and conditions as the Committee, in its sole discretion, shall determine.

8.3.1 General Performance Objectives . The Committee may set performance objectives based upon the achievement of Company-wide, business unit or individual goals, or any other basis determined by the Committee in its discretion.

8.3.2 Section 162(m) Performance Objectives . For purposes of qualifying grants of Performance Units or Shares as “performance-based compensation” under section 162(m) of the Code, the Committee, in its discretion, may determine that the performance objectives applicable to Performance Units or Shares shall be based on the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Performance Units or Shares to qualify as “performance-based compensation” under section 162(m) of the Code. In granting Performance Units or Shares which are intended to qualify under section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Performance Units or Shares under section 162(m) of the Code (e.g., in determining the Performance Goals).

8.4 Earning of Performance Units and Performance Shares . After the applicable Performance Period has ended, the Participant shall be entitled to receive a payout of the number of Performance Units or Shares earned during the Performance Period, depending upon the extent to which the applicable performance objectives have been achieved. After the grant of a Performance Unit or Share, the Committee, in its sole discretion, may reduce or waive any performance objectives for Award.

8.5 Form and Timing of Payment . Payment of earned Performance Units or Performance Shares shall be made as soon as practicable after the expiration of the applicable Performance Period. The Committee, in its sole discretion, may pay such earned Awards in cash, Shares or a combination thereof.

8.6 Cancellation . On the date set forth in the Award Agreement, all unearned or unvested Performance Units or Performance Shares shall be forfeited to the Company, and again shall be available for grant under the Plan.

SECTION 9

NON-EMPLOYEE DIRECTORS

9.1 Limitation on Grants to Non-Employee Directors . The maximum number of Shares subject to stock awards granted during a single fiscal year under the Plan or otherwise, taken together with any cash fees paid during such fiscal year for services on the Board, will not exceed $[ ] in total value for any Non-employee Director serving as the lead director of the Board or chair of the Board and $[ ] in total value for any other Non-employee Director (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). Such applicable limit will include the value of any stock awards that are received in lieu of all or a portion of any annual committee cash retainers or other similar cash based payments.

9.2 Non-Employee Director Options . Subject to the terms and provisions of the Plan, Non-qualified Stock Options may be issued to Non-employee Directors at any time and from time to time, as determined by the Board in its sole discretion, including the number of Shares subject to each Option, and the terms and conditions of such Awards.

9.3 Terms of Options .

9.3.1 Option Agreement . Each Option granted pursuant to this Section 9 shall be evidenced by a written stock option agreement, which shall be executed by the Non-employee Director and the Company.

9.3.2 Exercise Price . The Exercise Price for the Shares subject to each Option granted pursuant to this Section 9 shall be one hundred percent (100%) of the Fair Market Value of such Shares on the Grant Date.

9.3.3 Exercisability . Unless provided otherwise in an Award Agreement, each Option granted pursuant to this Section 9 shall be fully exercisable on the Grant Date.

9.3.4 Expiration of Options . Subject to Section 10.13, unless provided otherwise in an Award Agreement, each Option shall terminate upon the first to occur of the following events:

(a) The expiration of seven (7) years from the Grant Date; or

(b) The expiration of three (3) months from the date of the Non-employee Director’s Termination of Service for a reason (including, but not limited to the Non-Employee Director’s resignation) other than death, Disability, completion of the Participant’s term as a Director or Retirement; or

(c) The expiration of three (3) years from the date of the Non-employee Director’s Termination of Service by reason of completion of the Participant’s term as a Director, Disability or Retirement.

9.3.5 Death of Director . Subject to Section 10.13, notwithstanding Section 9.3.4, if a Non-employee Director dies prior to the expiration of his or her options in accordance with Section 9.3.4, his or her options shall terminate three (3) years after the date of his or her death.

9.3.6 Not Incentive Stock Options . Options granted pursuant to this Section 9 shall not be designated as Incentive Stock Options.

9.3.7 Other Terms . Unless provided otherwise in an Award Agreement, all provisions of the Plan not inconsistent with this Section 9 shall apply to Options granted to Non-employee Directors; provided, however, that Section 5.2 (relating to the Committee’s discretion to set the terms and conditions of Options) shall be inapplicable with respect to Non-employee Directors.

9.4 Substitute Options . Notwithstanding the provisions of Section 9.3.2, in the event that the Company or an Affiliate consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Non-employee Directors on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Committee, in its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options.

9.5 Elections by Non-employee Directors . Pursuant to such procedures as the Board (in its discretion) may adopt from time to time, each Non-employee Director may elect to forego receipt of all or a portion of the annual retainer, committee chair fees, meeting attendance fees and other cash compensation otherwise due to the Non-employee Director in exchange for Shares. The number of Shares received by any Non-employee Director shall equal the amount of foregone compensation divided by the Fair Market Value of a Share on the date that the compensation otherwise would have been paid to the Non-employee Director, rounded up to the nearest whole number of Shares. In addition, pursuant to such procedures as the Board (in its discretion) may adopt from time to time, each Non-employee Director may elect to forego receipt of all or a portion of the annual retainer, committee chair and meeting attendance fees and other cash compensation otherwise due to the Non-employee Director in exchange for an Option to purchase Shares. The number of Shares subject to such an Option received by any Non-employee Director shall equal the amount of foregone compensation multiplied by four (4) and divided by the Fair Market Value of a Share on the date that the compensation otherwise would have been paid to the Non-employee Director, rounded up to the nearest whole number of Shares. All Options granted pursuant to this Section 9.5 shall be subject to the restrictions of Section 9.2.

9.6 Deferred Stock Units . Subject to the terms and provisions of the Plan, Awards of Deferred Stock Units may be granted to Non-employee Directors at any time and from time to time, as determined by the Board in its sole discretion, including the number of Deferred Stock Units subject to each Award and the terms and conditions of such Awards.

9.7 Terms of Deferred Stock Units .

9.7.1 Deferred Stock Unit Agreement . Deferred Stock Units granted pursuant to Section 9.6 shall be evidenced by a written Award Agreement, which shall be executed by the Non-employee Director and the Company.

9.7.2 Vesting . Unless otherwise provided in an Award Agreement, Awards of Deferred Stock Units shall vest over a period of not less than one year from the date of grant, and may vest pro rata over such time. Vesting may be accelerated in limited situations such as death of the Non-employee Director and change in control of the Company.

9.7.3 Payment . Except as may be provided in an Award Agreement, Deferred Stock Unit Awards will be paid in Shares. Awards of Deferred Stock Units may be paid in a lump sum or in installments or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.

9.7.4 Other Terms . Unless provided otherwise in an Award Agreement, all provisions of the Plan applicable to Restricted Stock Units not inconsistent with Section 9.6 and this Section 9.7 shall apply to Deferred Stock Units granted to Non-employee Directors.

SECTION 10

MISCELLANEOUS

10.1 No Effect on Employment or Service . Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Service. Employment with the Company and its Affiliates is on an at-will basis only.

10.2 Participation . No Employee or Consultant shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

10.3 Indemnification . Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award Agreement, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

10.4 Successors . All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business or assets of the Company.

10.5 Beneficiary Designations . If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in the event of the Participant’s death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate and, subject to the terms of the Plan and of the applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or executor of the Participant’s estate.

10.6 Nontransferability of Awards . Except as provided below, no Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 10.5. All rights with respect to an Award granted to a Participant shall be available during his or her lifetime only to the Participant. Notwithstanding the foregoing, the Committee, or the Board in the case of Awards to Non-Employee Directors, may, in its sole discretion and to the extent permitted by applicable law, permit the transfer of an Award to an individual or entity other than the Company (each transferee thereof a “Permitted Assignee”), subject to such restrictions as the Committee, or the Board, in its sole discretion may impose.

10.7 No Rights as Stockholder . Except to the limited extent provided in Sections 7.6 and 7.7, no Participant (nor any beneficiary) shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable pursuant to an Award (or exercise thereof), 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 Participant (or beneficiary).

10.8 Withholding Requirements . Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof). Notwithstanding any contrary provision of the Plan, if a Participant fails to remit to the Company such withholding amount within the time period specified by the Committee (in its discretion), the Participant’s Award may, in the Committee’s discretion, be forfeited and in such case the Participant shall not receive any of the Shares subject to such Award.

10.9 Withholding Arrangements . The Committee, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit or require a Participant to satisfy all or part of the required tax withholding obligations in connection with an Award by (a) having the Company withhold otherwise deliverable Shares, or (b) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld, provided, however, that the amount of tax withholding to be satisfied by withholding and/or delivering Shares will be limited to the extent necessary to avoid adverse accounting consequences, including but not limited to the Award being classified as a liability award. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the taxes are required to be withheld.

10.10 Deferrals . The Committee, in its sole discretion, may permit a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be delivered to a Participant under the Plan. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Committee in its sole discretion. Notwithstanding the foregoing, any deferral under this Section 10.10 shall be made in accordance with the provisions of section 409A of the Code and the applicable guidance issued by the Secretary of the Treasury thereunder.

10.11 Dividend Equivalents . Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, or the Board in the case of Awards to Non-Employee Directors, be entitled to receive, currently or on a deferred basis, cash or stock dividends, or cash payments in amounts equivalent to cash or stock dividends on Shares (“dividend equivalents”) with respect to the number of Shares covered by the Award, as determined by the Committee, or the Board in the case of Non-Employee Directors, in its sole discretion, and the Committee or Board may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.

10.12 Prohibition on Repricings . Options and SARs may not be repriced without the approval of the Company’s stockholders. For this purpose, “reprice” means that that the Company has: (a) lowered or reduced the Exercise Price of outstanding Options and/or outstanding SARs after they have been granted, (b) canceled an Option and/or a SAR when the applicable Exercise Price exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award and (c) taken any other action with respect to an Option and/or a SAR that would be treated as a repricing under the rules and regulations of the principal securities market on which the Shares are traded. An adjustment pursuant to Section 4.4 shall not be treated as a repricing.

10.13 Maximum Term of Options and SARs . Notwithstanding anything in Sections 5, 6 and 9 to the contrary, no Option or SAR shall have a term that exceeds seven (7) years from the Grant Date.

10.14 Restatement of Financial Results . All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In the event that the Company has not adopted such required policy and notwithstanding anything to the contrary set forth in the Plan or any Award Agreement, in the event of a restatement of incorrect financial results, the Board shall review the conduct of executive officers in relation to the restatement and if the Board determines that an executive officer has engaged in misconduct or other violations of the Company’s code of ethics in connection with the restatement, the Board would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the Plan that is greater than would have been paid or awarded if calculated based on the restated financial results, to the extent not prohibited by governing law. For this purpose, the

term “executive officer” means executive officers as defined by the Securities Exchange Act of 1934, as amended. Such action by the Board would be in addition to any other actions the Board or the Company may take under the Company’s policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities.

SECTION 11

CORPORATE TRANSACTIONS

11.1 Effect of Corporate Transaction on Awards . Except as set forth in an Award Agreement, upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of Shares or other securities of the Company; (c) a sale of all or substantially all the business, stock or assets of the Company; (d) a dissolution of the Company; or (e) any event in which the Company does not survive (or does not survive as a public company in respect of its Shares), then any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Awards outstanding under the 2005 Plans or may substitute similar stock awards for Awards outstanding under the 2005 Plans (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the transaction), and any reacquisition or repurchase rights held by the Company in respect of Shares issued pursuant to Awards may be assigned by the Company to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) in connection with such transaction. Except as set forth in an Award Agreement, if the Committee does not provide for the assumption, continuation or substitution of Awards, each Award shall fully vest and terminate upon the related event, provided that holders of Options or SARs be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise their outstanding vested Options and SARs before the termination of such Awards; provided, however, that any payout in connection with a terminated award shall comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder.

11.2 Authority of the Committee . Notwithstanding the foregoing, except as set forth in an Award Agreement, in the event that an Award would otherwise terminate upon the effective time of any transaction described in 11.1, the Committee may provide for a payment in such form as may be determined by the Committee, equal in value to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise or vesting of the Award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise, and provided further, that at the discretion of the Committee, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of Shares in connection with the transaction; provided, however, that any payout in connection with a terminated award shall comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder. Without limiting the generality of Section 3, any good faith determination by the Committee pursuant to its authority under this Section 11.2 shall be conclusive and binding on all persons.

SECTION 12

AMENDMENT, TERMINATION AND DURATION

12.1 Amendment, Suspension or Termination . The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Award theretofore issued to such Participant. Any amendment shall also, to the extent required by applicable law or regulation, be subject to stockholder approval. No Award may be granted during any period of suspension or after termination of the Plan.

12.2 Duration of the Plan . This Plan shall, subject to Section 12.1 (regarding the Board’s right to amend or terminate the Plan), remain in effect for ten (10) years from the Adoption Date. Without further stockholder approval, no Incentive Stock Option may be granted under the Plan after ten (10) years from the Adoption Date.

SECTION 13

LEGAL CONSTRUCTION

13.1 Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

13.2 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

13.3 Requirements of Law . The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

13.4 Governing Law . The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.

13.5 Captions . Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.

EXECUTION

IN WITNESS WHEREOF, Varex Imaging Corporation, by its duly authorized officer, has executed the Plan on the date indicated below.

Exhibit 10.9

FORM OF

VAREX IMAGING CORPORATION

2017 EMPLOYEE STOCK PURCHASE PLAN

VAREX IMAGING CORPORATION

2017 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1

PURPOSE

The Varex Imaging Corporation 2017 Employee Stock Purchase Plan was adopted by the Board on [ ] (the “ Adoption Date ”), effective on the day immediately prior to the spin-off of the Company (the “ Effective Date ”) from Varian Medical Systems, Inc. (“ Varian ”), and approved by Varian, as the sole stockholder of the Company on [ ].

The purpose of the Plan is to provide eligible employees of the Company and its participating Subsidiaries with the opportunity to purchase Common Stock through payroll deductions. The Plan is intended to qualify as an employee stock purchase plan under Section 423(b) of the Code.

SECTION 2

DEFINITIONS

2.1 “ 1934 Act ” means the Securities Exchange Act of 1934, as amended. Reference to a specific Section of the 1934 Act or regulation thereunder shall include such Section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.

2.2 “ Board ” means the Board of Directors of the Company.

2.3 “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific Section of the Code or regulation thereunder shall include such Section or regulation, any valid regulation promulgated under such Section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such Section or regulation.

2.4 “ Committee ” shall mean the committee appointed by the Board to administer the Plan. Any member of the Committee may resign at any time by notice in writing mailed or delivered to the Secretary of the Company. As of the Effective Date, the Plan shall be administered by the Compensation and Management Development Committee of the Board.

2.5 “ Common Stock ” means the common stock of the Company.

2.6 “ Company ” means Varex Imaging Corporation, a Delaware corporation.

2.7 “ Compensation ” means a Participant’s regular wages. The Committee, in its discretion, may (on a uniform and nondiscriminatory basis) establish a different definition of Compensation prior to an Enrollment Date for all options to be granted on such Enrollment Date.

2.8 “ Eligible Employee ” means every Employee of an Employer, except, subject to requirements of Section 423 of the Code, (a) any Employee who immediately after the grant of an option under the Plan, would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company (including stock attributed to such Employee pursuant

to Section 424(d) of the Code), (b) any Employee not scheduled to work at least five months every calendar year or at least 20 hours per week, or (c) in the Committee’s sole discretion, “highly compensated employees” (within the meaning of Section 414(q) of the Code), and/or any other Employees who may be excluded from participation in the Plan under Section 423 of the Code.

2.9 “ Employee ” means an individual who is a common-law employee of any Employer, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

2.10 “ Employer ” or “ Employers ” means any one or all of the Company, and those Subsidiaries which, with the consent of the Board, have adopted the Plan.

2.11 “ Enrollment Date ” means such dates as may be determined by the Committee (in its discretion and on a uniform and nondiscriminatory basis) from time to time on which Eligible Employees become Participants in the Plan.

2.12 “ Grant Date ” means any date on which a Participant is granted an option under the Plan.

2.13 “ Offering Period ” means the period during which an option will be in effect, which period will not exceed 27 months beginning with the Grant Date. The Committee, in its discretion, may provide for an Offering Period with more than one Purchase Date and a “reset feature”.

2.14 “ Participant ” means an Eligible Employee who (a) has become a Participant in the Plan pursuant to Section 4.1 and (b) has not ceased to be a Participant pursuant to Section 8.

2.15 “ Plan ” means the Varex Imaging Corporation Employee Stock Purchase Plan, as set forth in this instrument and as hereafter amended from time to time.

2.16 “ Purchase Date ” means such date that shares of Common Stock are purchased under an option as may be determined by the Committee (in its discretion and on a uniform and nondiscriminatory basis) from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date.

2.17 “ Subsidiary ” means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

SECTION 3

SHARES SUBJECT TO THE PLAN

3.1 Number Available . The number of shares of Common Stock subject to the Plan shall be [ ] (subject to adjustment under Section 3.2). If any option granted under the Plan terminates without having been exercised in full, the shares of Common Stock not purchased under such option will again become available for issuance under the Plan. The stock purchasable under the Plan may be authorized but unissued shares, treasury shares or reacquired shares, including shares repurchased by the Company on the open market.

3.2 Adjustments . In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, offering of rights or other

similar change in the capital structure of the Company, the Board shall make appropriate adjustments in the number, kind and purchase price of the shares available for purchase under the Plan and in the maximum number of shares subject to any option under the Plan.

SECTION 4

ENROLLMENT

4.1 Participation . Each Eligible Employee may elect to become a Participant by enrolling or re-enrolling in the Plan effective as of any Enrollment Date. In order to enroll, an Eligible Employee must complete and submit to the Company an enrollment form in such form, manner and by such deadline as may be specified by the Committee from time to time (in its discretion and on a nondiscriminatory basis). Any Participant whose option expires and who has not withdrawn from the Plan automatically will be re-enrolled in the Plan on the Enrollment Date immediately following the Purchase Date on which his or her option expires.

4.2 Payroll Withholding . On his or her enrollment form, each Participant must elect to make Plan contributions via payroll withholding from his or her Compensation pursuant to such procedures as the Committee may specify from time to time. A Participant may elect to have withholding equal to a whole percentage from 1% to 10% (or such lesser, or greater, percentage that the Committee may establish from time to time for all options to be granted on any Enrollment Date) of his or her Compensation. A Participant may elect to increase or decrease his or her rate of payroll withholding by submitting a new enrollment form in accordance with such procedures as may be established by the Committee from time to time. A Participant may stop his or her payroll withholding by submitting a new enrollment form in accordance with such procedures as may be established by the Committee from time to time. In order to be effective as of a specific date, an enrollment form must be received by the Company no later than the deadline specified by the Committee, in its discretion and on a nondiscriminatory basis, from time to time. Any Participant who is automatically re-enrolled in the Plan will be deemed to have elected to continue his or her contributions at the percentage last elected by the Participant.

SECTION 5

OPTIONS TO PURCHASE COMMON STOCK

5.1 Grant of Option . On each Enrollment Date on which the Participant enrolls or re-enrolls in the Plan, he or she shall be granted an option to purchase shares of Common Stock.

5.2 Duration of Option . Each option granted under the Plan shall expire upon the earliest to occur of (a) the completion of the purchase of shares on the last Purchase Date in the Offering Period or (b) the date on which the Participant ceases to be such for any reason.

5.3 Number of Shares Subject to Option . The number of shares available for purchase by each Participant under the option will be established by the Committee from time to time prior to an Enrollment Date for all options to be granted on such Enrollment Date.

5.4 Other Terms and Conditions . Each option shall be subject to the following additional terms and conditions:

(a) payment for shares purchased under the option shall be made only through payroll withholding under Section 4.2;

(b) purchase of shares upon exercise of the option will be accomplished only in accordance with Section 6.1;

(d) the option in all respects shall be subject to such other terms and conditions (applied on a uniform and nondiscriminatory basis), as the Committee shall determine from time to time in its discretion.

SECTION 6

PURCHASE OF SHARES

6.1 Exercise of Option . Subject to Section 6.2, on each Purchase Date, the funds then credited to each Participant’s account shall be used to purchase whole shares of Common Stock. Any cash remaining after whole shares of Common Stock have been purchased shall be carried forward in the Participant’s account for the purchase of shares on the next Purchase Date. The price per share of the shares purchased under any option granted under the Plan shall be eighty-five percent (85%) of the lower of:

(a) the last quoted per share selling price on an established securities market for shares of Common Stock on the Grant Date for such option, or if there were no sales on such date, the last quoted per share price for shares on the most recent preceding date on which there were sales of shares of Common Stock; or

(b) the last quoted per share selling price on an established securities market for shares of Common Stock on the Purchase Date or if there were no sales on such date, the last quoted per share price for shares on the most recent preceding date on which there were sales of shares of Common Stock.

Notwithstanding the foregoing, the maximum number of shares purchasable by any Participant on any one Purchase Date for any Offering Period shall not exceed [ ] shares (subject to adjustment under Section 3.2 and change pursuant to Section 5.3), and any amount not applied to the purchase of shares on behalf of a Participant by reason of such limitation shall be refunded to that Participant (without interest thereon).

6.2 Delivery of Shares . As directed by the Committee in its sole discretion, shares purchased on any Purchase Date shall be delivered directly to the Participant or to a custodian or broker (if any) designated by the Committee to hold shares for the benefit of the Participants. As determined by the Committee from time to time, such shares shall be delivered as physical certificates or by means of a book entry system.

6.3 Exhaustion of Shares . If at any time the shares available under the Plan are over-enrolled, enrollments shall be reduced proportionately to eliminate the over-enrollment. Such reduction method shall be “bottom up,” with the result that all option exercises for one share shall be satisfied first, followed by all exercises for two shares, and so on, until all available shares have been exhausted. Any funds that, due to over-enrollment, cannot be applied to the purchase of whole shares shall be refunded to the Participants (without interest thereon).

6.4 Accrual Limitations . No Participant shall be entitled to accrue rights to acquire shares of Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such

accrual, when aggregated with rights accrued under other purchase rights outstanding under this Plan and similar rights accrued under other employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company or any of its Subsidiaries, would otherwise permit such Participant to purchase more than Twenty-Five Thousand U.S. Dollars (US$25,000) worth of stock of the Company or any Subsidiary (determined on the basis of the fair market value of such stock on the date or dates such rights are granted to the Participant) for each calendar year such rights are at any time outstanding. For purposes of applying the accrual limitations of this Section 6.4, the right to acquire shares of Common Stock pursuant to each purchase right outstanding under the Plan shall accrue as follows: (i) the right to acquire shares of Common Stock under each such purchase right shall accrue as and when the purchase right first becomes exercisable during the calendar year; and (ii) no right to acquire shares of Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Twenty-Five Thousand U.S. Dollars (US$25,000) worth of shares of Common Stock (determined on the basis of the fair market value on the date or dates of grant) pursuant to one or more purchase rights held by the Participant during such calendar year. If by reason of this Section 6.4, one or more purchase rights of a Participant do not accrue for a particular purchase period, then the payroll deductions which the Participant made during that purchase period with respect to such purchase rights shall be promptly refunded in the currency originally collected (without interest thereon). In the event there is any conflict between the provisions of this Section 6.4 and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Section 6.4 shall be controlling.

SECTION 7

WITHDRAWAL

7.1 Withdrawal . A Participant may withdraw from the Plan by submitting a completed Employee Stock Purchase Plan Authorization form to the Company in such form and manner prescribed by the Company (in its discretion and on a uniform and nondiscriminatory basis). A withdrawal will be effective only if it is received by the Company by the deadline specified by the Committee (in its discretion and on a uniform and nondiscriminatory basis) from time to time. When a withdrawal becomes effective, the Participant’s payroll contributions shall cease and all amounts then credited to the Participant’s account shall be distributed to him or her (without interest thereon).

SECTION 8

CESSATION OF PARTICIPATION

8.1 Termination of Status as Eligible Employee . A Participant shall cease to be a Participant immediately upon the cessation of his or her status as an Eligible Employee (for example, because of his or her termination of employment from all Employers for any reason). As soon as practicable after such cessation, the Participant’s payroll contributions shall cease and all amounts then credited to the Participant’s account shall be distributed to him or her (without interest thereon). For purposes of determining whether a Participant ceases to be an Eligible Employee, a Participant is still considered to be employed by an Employer if such individual is on a Company-approved leave of absence; provided however , that if such leave of absence exceeds three months, and the Participant’s right to reemployment is not guaranteed either by statute or by contract, the Participant shall cease to be an Eligible Employee on the first day following such three month period.

SECTION 9

DESIGNATION OF BENEFICIARY

9.1 Designation . Each Participant may, pursuant to such uniform and nondiscriminatory procedures as the Committee may specify from time to time, designate one or more beneficiaries to

receive any amounts credited to the Participant’s account at the time of his or her death. Notwithstanding any contrary provision of this Section 9, Sections 9.1 and 9.2 shall be operative only after (and for so long as) the Committee determines (on a uniform and nondiscriminatory basis) to permit the designation of beneficiaries.

9.2 Changes . A Participant may designate different beneficiaries (or may revoke a prior beneficiary designation) at any time by delivering a new designation (or revocation of a prior designation) in like manner. Any designation or revocation shall be effective only if it is received by the Committee. However, when so received, the designation or revocation shall be effective as of the date the designation or revocation is executed (whether or not the Participant still is living), but without prejudice to the Committee on account of any payment made before the change is recorded. The last effective designation received by the Committee shall supersede all prior designations.

9.3 Failed Designations . If a Participant dies without having effectively designated a beneficiary, or if no beneficiary survives the Participant, the Participant’s account shall be payable to his or her estate.

SECTION 10

ADMINISTRATION

10.1 Plan Administrator . The Plan shall be administered by the Committee. The Committee shall have the authority to control and manage the operation and administration of the Plan.

10.2 Actions by Committee . Each decision of a majority of the members of the Committee then in office shall constitute the final and binding act of the Committee. The Committee may act with or without a meeting being called or held and shall keep minutes of all meetings held and a record of all actions taken by written consent.

10.3 Powers of Committee . The Committee shall have all powers and discretion necessary or appropriate to supervise the administration of the Plan and to control its operation in accordance with its terms, including, but not by way of limitation, the following discretionary powers:

(a) To interpret and determine the meaning and validity of the provisions of the Plan and the options and to determine any question arising under, or in connection with, the administration, operation or validity of the Plan or the options;

(b) To determine any and all considerations affecting the eligibility of any employee to become a Participant or to remain a Participant in the Plan;

(d) To determine the time or times when, and the number of shares for which options shall be granted, and the terms of each Offering Period;

(e) To establish and revise an accounting method or formula for the Plan;

(f) To designate a custodian or broker to receive shares purchased under the Plan and to determine the manner and form in which shares are to be delivered to the designated custodian or broker;

(g) To determine the status and rights of Participants and their beneficiaries or estates;

(h) To employ such brokers, counsel, agents and advisers, and to obtain such broker, legal, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan;

(i) To establish, from time to time, rules for the performance of its powers and duties and for the administration of the Plan;

(j) To adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by employees who are foreign nationals or employed outside of the United States;

(k) To delegate to any one or more of its members or to any other person, severally or jointly, the authority to perform for and on behalf of the Committee one or more of the functions of the Committee under the Plan.

10.4 Decisions of Committee . All actions, interpretations, and decisions of the Committee shall be conclusive and binding on all persons, and shall be given the maximum possible deference allowed by law.

10.5 Administrative Expenses . All expenses incurred in the administration of the Plan by the Committee, or otherwise, including legal fees and expenses, shall be paid and borne by the Employers, except any stamp duties or transfer taxes applicable to the purchase of shares may be charged to the account of each Participant. Any brokerage fees for the purchase of shares by a Participant, fees and taxes (including brokerage fees) for the transfer, sale or resale of shares by a Participant, or the issuance of physical share certificates, shall be borne solely by the Participant.

10.6 Eligibility to Participate . No member of the Committee who is also an employee of an Employer shall be excluded from participating in the Plan if otherwise eligible, but he or she shall not be entitled, as a member of the Committee, to act or pass upon any matters pertaining specifically to his or her own account under the Plan.

10.7 Indemnification . Each of the Employers shall, and hereby does, indemnify and hold harmless the members of the Committee and the Board, from and against any and all losses, claims, damages or liabilities (including attorneys’ fees and amounts paid, with the approval of the Board, in settlement of any claim) arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

SECTION 11

CORPORATE TRANSACTION

11.1 Effect of Corporate Transaction on Options. Upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of shares of Common Stock or other securities of the Company; (c) a sale of all or substantially all the business, stock or assets of the Company; (d) a dissolution of the Company; or (e) any event in which the Company does not survive (or does not survive as a public company in respect of its shares of Common Stock), then (i) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding options or may substitute similar

rights (including a right to acquire the same consideration paid to the stockholders in the transaction) for outstanding options, or (ii) if any surviving or acquiring corporation (or the surviving or acquiring corporation’s parent company) does not assume or continue such options or does not substitute similar rights for such options, then the Participants’ accumulated contributions will be used to purchase shares of Common Stock within ten business days prior to the transaction through the exercise of outstanding options on such actual date as determined by the Committee in its discretion, and all such outstanding options will terminate immediately after such purchase.

SECTION 12

AMENDMENT, TERMINATION, AND DURATION

12.1 Amendment, Suspension, or Termination . The Board, in its sole discretion, may amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason. If the Plan is terminated, the Board, in its discretion, may elect to terminate all outstanding options either immediately or upon completion of the purchase of shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all amounts then credited to Participants’ accounts which have not been used to purchase shares shall be returned to the Participants (without interest thereon) as soon as administratively practicable.

12.2 Duration . The Plan shall commence on the Effective Date, and subject to Section 12.1 (regarding the Board’s right to amend, suspend or terminate the Plan), shall remain in effect for ten (10) years from the Adoption Date.

SECTION 13

GENERAL PROVISIONS

13.1 Participation by Subsidiaries . One or more Subsidiaries of the Company may become participating Employers by adopting the Plan and obtaining approval for such adoption from the Board. By adopting the Plan, a Subsidiary shall be deemed to agree to all of its terms, including (but not limited to) the provisions granting exclusive authority (a) to the Board to amend the Plan, and (b) to the Committee to administer and interpret the Plan. An Employer may terminate its participation in the Plan at any time. The liabilities incurred under the Plan to the Participants employed by each Employer shall be solely the liabilities of that Employer, and no other Employer shall be liable for benefits accrued by a Participant during any period when he or she was not employed by such Employer.

13.2 Inalienability . In no event may either a Participant, a former Participant or his or her beneficiary, spouse or estate sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any right or interest under the Plan; and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process. Accordingly, for example, a Participant’s interest in the Plan is not transferable pursuant to a domestic relations order.

13.3 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

13.4 Requirements of Law . The granting of options and the issuance of shares shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or securities exchanges as the Committee may determine are necessary or appropriate.

13.5 Compliance with Rule 16b-3 . Any transactions under this Plan with respect to officers (as defined in Rule 16a-1 promulgated under the 1934 Act) are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Notwithstanding any contrary provision of the Plan, if the Committee specifically determines that compliance with Rule 16b-3 no longer is required, all references in the Plan to Rule 16b-3 shall be null and void.

13.6 No Enlargement of Employment Rights . Neither the establishment or maintenance of the Plan, the granting of options, the purchase of shares, nor any action of any Employer or the Committee, shall be held or construed to confer upon any individual any right to be continued as an employee of the Employer nor, upon dismissal, any right or interest in any specific assets of the Employers other than as provided in the Plan. Each Employer expressly reserves the right to discharge any employee at any time, with or without cause.

13.7 Apportionment of Costs and Duties . All acts required of the Employers under the Plan may be performed by the Company for itself and its Subsidiaries, and the costs of the Plan may be equitably apportioned by the Committee among the Company and the other Employers. Whenever an Employer is permitted or required under the terms of the Plan to do or perform any act, matter or thing, it shall be done and performed by any officer or employee of the Employers who is thereunto duly authorized by the Employers.

13.8 Construction and Applicable Law . The Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code. Any provision of the Plan which is inconsistent with Section 423(b) of the Code shall, without further act or amendment by the Company or the Committee, be reformed to comply with the requirements of Section 423(b). The provisions of the Plan shall be construed, administered and enforced in accordance with such Section and with the laws of the State of Delaware (excluding Delaware’s conflict of laws provisions).

13.9 Captions . The captions contained in and the table of contents prefixed to the Plan are inserted only as a matter of convenience, and in no way define, limit, enlarge or describe the scope or intent of the Plan nor in any way shall affect the construction of any provision of the Plan.

EXECUTION

IN WITNESS WHEREOF, Varex Imaging Corporation, by its duly authorized officer, has executed this Plan.

Exhibit 10.10

FORM OF

VAREX IMAGING CORPORATION

MANAGEMENT INCENTIVE PLAN

(Effective as of [ ])

TABLE OF CONTENTS


		Page
SECTION 1	BACKGROUND, PURPOSE AND DURATION		1

1.1	Effective Date		1

1.2	Purpose of the Plan		1

SECTION 2	DEFINITIONS		1

2.1	“Actual Award		1

2.2	“Affiliate		1

2.3	“Base Salary		1

2.4	“Board		1

2.5	“Code		1

2.6	“Committee		1

2.7	“Company		2

2.8	“Disability		2

2.9	“EBIT		2

2.10	“EBITDA		2

2.11	“Earnings Per Share		2

2.12	“Employee		2

2.13	“Exchange Act		2

2.14	“Fair Market Value		2

2.15	“Fiscal Year		2

2.16	“Maximum Award		2

2.17	“Net Income		2

2.18	“Net Orders		2

2.19	“Omnibus Plan		2

2.20	“Operating Cash Flow		2

2.21	“Participant		3

2.22	“Payout Formula		3

2.23	“Performance Goals		3

2.24	“Performance Period		3

2.25	“Plan		3

-i-

TABLE OF CONTENTS

(Continued)


		Page
2.26	“Retirement		3

2.27	“Return on Assets		3

2.28	“Return on Equity		3

2.29	“Return on Sales		3

2.30	“Revenue		4

2.31	“Shareholder Return		4

2.32	“Shares		4

2.33	“Target Award		4

SECTION 3	SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS		4

3.1	Selection of Participants		4

3.2	Determination of Performance Goals		4

3.3	Determination of Target Awards		4

3.4	Determination of Payout Formula or Formulae		4

3.5	Determination of Actual Awards		4

SECTION 4	PAYMENT OF AWARDS		5

4.1	Right to Receive Payment		5

4.2	Timing of Payment		5

4.3	Form of Payment		5

4.4	Payment in the Event of Death		5

4.5	Recoupment Policy		5

SECTION 5	ADMINISTRATION		6

5.1	Committee is the Administrator		6

5.2	Committee Authority		6

5.3	Decisions Binding		6

5.4	Delegation by the Committee		6

SECTION 6	GENERAL PROVISIONS		6

6.1	Tax Withholding		6

6.2	No Effect on Employment or Service		6

-ii-

TABLE OF CONTENTS

(Continued)


		Page
6.3	Participation		7

6.4	Indemnification		7

6.5	Successors		7

6.6	Beneficiary Designations		7

6.7	Nontransferability of Awards		7

6.8	Deferrals		7

SECTION 7	AMENDMENT, TERMINATION AND DURATION		7

7.1	Amendment, Suspension or Termination		7

7.2	Duration of the Plan		8

SECTION 8	LEGAL CONSTRUCTION		8

8.1	Gender and Number		8

8.2	Severability		8

8.3	Requirements of Law		8

8.4	Governing Law		8

8.5	Captions		8

-iii-

VAREX IMAGING CORPORATION

MANAGEMENT INCENTIVE PLAN

(Effective as of [ ])

SECTION 1

BACKGROUND, PURPOSE AND DURATION

1.1 Effective Date . The Plan was adopted by the Board on [ ], effective on the day immediately prior to the spin-off of the Company from Varian Medical Systems, Inc. (“ Varian ”), and approved by Varian, as the sole stockholder of the Company on [ ].

1.2 Purpose of the Plan . The Plan is intended to increase stockholder value and the success of the Company by motivating key executives (1) to perform to the best of their abilities, and (2) to achieve the Company’s objectives. The Plan’s goals are to be achieved by providing such executives with incentive awards based on the achievement of goals relating to the performance of the Company and its business units. The Plan is intended to permit the grant of awards that qualify as performance-based compensation under section 162(m) of the Code.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

2.1 “ Actual Award ” means as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period. Each Actual Award is determined by the Payout Formula for the Performance Period, subject to the Committee’s authority under Section 3.5 to reduce the award otherwise determined by the Payout Formula.

2.2 “ Affiliate ” means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.

2.3 “ Base Salary ” means as to any Performance Period, the Participant’s annualized salary rate on the last day of the Performance Period. Such Base Salary shall be before both (a) deductions for taxes or benefits, and (b) deferrals of compensation pursuant to Company-sponsored plans.

2.4 “ Board ” means the Board of Directors of the Company.

2.5 “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.6 “ Committee ” means the committee appointed by the Board (pursuant to Section 5.1) to administer the Plan.

2.7 “ Company ” means Varex Imaging Corporation, a Delaware corporation, or any successor thereto.

2.8 “ Disability ” means a permanent and total disability determined in accordance with uniform and nondiscriminatory standards adopted by the Committee from time to time.

2.9 “ EBIT ” means as to any Performance Period, the Company’s or a business unit’s income before reductions for interest and taxes, determined in accordance with generally accepted accounting principles.

2.10 “ EBITDA ” means as to any Performance Period, the Company’s or a business unit’s income before reductions for interest, taxes, depreciation and amortization, determined in accordance with generally accepted accounting principles.

2.11 “ Earnings Per Share ” means as to any Performance Period, the Company’s or a business unit’s Net Income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles.

2.12 “ Employee ” means any employee of the Company or of an Affiliate, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

2.13 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.14 “ Fair Market Value ” means the closing sales price for Shares as quoted on any established securities market, or if there is no closing sales price for Shares on the applicable date, the closing sales price for Shares on the last preceding date for which such quotation exists.

2.15 “ Fiscal Year ” means any fiscal year of the Company.

2.16 “ Maximum Award ” means as to any Actual Award to any Participant for any Performance Period, $3 million.

2.17 “ Net Income ” means as to any Performance Period, the Company’s or a business unit’s income after taxes, determined in accordance with generally accepted accounting principles.

2.18 “ Net Orders ” means as to any Performance Period, the Company’s or a business unit’s net orders calculated (and reviewed by the Company’s external independent auditors in accordance with agreed standard procedures) for and reported in the Company’s quarterly financial earnings press release filed by the Company on a Current Report on Form 8-K.

2.19 “ Omnibus Plan ” means the Company’s 2017 Omnibus Plan, or any successor plan.

2.20 “ Operating Cash Flow ” means as to any Performance Period, the Company’s or a business unit’s sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles.

2.21 “ Participant ” means as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that Performance Period.

2.22 “ Payout Formula ” means as to any Performance Period, the formula or payout matrix established by the Committee pursuant to Section 3.4 in order to determine the Actual Awards (if any) to be paid to Participants. The formula or matrix may differ from Participant to Participant.

2.23 “ Performance Goals ” means the goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to be applicable to a Participant for a Target Award for a Performance Period. As determined by the Committee, the Performance Goals for any Target Award applicable to a Participant may provide for a targeted level or levels of achievement using one or more of the following measures: (a) EBIT, (b) EBITDA, (c) Earnings Per Share, (d) Net Income, (e) Operating Cash Flow, (f) Return on Assets, (g) Return on Equity, (h) Return on Sales, (i) Revenue, (j) Shareholder Return, (k) orders or Net Orders, (l) expenses, (m) cost of goods sold, (n) profit/loss or profit margin, (o) working capital, (p) operating income, (q) cash flow, (r) market share, (s) return on equity, (t) economic value add, (u) stock price of the Company’s stock, (v) price/earning ratio, (w) debt or debt-to-equity ratio, (x) accounts receivable, (y) cash, (z) write-off, (aa) assets, (bb) liquidity, (cc) operations, (dd) intellectual property (e.g., patents), (ee) product development, (ff) regulatory activities, (gg) manufacturing, production or inventory, (hh) mergers, acquisitions or divestitures, (ii) financings, (jj) days sales outstanding, (kk) backlog, (ll) deferred revenue, and (mm) employee headcount. The Performance Goals may differ from Participant to Participant and from award to award. Prior to the Determination Date, the Committee shall determine whether any significant element(s) shall be included in or excluded from the calculation of any Performance Goal with respect to any Participants. “Determination Date” means the latest possible date that will not jeopardize a Target Award’s qualification as performance-based compensation under section 162(m) of the Code.

2.24 “ Performance Period ” means any fiscal period not to exceed three consecutive Fiscal Years, as determined by the Committee in its sole discretion.

2.25 “ Plan ” means the Varex Imaging Corporation Management Incentive Plan, as set forth in this instrument and as hereafter amended from time to time.

2.26 “ Retirement ” means, with respect to any Participant, “Retirement” as defined by the Company’s retirement policies, as they may be established from time to time. ¹

2.27 “ Return on Assets ” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s EBIT before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles.

2.28 “ Return on Equity ” means as to any Performance Period, the percentage equal to the Company’s Net Income divided by average stockholder’s equity, determined in accordance with generally accepted accounting principles.

2.29 “ Return on Sales ” means as to any Performance Period, the percentage equal to the Company’s or a business unit’s EBIT before incentive compensation, divided by the Company’s or the business unit’s, as applicable, Revenue, determined in accordance with generally accepted accounting principles.

1	NTD: Consider adding actual definition.

2.30 “ Revenue ” means as to any Performance Period, the Company’s or a business unit’s net sales, determined in accordance with generally accepted accounting principles.

2.31 “ Shareholder Return ” means as to any Performance Period, the total return (change in share price plus reinvestment of any dividends) of a Share.

2.32 “ Shares ” means shares of the Company’s common stock.

2.33 “ Target Award ” means the target award payable under the Plan to a Participant for the Performance Period, expressed as a percentage of his or her Base Salary, as determined by the Committee in accordance with Section 3.3.

SECTION 3

SELECTION OF PARTICIPANTS AND DETERMINATION OF AWARDS

3.1 Selection of Participants . The Committee, in its sole discretion, shall select the Employees of the Company who shall be Participants for any Performance Period. Participation in the Plan is in the sole discretion of the Committee, and on a Performance Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent Performance Period or Periods.

3.2 Determination of Performance Goals . The Committee, in its sole discretion, shall establish the Performance Goals for each Participant for the Performance Period no later than the Determination Date. Such Performance Goals shall be set forth in writing.

3.3 Determination of Target Awards . The Committee, in its sole discretion, shall establish a Target Award for each Participant. Each Participant’s Target Award shall be determined by the Committee in its sole discretion, and each Target Award shall be set forth in writing.

3.4 Determination of Payout Formula or Formulae . On or prior to the Determination Date, the Committee, in its sole discretion, shall establish a Payout Formula or Formulae for purposes of determining the Actual Award (if any) payable to each Participant. Each Payout Formula shall (a) be in writing, (b) be based on a comparison of actual performance to the Performance Goals, (c) provide for the payment of a Participant’s Target Award if the Performance Goals for the Performance Period are achieved, and (d) provide for an Actual Award greater than or less than the Participant’s Target Award, depending upon the extent to which actual performance exceeds or falls below the Performance Goals. Notwithstanding the preceding, no Participant’s Actual Award under the Plan may exceed his or her Maximum Award.

3.5 Determination of Actual Awards . After the end of each Performance Period, the Committee shall certify in writing the extent to which the Performance Goals applicable to each Participant for the Performance Period were achieved or exceeded. The Actual Award for each Participant shall be determined by applying the Payout Formula to the level of actual performance which has been certified in writing by the Committee. Notwithstanding any contrary provision of the Plan, the Committee, in its sole discretion, may (a) eliminate or reduce the Actual Award payable to any Participant below that which otherwise would be payable under the Payout Formula, and (b) determine what Actual

Award, if any, will be paid to a Participant if such Participant’s employment terminates prior to the end of the Performance Period, provided, however, that no Actual Award will be paid to the Participant in such circumstances unless the Committee certifies in writing that the Performance Goals applicable to the Participant for such Performance Period were achieved. In addition, the Committee may not increase the amount of an Actual Award otherwise payable to a Participant with respect to any Performance Period unless such Participant is not subject to the limitations of section 162(m) of the Code. The total aggregate Actual Awards under the Plan with respect to any Performance Period shall not exceed eight percent (8%) of the Company’s EBIT (but before incentive compensation) for the most recent completed Fiscal Year. If the total aggregate Actual Awards with respect to a Performance Period would exceed this aggregate limit, all such Actual Awards shall be pro-rated on an equal basis among all Participants according to a formula established by the Committee. Notwithstanding the foregoing, the Committee, in its sole discretion, may establish an award that provides that a Participant shall be paid an Actual Award in the amount of his or her Target Award in the event of such Participant’s termination due to Death or Disability.

SECTION 4

PAYMENT OF AWARDS

4.1 Right to Receive Payment . Each Actual Award that may become payable under the Plan shall be paid solely from the general assets of the Company. Nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.

4.2 Timing of Payment . Except as determined by the Committee with respect to multi-fiscal year Performance Periods, payment of each Actual Award shall be made no later than the 15th day of the third month following the end of the Performance Period during which the Actual Award was earned.

4.3 Form of Payment . Each Actual Award normally shall be paid in cash (or its equivalent) in a single lump sum. However, the Committee, in its sole discretion, may declare any Actual Award, in whole or in part, payable in stock granted under the Company’s Omnibus Plan. The number of Shares granted shall be determined by dividing the cash amount foregone by the Fair Market Value of a Share on the date that the cash payment otherwise would have been made.

4.4 Payment in the Event of Death . If the Committee certifies in writing that the Performance Goals for the Performance Period were achieved and a Participant dies prior to the payment of an Actual Award earned by him or her for such Performance Period, the Actual Award shall be paid to his or her estate.

4.5 Recoupment Policy . All Actual Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In the event that the Company has not adopted such a policy and notwithstanding anything to the contrary set forth in the Plan or otherwise, and there is a restatement of incorrect financial results, the Board will review the conduct of executive officers in relation to the restatement, and if the Board determines that an executive officer has engaged in misconduct or other violations of the Company’s code of ethics in connection with the restatement, the Board would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the Plan that is greater than would have been paid or awarded if calculated based on the restated financial results,

to the extent not prohibited by governing law. For this purpose, the term “executive officer” means executive officers as defined by the Exchange Act. Such action by the Board would be in addition to any other actions the Board or the Company may take under the Company’s policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.

SECTION 5

ADMINISTRATION

5.1 Committee is the Administrator . The Plan shall be administered by the Committee. The Committee shall consist of not less than two (2) members of the Board. The members of the Committee shall be appointed from time to time by, and serve at the pleasure of, the Board. Each member of the Committee shall qualify as an “outside director” under section 162(m) of the Code and as a “non-employee director” for purposes of Rule 16b-3 of the Exchange Act. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.

5.2 Committee Authority . It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees shall be granted awards, (b) prescribe the terms and conditions of awards, (c) interpret the Plan and the awards, (d) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (e) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules.

5.3 Decisions Binding . All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

5.4 Delegation by the Committee . The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may delegate its authority and powers only with respect to awards that are not intended to qualify as performance-based compensation under section 162(m) of the Code.

SECTION 6

GENERAL PROVISIONS

6.1 Tax Withholding . The Company shall withhold all applicable taxes from any Actual Award, including any federal, state and local taxes (including the Participant’s FICA obligation).

6.2 No Effect on Employment or Service . Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of Service. Employment with the Company and its Affiliates is on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without regard to when during a Performance Period such exercise occurs, to terminate any individual’s employment with or without cause, and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant.

6.3 Participation . No Employee shall have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to receive a future award.

6.4 Indemnification . Each person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any award, and (b) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

6.5 Successors . All obligations of the Company under the Plan, with respect to awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

6.6 Beneficiary Designations . If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid award shall be paid in the event of the Participant’s death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

6.7 Nontransferability of Awards . No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6.6. All rights with respect to an award granted to a Participant shall be available during his or her lifetime only to the Participant.

6.8 Deferrals . The Committee, in its sole discretion, may permit a Participant to defer receipt of the payment of cash that would otherwise be delivered to a Participant under the Plan. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Committee in its sole discretion.

SECTION 7

AMENDMENT, TERMINATION AND DURATION

7.1 Amendment, Suspension or Termination . The Board, in its sole discretion, may amend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Target Award theretofore granted to such Participant. No award may be granted during any period of suspension or after termination of the Plan.

7.2 Duration of the Plan . The Plan shall commence on the date specified herein, and subject to Section 7.1 (regarding the Board’s right to amend or terminate the Plan), shall remain in effect thereafter.

SECTION 8

LEGAL CONSTRUCTION

8.1 Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

8.2 Severability . In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

8.3 Requirements of Law . The granting of awards under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

8.4 Governing Law . The Plan and all awards shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard to its conflict of law provisions.

8.5 Captions . Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.

EXECUTION

IN WITNESS WHEREOF, Varex Imaging Corporation, by its duly authorized officer, has executed the Plan on the date indicated below.

Exhibit 10.11

CHANGE IN CONTROL AGREEMENT

FOR [INSERT TITLE]

FORM OF CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into effective as of the date that the spin-off of Varex Imaging Corporation, a Delaware corporation, (the “Company”) from Varian Medical Systems, Inc. (“Varian”) is completed (the “Effective Date”), by and between the Company ¹ , and , an employee of the Company (“Employee”).

The Company’s Board of Directors (the “Board”) has determined that it is in the best interest of the Company and its stockholders for the Company to agree to pay Employee termination compensation in the event Employee should leave the employ of the Company under the circumstances described below. The Board recognizes that the possibility of a proposal from a third person, whether or not solicited by the Company, concerning a possible “Change in Control” of the Company (as such language is defined in Section 3(d)) will be unsettling to Employee. Therefore, the arrangements set forth in this Agreement are being made to help assure a continuing dedication by Employee to Employee’s duties to the Company notwithstanding the proposal or occurrence of a Change in Control. The Board believes it imperative, should the Company receive any proposal from a third party, that Employee, without being influenced by the uncertainties of Employee’s own situation, be able to assess and advise the Board whether such proposals are in the best interest of the Company and its stockholders, and to enable Employee to take action regarding such proposals as the Board might determine to be appropriate. The Board also wishes to demonstrate to key personnel that the Company desires to enhance management relations and its ability to retain and, if needed, to attract new management, and intends to ensure that loyal and dedicated management personnel are treated fairly.

In view of the foregoing, the Company and Employee agree as follows:

1.	EFFECTIVE DATE AND TERM OF AGREEMENT .

This Agreement is effective and binding on the Company and Employee as of the date described above; provided, however, that, subject to Section 2(d), the provisions of Sections 3 and 4 shall become operative only upon the Change in Control Date.

¹	“Company” shall include the Company, any successor to the Company’s business and/or assets, and any party which executes and delivers the agreement required by Section 6(e) or which otherwise becomes bound by the terms and conditions of this Agreement by operation of law or otherwise.

2.	EMPLOYMENT OF EMPLOYEE .

(a) Except as provided in Sections 2(b), 2(c) and 2(d), nothing in this Agreement shall affect any right which Employee may otherwise have to terminate Employee’s employment, nor shall anything in this Agreement affect any right which the Company may have to terminate Employee’s employment at any time in any lawful manner.

(b) In the event of a Potential Change in Control, to be eligible to receive the benefits provided by this Agreement, Employee will not voluntarily leave the employ of the Company, and will continue to perform Employee’s regular duties and the services specified in the recitals of this Agreement until the Change in Control Date. Should Employee voluntarily terminate employment prior to the Change in Control Date, this Agreement shall lapse upon such termination and be of no further force or effect.

(c) If Employee’s employment terminates on or after the Change in Control Date as provided under Sections 3 and 4, the Company will provide to Employee the payments and benefits as provided in Sections 3 and 4.

(d) If Employee’s employment is terminated by the Company without Cause within sixty (60) days prior to and including the Change in Control Date but on or after a Potential Change in Control Date, subject to Section 4(d), then the Company will provide to Employee the payments and benefits described in Sections 3 and 4 unless the Company reasonably demonstrates that Employee’s termination of employment neither (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change in Control nor (ii) arose in connection with or in anticipation of a Change in Control. Such payments and benefits will be paid within five (5) business days following the 60th day after the Employee’s Separation from Service except that the stock option and restricted stock acceleration benefits described in Section 4(a)(iii) shall be provided on the Change in Control Date and accelerated restricted stock units outstanding as of [ ], shall be settled on their originally scheduled vesting dates. In the event that a Change in Control is not consummated, Employee shall not be entitled to any payments or benefits on account of Employee’s termination described in this Section 2(d).

3.	TERMINATION FOLLOWING CHANGE IN CONTROL .

(a) If a Change in Control shall have occurred, Employee shall be entitled to the benefits provided in Section 4 upon the subsequent termination of Employee’s employment within the applicable period set forth in Section 4 unless such termination is due to Employee’s death, Retirement or Disability or is for Cause or is effected by Employee other than for Good Reason (as such terms are defined in Section 3(d)).

(b) If within eighteen (18) months after a Change in Control, Employee incurs a Separation from Service by reason of Employee’s death or Disability, Employee (or, if applicable, his or her estate) shall be entitled to death or long-term disability benefits

from the Company no less favorable than the most favorable benefits to which Employee would have been entitled had the death or Disability occurred at any time during the period commencing one (1) year prior to the Change in Control under the plans of the Company or Varian. To the extent such benefits are taxable to Employee, the benefits provided during the calendar year shall not affect the benefits to be provided in any other calendar year and the benefits shall not be subject to liquidation or exchange for another benefit.

(c) If Employee’s employment shall be terminated by the Company for Cause or by Employee other than for Good Reason during the term of this Agreement, the Company shall pay Employee’s base salary through the date of termination at the rate in effect at the time notice of termination is given, and the Company shall have no further obligations to Employee under this Agreement.

(d) For purposes of this Agreement:

“Base Salary” shall mean the annual base salary paid to Employee immediately prior to a Change in Control, provided that such amount shall in no event be less than the annual base salary paid to Employee during the one (1) year period immediately prior to the Change in Control by the Company or Varian.

A “Change in Control” shall be deemed to have occurred if:

(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;

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; it being understood, for the avoidance of doubt, that the spin-off of the Company from Varian shall not constitute a Change in Control.

“Change in Control Date” shall mean the date on which a Change in Control occurs.

“Cause” shall mean:

(i) The continued willful failure of Employee to perform Employee’s duties to the Company (other than any such failure resulting from Employee’s incapacity due to physical or mental illness) after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to Employee by the Board or a committee thereof; or

(ii) The willful commission by Employee of a wrongful act that caused or was reasonably likely to cause substantial damage to the Company, or an act of fraud in the performance of Employee’s duties on behalf of the Company; or

(iii) The conviction of, or plea of nolo contendere by, Employee for commission of a felony in connection with the performance of Employee’s duties on behalf of the Company; or

(iv) The order of a federal or state regulatory authority having jurisdiction over the Company or its operations or by a court of competent jurisdiction requiring the termination of Employee’s employment by the Company.

“Continuing Directors” shall mean the directors of the Company in office on the Effective Date 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 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.

“Disability” shall mean Employee’s incapacity due to physical or mental illness such that Employee shall have become qualified to receive benefits under the Company’s long-term disability plan as in effect on the date of the Change in Control.

“Dispute” shall mean, in the case of termination of Employee’s employment for Disability or Cause, that Employee challenges the existence of Disability or Cause, and in the case of termination of Employee’s employment for Good Reason, that the Company challenges the existence of Good Reason for termination of Employee’s employment.

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

[FOR CFO/General Counsel: “Equivalent Position” shall mean an employment position that:

(i) requires that Employee serve in a role and perform duties that are functionally equivalent in all material respects to (or broader than) the role and duties performed by Employee for the Company prior to the Change in Control;

(ii) is the [principal [financial] OR [legal] officer] of the combined or acquiring entity;

(iii) does not constitute a material, adverse change in Employee’s responsibilities or duties or authority, when compared to Employee’s responsibilities or duties or authority with the Company prior to the Change in Control;

[(iv) requires that Employee be deemed an executive officer (for purposes of the rules promulgated under Section 16 of the Securities Exchange Act of 1934) of a publicly-traded successor entity to the extent that the Employee was an executive officer under Section 16 of the Securities Exchange Act of 1934 prior to the Change in Control;] and

(v) has Employee reporting directly to the Chief Executive Officer of the combined or acquiring company to the extent that the Employee was reporting directly to the Chief Executive Officer of the Company prior to the Change in Control.]

“Good Reason” shall mean:

(i) [FOR CEO: The failure to appoint Employee as Chief Executive Officer (or principal executive officer) of the combined or acquiring entity, reporting to its Board of Directors] [FOR CFO/General Counsel: The assignment to Employee of a position, responsibilities or duties such that he no longer holds an Equivalent Position] [FOR KEY EMPLOYEES: The assignment of Employee to duties which are materially different from Employee’s duties immediately prior to the Change in Control and which result in a material reduction in Employee’s authority and responsibility]; or

(ii) A material reduction of Employee’s total cash and equity compensation, evaluated in the aggregate, as the same may have been increased from time to time after the Change in Control Date other than a reduction implemented with the consent of Employee; or

(iii) The relocation of the office of the Company where Employee is providing Employee’s services to the Company immediately prior to the Change in Control Date (the “CIC Location”) to a location which is more than 50 miles away from the CIC Location or the Company’s requiring Employee to be based more than 50 miles away from the CIC Location (except for required travel on the Company’s business to an extent substantially consistent with Employee’s customary business travel obligations in the ordinary course of business prior to the Change in Control Date); or

(iv) A material breach of this Agreement.

Notwithstanding anything in this Agreement to the contrary, a termination for “Good Reason” shall not occur unless the Employee has provided written notice to the Company of the Employee’s intention to terminate employment and the specific reason(s) for such “Good Reason”. Following receipt of such notice, the Company shall have the right, within thirty (30) days of receiving such written notice, to cure the circumstances giving rise to such “Good Reason”.

“Potential Change in Control” shall mean the earliest to occur of (a) the execution of an agreement or letter of intent, the consummation of the transactions described in which would result in a Change in Control, (b) the approval by the Board of a transaction or series of transactions, the consummation of which would result in a Change in Control, or (c) the public announcement of a tender offer for the Company’s voting stock, the completion of which would result in a Change in Control; provided, that no such event shall be a “Potential Change in Control” unless (i) in the case of any agreement or letter of intent described in clause (a), the transaction described therein is subsequently consummated by the Company and the other party or parties to such agreement or letter of intent and thereupon constitutes a “Change in Control”, (ii) in the case of any Board-approved transaction described in clause (b), the transaction so approved is subsequently consummated and thereupon constitutes a “Change in Control” or (iii) in the case of any tender offer described in clause (c), such tender offer is subsequently completed and such completion thereupon constitutes a “Change in Control”.

“Potential Change in Control Date” shall mean the date on which a Potential Change in Control occurs.

“Retirement” shall mean Employee’s actual retirement after reaching the normal or early retirement date provided for in the Company’s Retirement and Profit-Sharing Program as in effect on the date of Employee’s termination of employment.

“Separation from Service” shall have the meaning set forth in Section 409A of the Code.

(e) Any termination of employment by the Company or by Employee shall be communicated by written notice, specify the date of termination, state the specific basis

for termination and set forth in reasonable detail the facts and circumstances of the termination in order to provide a basis for determining the entitlement to any payments under this Agreement.

(f) If within thirty (30) days after notice of termination is given, the party to whom the notice was given notifies the other party that a Dispute exists, the parties will promptly pursue resolution of such Dispute with reasonable diligence; provided, however, that pending resolution of any such Dispute, the Company shall pay 75% of any amounts which would otherwise be due Employee pursuant to Section 4 if such Dispute did not exist into escrow pending resolution of such Dispute and pay 25% of such amounts to Employee. Employee agrees to return to the Company any such amounts to which it is ultimately determined that he is not entitled. If, following a final, nonappealable determination that Employee is not entitled to retain all or any portion of this amount, Employee fails to return such excess amount, then Employee shall be required to pay the full costs of recovering such amount. Any escrowed amounts that are released shall otherwise be paid as required under this Agreement and, in no case, later than the end of the calendar year in which the Company and Employee enter into a legally binding settlement of such dispute, the Company concedes the amount is payable, or the Company is required to make such payment pursuant to a final and nonappealable judgment or other binding decision.

4.	PAYMENTS AND BENEFITS UPON TERMINATION .

(a) If within eighteen (18) months after a Change in Control, the Company terminates Employee’s employment other than by reason of Employee’s death, Disability, Retirement or for Cause, or if Employee terminates Employee’s employment for Good Reason, then the Employee shall be entitled to the following payments and benefits following Employee’s Separation from Service:

(i) The Company shall pay to Employee as compensation for services rendered, no later than five (5) business days following the Release Deadline, a lump sum severance payment equal to [INSERT MULTIPLE] multiplied by the sum of: (A) Employee’s Base Salary; and (B) the greater of (x) the Employee’s most recently established target annual bonus under the Company’s annual incentive plan (the “AIP”) and (y) the average annual bonus that was paid to Employee in the three (3) fiscal years ending prior to the date of termination under the AIP or the Varian Management Incentive Plan. Notwithstanding the foregoing, if Employee has not completed at least three (3) full fiscal years of service with the Company prior to Employee’s termination date, then the amount determined in (y) above, shall be based on the average annual bonus for the number of full fiscal years Employee has completed.

(ii) The Company shall pay to Employee as compensation for services rendered, no later than five (5) business days following the Release Deadline, a lump sum payment equal to a pro rata portion (based on the number of days elapsed during the fiscal year and/or other bonus performance period in which the termination occurs) of Employee’s target bonus under the AIP for the fiscal year and for any other partially completed bonus performance period in which the termination occurs.

(iii) All waiting periods for the exercise of any stock options granted to Employee and all conditions or restrictions of any restricted stock granted to Employee shall terminate, and all such options shall be exercisable in full according to their terms, and the restricted stock shall be transferred to Employee as soon as reasonably practicable thereafter. In addition, all conditions or restrictions of any restricted stock units granted to Employee shall terminate, and the stock underlying such units shall be transferred to Employee (x) within five (5) business days following the Release Deadline with respect to awards granted after [ ], or (y) on the originally scheduled vesting dates for awards first outstanding as of [ ].

(iv) If Employee is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental, or vision plan sponsored by the Company, the Company will pay, as and when due directly to the COBRA carrier, the COBRA premiums necessary to continue the COBRA coverage for Employee and his or her eligible dependents from the date of Employee’s termination until the earliest of (i) the end of 18 months or (ii) the expiration of Employee’s eligibility for the continuation coverage under COBRA.

Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that the payment of the COBRA premiums is likely to result in a violation of the nondiscrimination rules of Section 105(h) of the Code or any other statute or regulation (including, without limitation, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums, the Company will instead pay Employee, no later than five (5) business days following the Release Deadline, a fully taxable cash payment equal to eighteen (18) months of COBRA premiums for Employee and his or her eligible dependents, subject to applicable tax withholdings and deductions. Any insurance premiums that are paid by the Company will not include any amounts payable by Employee under a health care reimbursement plan that qualifies under Section 125 of the Code, which amounts, if any, are the sole responsibility of Employee.

(vi) All payments and benefits provided under this Agreement shall be subject to applicable tax withholding.

(b) Following Employee’s termination of employment for any reason, the Company shall have the unconditional right to reduce any payments owed to Employee hereunder by the amount of any due and unpaid principal and interest on any loans by the Company to Employee and Employee hereby agrees and consents to such right on the part of the Company. Any loan offset made under this Section 4(b) shall be made at the same time the payments reduced hereunder would have otherwise been made and

otherwise in a manner that would not result in the imposition of taxes to Employee under Section 409A of the Code. If it is not possible to make such offset without the imposition of taxes to Employee under Section 409A of the Code, such offset shall not be made.

(c) In the event this Agreement or any compensation or benefit paid to Employee hereunder is deemed to be subject to Section 409A of the Code, Employee and the Company agree to negotiate in good faith to adopt such amendments that are necessary to comply with Section 409A of the Code or to exempt such compensation or benefits from Section 409A. In addition, to the extent (i) any compensation or benefits to which Employee becomes entitled under this agreement, or any agreement or plan referenced herein, in connection with Employee’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code and (ii) Employee is deemed at the time of such termination of employment to be a “specified” employee under Section 409A of the Code, then such compensation or benefits shall not be made or commence until the earliest of (i) the expiration of the six (6)-month period measured from the date of Employee’s “separation from service” (as such term is at the time defined in Treasury Regulations under Section 409A of the Code with the Company; or (ii) the date of Employee’s death following such separation from service; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Employee, including (without limitation) the additional twenty percent (20%) tax for which Employee would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral. During any period compensation or benefits to Employee are deferred pursuant to the foregoing, Employee shall be entitled to interest on such deferral at a per annum rate equal to the highest rate of interest applicable to six (6)-month money market accounts offered by the following institutions: Citibank N.A., Wells Fargo Bank, N.A. or Bank of America, on the date of such “separation from service.” Upon the expiration of the applicable deferral period, any compensation or benefits which would have otherwise been paid during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Employee or Employee’s beneficiary in one lump sum and any amounts not subject to such deferral shall be paid at their regularly scheduled time.

(d) Any payment pursuant to this Section 4 shall be conditioned upon the Employee signing and not revoking a release in a form reasonably acceptable to the Company (the “Release”) not later than 60 days after the Employee’s Separation from Service (such 60th day, the “Release Deadline”). The Employee shall not be entitled to such payment, and no payment shall be made to the Employee, until after the Release Deadline and subject to the Release having become effective on or prior to the Release Deadline. The Company shall furnish such Release to the Employee in connection with the Employee’s Separation from Service. If the Employee has signed the Release prior to the time the Company so furnishes such Release to the Employee, the Employee will be required to again sign and not revoke the Release in connection with the Employee’s Separation from Service in order to receive payments hereunder (as described above), and the prior signed Release shall be null and void.

5.	LIMITATION ON PAYMENTS .

In the event that the payments and other benefits provided for in this Agreement or otherwise payable to Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s payments and benefits under this Agreement or otherwise payable to Employee shall be either delivered in full (without the Company paying any portion of the Excise Tax), or delivered as to such lesser extent which would result in no portion of such payments and benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis of the greatest amount of payments and benefits, notwithstanding that all or some portion of such payments and benefits may subject to the Excise Tax. Unless the Company and Employee otherwise agree in writing, any determination required under this Section 5 shall be made in writing by a nationally-recognized independent public accounting firm designated by agreement between Employee and Company (the “Accountants”), whose determination shall be conclusive and binding upon Employee and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and Employee shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 5.

Any reduction in payments and/or benefits required by this Section 5 shall occur in the following order as reasonably determined by the Accountants: (1) reduction of vesting acceleration of “out-of-the-money” stock options or stock appreciation rights, (2) reduction of cash payments; (3) reduction of non-cash/non-equity-based payments or benefits and (4) reduction of vesting acceleration of equity-based awards (other than “out-of-the-money” stock options or stock appreciation rights); provided, however, that any non-taxable payments or benefits shall be reduced last in accordance with the same categorical ordering rule. In the event items described in (2) or (3) are to be reduced, reduction shall occur in reverse chronological order such that the payment or benefit owed on the latest date following the occurrence of the event triggering the Excise Tax will be the first payment to be reduced (with reductions made pro-rata in the event payments are owed at the same time). In the event that acceleration of vesting of equity-based awards is to be reduced, such acceleration of vesting shall be cancelled in a manner such as to obtain the best economic benefit for Employee (with reductions made pro-rata if economically equivalent), as determined by the Accountants. In no event will Employee exercise any discretion with respect to the ordering of any reduction of payments or benefits pursuant to this Section 5.

GENERAL.

(a) Employee shall retain in confidence under the conditions of the Company’s confidentiality agreement with Employee any proprietary or other

confidential information known to Employee concerning the Company and its business so long as such information is not publicly disclosed and disclosure is not required by an order of any governmental body or court. If required, Employee shall return to the Company any memoranda, documents or other materials proprietary to the Company.

(b) While employed by the Company and following the termination of such employment after a Change in Control for a period of twelve (12) months, Employee shall not:

(i) whether for Employee’s own account or for the account of any other individual, partnership, firm, corporation or other business organization, intentionally solicit, endeavor to entice away from the Company or a subsidiary of the Company (each, a “Protected Party”), or otherwise interfere with the relationship of a Protected Party with, any person who is employed by a Protected Party or any person or entity who is, or was within the then most recent twelve (12) month period, a customer or client of a Protected Party; or

(ii) without the prior written consent of the Protected Party, in any geographic area in which the Protected Party is then conducting business, directly or indirectly own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer, employee, partner, stockholder, consultant or otherwise, any individual, partnership, firm, corporation or other business organization or entity that is engaged in any business in which the Protected Party is actively engaged at the time; provided, however, that the restrictions in this Section 6(b)(ii) shall not apply to (A) any non-employee directorships held by Employee as of the date hereof or (B) ownership by Employee for personal investment purposes only of not in excess of 1% of the voting stock of any publicly held corporation.

Employee acknowledges that a breach of any of the covenants contained in this Section 6(b) may result in material irreparable injury to the Company for which there is no adequate remedy at law, that it may not be possible to measure damages for such injuries precisely and that, in the event of such a breach, any payments remaining under the terms of this Agreement shall cease and the Company may be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining Employee from engaging in activities prohibited by this Section 6(b) or such other relief as may be required to specifically enforce any of the covenants in this Section 6(b). Employee agrees to and hereby does submit to in personam jurisdiction before each and every such court in the State of [ ], County of [ ], for that purpose. This Section 6(b) shall survive any termination of this Agreement.

(c) If litigation is brought by Employee to enforce or interpret any provision contained in this Agreement, the Company shall indemnify Employee for Employee’s reasonable attorney’s fees and disbursements incurred in such litigation and pay prejudgment interest on any money judgment obtained by Employee calculated at the prime rate of interest in effect from time to time at the Bank of America, San Francisco,

from the date that payment should have been made under the Agreement, provided that Employee shall not have been found by the court in which such litigation is pending to have had no cause in bringing the action, or to have acted in bad faith, which finding must be final with the time to appeal therefrom having expired and no appeal having been taken. Any payment made pursuant to this Section 6(c) shall be made promptly and no later than the end of the calendar year in which such fees or disbursements were incurred or in which such judgment was obtained, as applicable.

(d) Except as provided in Section 4, the Company’s obligation to pay to Employee the compensation and to make the arrangements provided in this Agreement shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, any setoff, counterclaim, recoupment, defense or other right which the Company may have against Employee or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Subject to Section 4(a)(iv), Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment.

(e) The Company shall require any successor, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business and/or assets of the Company, by written agreement to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

(f) This Agreement shall inure to the benefit of and be enforceable by Employee’s heirs, successors and assigns. If Employee should die while any amounts would still be payable to Employee hereunder if Employee had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Employee’s heirs, successors and assigns.

(g) For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed as follows:


If to Employee:				If to the Company:

				Varex Imaging Corporation
				1678 S. Pioneer Road
				Salt Lake City, UT 84104
				Attn: Chief Human Resource Officer

or to such other address as either party furnishes to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

(h) This Agreement shall constitute the entire agreement between Employee and the Company concerning the subject matter of this Agreement.

(i) The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of without giving effect to the provisions, principles or policies thereof relating to choice or conflict of laws. The invalidity or unenforceability of any provision of this Agreement in any circumstance shall not affect the validity or enforceability of such provision in any other circumstance or the validity or enforceability of any other provision of this Agreement, and, except to the extent such provision is invalid or unenforceable, this Agreement shall remain in full force and effect. Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof in such jurisdiction, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. This Section 6(i) shall survive any termination of this Agreement.

(j) This Agreement may be amended or terminated by the Company pursuant to a resolution adopted by the Board at any time prior to a Potential Change in Control Date. After a Change in Control Date or a Potential Change in Control Date, this Agreement may only be amended or terminated in writing with the consent of Employee.

(k) No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement and this Agreement shall supersede all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, with respect to the subject matter hereof.

IN WITNESS WHEREOF, the parties acknowledge that they have read and understand the terms of this Agreement and have executed this Agreement to be effective as of .

Exhibit 10.12

VAREX IMAGING CORPORATION

FORM OF INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “ Agreement ”) is made as of , by and between Varex Imaging Corporation, a Delaware corporation (the “ Company ”), and (“ Indemnitee ”).

RECITALS

The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee may not be willing to continue to serve in Indemnitee’s current capacity with the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.

AGREEMENT

In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:

1. Indemnification .

(a) Third-Party Proceedings . To the fullest extent permitted by applicable law, as such may be amended from time to time, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(b) Proceedings By or in the Right of the Company . To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in the Company’s favor, against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding if

Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) Success on the Merits . To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters to the fullest extent permitted by applicable law. If any Proceeding is disposed of on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respect to any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.

(d) Witness Expenses . To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding.

2. Indemnification Procedure .

(a) Advancement of Expenses . To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statement requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall be unsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled to continue to receive advancement of Expenses pursuant to this Section 2(a) unless and until the matter of Indemnitee’s entitlement to indemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify for advances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repayment of advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than the execution of this Agreement.

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(b) Notice and Cooperation by Indemnitee . Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter for which indemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of, and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 13(e) below. In addition, Indemnitee shall give the Company such additional information and cooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperate with the Company shall not relieve the Company of any obligation that it may have to Indemnitee under this Agreement, except to the extent that the Company is adversely affected by such failure.

(i) Final Disposition . Notwithstanding any other provision in this Agreement, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

(ii) Determination and Payment . Subject to the foregoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, to the extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth in Section 145 of the Delaware General Corporation Law. The Company shall pay any claims made under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancement of Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claim is not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against the Company in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shall also be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(a)) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption with clear and convincing evidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall

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be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement to indemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisite determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

(d) Payment Directions . To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’s request (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses.

(e) Notice to Insurers . If, at the time of the receipt of a notice of a claim pursuant to Section 2(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. The Company shall provide to Indemnitee: (i) copies of all potentially applicable directors’ and officers’ liability insurance policies, (ii) a copy of such notice delivered to the applicable insurers, and (iii) copies of all subsequent correspondence between the Company and such insurers regarding the Proceeding, in each case substantially concurrently with the delivery or receipt thereof by the Company.

(f) Defense of Claim and Selection of Counsel . In the event the Company shall be obligated under Section 2(a) hereof to advance Expenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do, and upon Indemnitee providing signed, written consent to such assumption, which shall not be unreasonably withheld. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, but not an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred by Indemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume

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Indemnitee’s defense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to be Expenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether such conflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Company shall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend if the Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required to obtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (1) does not grant Indemnitee a complete release of liability, (2) would impose any penalty or limitation on Indemnitee, or (3) would admit any liability or misconduct by Indemnitee.

3. Additional Indemnification Rights .

(a) Scope . Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Nonexclusivity . The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company’s Board of Directors, the Delaware General Corporation Law, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office.

(c) Interest on Unpaid Amounts . If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90) days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the period commencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement and ending with the date on which such payment is made to Indemnitee by the Company.

(d) Third-Party Indemnification . The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “ Third-Party Indemnitors ”). The Company hereby agrees that it is the indemnitor of first resort ( i.e., its obligations to Indemnitee are primary and any obligation of the Third-Party Indemnitors to

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advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), and that the Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Third-Party Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Third-Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company if the Third-Party Indemnitors had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Third-Party Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Third-Party Indemnitors shall have a right of contribution by the Company to the Third-Party Indemnitors with respect to any advance or payment by the Third-Party Indemnitors to or on behalf of the Indemnitee.

4. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines and amounts paid in settlement to which Indemnitee is entitled.

5. Director and Officer Liability Insurance .

(a) D&O Policy . The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors and officers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.

(b) Tail Coverage . In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership or entering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies then maintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter.

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6. Severability . Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

7. Exclusions . Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Claims Initiated by Indemnitee . To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of this subsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary or advisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party;

(b) Lack of Good Faith . To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;

(c) Unlawful Payments . To indemnify Indemnitee for Expenses to the extent it is determined by a final court order or judgment by a court of competent jurisdiction, to which all rights of appeal have either lapsed or been exhausted, that such indemnification is unlawful;

(d) Certain Conduct . To indemnify Indemnitee for Expenses on account of Indemnitee’s conduct that is established by a final court order or judgment by a court of competent jurisdiction, to which all rights of appeal have either lapsed or been exhausted, as knowingly fraudulent;

(e) Insured Claims . To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by an insurance carrier under an insurance policy maintained by the Company; or

(f) Certain Exchange Act Claims . To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accounting of profits made from the purchase

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and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicable law and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually and reasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject to indemnification hereunder.

8. Contribution Claims .

(a) If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason other than those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding Section 8(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any Expenses, judgment or settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such Expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

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(c) With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may be brought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable with Indemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceeding had been brought against Indemnitee.

9. No Imputation . The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement.

10. Determination of Good Faith . For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board of Directors of the Enterprise or any counsel selected by any committee of the Board of Directors of the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensation consultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.

11. Defined Terms and Phrases . For purposes of this Agreement, the following terms shall have the following meanings:

(a) “ Beneficial Owner ” and “ Beneficial Ownership ” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act as in effect on the date hereof.

(b) “ Change of Control ” shall be deemed to occur upon the earliest of any of the following events:

(i) Acquisition of Stock by Third Party . Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors and such acquisition would not constitute a Change of Control under part (iii) of this definition.

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(ii) Change in Board of Directors . Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors (the “ Board ”), and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date of this Agreement (collectively, the “ Continuing Directors ”), cease for any reason to constitute at least a majority of the members of the Board.

(iii) Corporate Transaction . The effective date of a reorganization, merger, or consolidation of the Company (a “ Business Combination ”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors and with the power to elect at least a majority of the Board or other governing body of the surviving entity; (2) no Person (excluding any corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination.

(iv) Liquidation . The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale or disposition in one transaction or a series of related transactions).

(v) Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under the Exchange Act whether or not the Company is then subject to such reporting requirement.

(c) “ Company ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

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(d) “ Enterprise ” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent.

(e) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

(f) “ Expenses ” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement (including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to the imposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the forgoing expenses incurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costs relating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessment or other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(g) “ Person ” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) any employee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporation owned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of the Company (an “ Employee Benefit Plan ”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.

(h) “ Proceeding ” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by a third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director, officer, employee or agent of the Company, or by reason of the

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fact that Indemnitee is or was serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement.

(i) In addition, references to “ other enterprise ” shall include another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise; references to “ fines ” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; references to “ serving at the request of the Company ” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “ not opposed to the best interests of the Company ” as referred to in this Agreement; references to “ include ” or “ including ” shall mean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this Agreement unless otherwise specified.

12. Attorneys ’ Fees . In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such Proceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

13. Miscellaneous .

(a) Governing Law . The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Delaware, without giving effect to principles of conflicts of law.

(b) Entire Agreement; Binding Effect . Without limiting any of the rights of Indemnitee described in Section 3(b), this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions and supersedes any and all previous agreements between them covering the subject matter herein. The indemnification provided under this Agreement applies with respect to events occurring before or after the effective date of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company in any and all indemnified capacities.

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(c) Amendments and Waivers . No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

(d) Successors and Assigns . This Agreement shall be binding upon the Company and its successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

(e) Notices . Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(f) Severability . If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(g) Construction . This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

(h) Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned signature will be deemed an original and valid signature.

(i) No Employment Rights . Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

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(j) Company Position . The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcing or interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

(k) Injunctive Relief . The Company and the Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause the Indemnitee and the Company irreparable harm. Accordingly, the parties hereto agree that the parties may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, they shall not be precluded from seeking or obtaining any other relief to which they may be entitled. The Company and the Indemnitee further agree that they shall be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company and the Indemnitee acknowledge that in the absence of a waiver, a bond or undertaking may be required by the Chancery Court of the State of Delaware, and they hereby waive any such requirement of such a bond or undertaking.

(l) Subrogation . Subject to Section 3(d), in the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.

[Signature Page Follows]

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The parties have executed this Indemnification Agreement as of the date first set forth above.


THE COMPANY:



VAREX IMAGING CORPORATION



By:


		(Signature)



Name:


Title:



Address:


United States


AGREED TO AND ACCEPTED:

INDEMNITEE:


(PRINT NAME)


(Signature)

Address:


Email:

Exhibit 21.1

VAREX IMAGING CORPORATION

LIST OF SUBSIDIARIES


Name		Jurisdiction of Incorporation
Jiangsu Varian Medical Systems Co., Ltd.		China
MeVis Medical Solutions AG		Germany
Varex Imagens Brasil Holdings, Ltda.		Brazil
Varex Imaging Corporation		Delaware, USA
Varex Imaging Holdings, Inc.		Delaware, USA
Varex Imaging France SARL		France
Varex Imaging Deutschland GmbH		Germany
Varex Imaging Italia Srl		Italy
Varex Imaging Investments B.V.		Netherlands
Varex Imaging International Holdings B.V.		Netherlands
Varex Imaging UK Limited		United Kingdom
Claymount Technologies Group B.V.		Netherlands
Claymount Switzerland AG		Switzerland
Claymount International AG		Netherlands
Claymount Assemblies Philippines, Inc.		Philippines
Claymount High Voltage Technologies (Beijing) Co. Ltd.		China
Claymount Assemblies B.V.		Netherlands
Claymount Americas Corporation		Illinois, USA

Exhibit 99.1

LOGO

, 2017

Dear Varian Medical Systems Stockholder:

In May 2016, we announced plans to separate our Imaging Components business from our cancer treatment businesses. The separation will occur by means of a spin-off of a company named Varex Imaging Corporation (“Varex”), which was formed to hold our Imaging Components business. The Oncology Systems and Particle Therapy businesses will remain a part of the existing publicly traded company, which will continue to be named Varian Medical Systems, Inc. (“Varian”). As two distinct businesses, Varian and Varex will be better positioned to capitalize on significant growth opportunities and have greater focus on their respective businesses and strategic priorities.

Both of these companies have valuable assets and industry-leading products and services. Varex will be a leading global provider of X-ray imaging components for medical, security and industrial applications. As an independent, publicly traded company, Varex will be able to pursue its own growth strategies and prioritize investment spending and capital allocation accordingly. Varian will continue to be the world’s leading manufacturer of medical devices and software for treating cancer with radiotherapy, radiosurgery, proton therapy and brachytherapy. After the separation, Varian will be able to better focus its capital deployment strategy and implement an appropriate capital structure to meet the needs of its businesses.

The separation will provide current Varian stockholders with ownership interests in both Varian and Varex. The separation will be in the form of a pro rata distribution of 100% of the outstanding shares of Varex common stock to holders of Varian common stock. Each Varian stockholder will receive one share of Varex common stock for every [●] shares of Varian common stock held on [●], 2017, the record date for the distribution. It is intended that, for U.S. federal income tax purposes, the distribution generally will be tax-free to Varian stockholders. You do not need to take any action to receive shares of Varex common stock to which you are entitled as a Varian stockholder. You do not need to pay any consideration or surrender or exchange your Varian common shares to participate in the spin-off.

I encourage you to read the attached information statement, which is being provided to all Varian stockholders who held shares on the record date for the distribution. The information statement describes the separation in detail and contains important business and financial information about Varex.

I believe the separation is a positive progression for our businesses, our customers, our employees and our stockholders. We remain committed to working on your behalf to continue to build long-term stockholder value.

Sincerely,

Dow R. Wilson

President and Chief Executive Officer

Varian Medical Systems, Inc.

LOGO

, 2017

Dear Future Varex Stockholder:

I am pleased to welcome you as a future stockholder of our company, Varex Imaging Corporation (“Varex”). We are a leading global designer and manufacturer of X-ray tubes, flat panel detectors, imaging software, high voltage connectors and high-energy inspection accelerators, which are key components of X-ray imaging systems for medical, security and industrial applications. Our knowledge and expertise in this business are unparalleled and translate into highly innovative and superior quality products, customer support and service.

As a stand-alone company, we will focus 100% of our energy on the Imaging Components business. This will enable us to utilize our 65+ years of experience of innovation in X-ray technologies to target new technologies and components in the medical, as well as industrial and security markets. We believe that our solid financial profile, coupled with our research and development capabilities, focus on our stand-alone business and future growth opportunities, will enable us to create the most innovative and cost-effective X-ray imaging solutions for equipment manufacturers and will further enhance stockholder value.

We believe that an independent equity structure that will afford us direct access to capital markets will enable us to capitalize on unique growth opportunities in the imaging components space. We also plan to create incentive compensation arrangements for employees that are more directly tied to our performance, which we believe will enhance our ability to attract and retain key talent globally, and further align management and employee incentives with our performance and growth objectives.

In addition, as a stand-alone company, we expect to be able to give you more visibility into the opportunities in the imaging components space and enhance your ability to understand and value the merits, performance and future prospects of our business.

I encourage you to learn more about Varex and our business and strategic initiatives by reading the attached information statement. We expect that our shares of common stock will be listed on the NASDAQ Global Select Market under the symbol “VREX.”

Sincerely,

Sunny S. Sanyal

President and Chief Executive Officer

Varex Imaging Corporation

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended.

PRELIMINARY AND SUBJECT TO COMPLETION, DATED DECEMBER 8, 2016

INFORMATION STATEMENT

Varex Imaging Corporation

This information statement is being furnished in connection with the distribution by Varian Medical Systems, Inc. (“Varian”) to its stockholders of all of the outstanding shares of common stock of Varex Imaging Corporation, a wholly owned subsidiary of Varian that will hold, directly or indirectly, the assets and liabilities associated with Varian’s Imaging Components business (“Varex”). To implement the distribution, Varian will distribute all of the shares of Varex common stock on a pro rata basis to Varian stockholders in a manner that is intended to be tax-free to Varian stockholders for U.S. federal income tax purposes.

For every [●] shares of Varian common stock held of record by you as of the close of business on [●], 2017, the record date for the distribution, you will receive one share of Varex common stock. You will receive cash in lieu of any fractional shares of Varex common stock that you would have received after application of the above ratio. As discussed under the section entitled “The Separation and Distribution—Trading Between the Record Date and Distribution Date,” if you sell your shares of Varian common stock “regular-way” after the record date and before the distribution, you also will be selling your right to receive shares of Varex common stock in connection with the distribution. Varian and Varex expect the shares of Varex common stock to be distributed by Varian to you on [●], 2017. Varian and Varex refer to the date of the distribution of the Varex common stock as the “distribution date.”

No vote of Varian stockholders is required for the distribution. Therefore, you are not being asked for a proxy, and you are requested not to send Varian a proxy, in connection with the distribution. You do not need to pay any consideration, exchange or surrender your existing shares of Varian common stock, or take any other action to receive your shares of Varex common stock.

There is no current trading market for Varex common stock, although Varex expects that a limited market, commonly known as a “when-issued” trading market, will develop on or shortly before the record date for the distribution, and Varex expects “regular-way” trading of Varex common stock to begin on the first trading day following the distribution. Varex intends to apply to have its common stock authorized for listing on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “VREX.” Following the distribution, Varian will continue to trade on the New York Stock Exchange under the symbol “VAR.”

Varex is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and, as such, is allowed to provide in this information statement more limited disclosures than an issuer that would not so qualify. In addition, for so long as Varex remains an emerging growth company, it may also take advantage of certain limited exceptions from investor protection laws such as the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), and the Investor Protection and Securities Reform Act of 2010, for limited periods. See “Information Statement Summary—Emerging Growth Company Status.”

In reviewing this information statement, you should carefully consider the matters described under the caption “ Risk Factors ” beginning on page 20.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is , 2017.

This information statement was first mailed to Varian stockholders on or about , 2017.

TABLE OF CONTENTS


	Page
QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION		1

INFORMATION STATEMENT SUMMARY		8

RISK FACTORS		20

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS		51

DIVIDEND POLICY		52

CAPITALIZATION		53

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS		54

SELECTED HISTORICAL COMBINED FINANCIAL DATA		59

BUSINESS		60

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		74

MANAGEMENT		91

DIRECTORS		93

EXECUTIVE COMPENSATION		101

DIRECTOR COMPENSATION		119

RELATIONSHIPS WITH VARIAN FOLLOWING SEPARATION AND DISTRIBUTION		121

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		129

THE SEPARATION AND DISTRIBUTION		130

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES		137

DESCRIPTION OF MATERIAL INDEBTEDNESS		141

DESCRIPTION OF VAREX’S CAPITAL STOCK		142

WHERE YOU CAN FIND MORE INFORMATION		147

INDEX TO FINANCIAL STATEMENTS		F-1

Presentation of Information

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement about Varex assumes the completion of all of the transactions referred to in this information statement in connection with the separation and distribution. Unless the context otherwise requires, references in this information statement to “Varex” and the “Company” refer to Varex Imaging Corporation, a Delaware corporation, and its consolidated subsidiaries. References to Varex’s historical business and operations refer to the business and operations of Varian’s Imaging Components business that will be transferred to Varex in connection with the separation and distribution. Unless the context otherwise requires, references in this information statement to “Varian” refers to Varian Medical Systems, Inc., a Delaware corporation, and its consolidated subsidiaries.

Trademarks, Trade Names and Service Marks

Varex owns or has rights in the trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the more important trademarks that Varex owns or has rights in that appear in this information statement include: Varex, Varex Imaging, Claymount, MeVis and Linatron ^® , which may be registered or trademarked in the United States or other jurisdictions. Each trademark, trade name or service mark of any other company appearing in this information statement is, to Varex’s knowledge, owned by such other company.

QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION

What is Varex and why is Varian separating Varex’s business and distributing Varex common stock?

Varex, which is currently a wholly owned subsidiary of Varian, was formed to hold Varian’s Imaging Components business. The separation of Varex from Varian and the distribution of Varex common stock are intended to, among other things, (i) create two sharper, stronger, more focused companies by enabling the management of each company to concentrate efforts on the unique needs of each business and the pursuit of distinct opportunities for long-term growth and profitability, (ii) allow each business to more effectively pursue its own distinct capital structures and capital allocation strategies and design more effective equity compensation programs, and (iii) provide you with equity ownership in two separate, publicly traded companies. Varian and Varex expect that the separation will result in enhanced long-term performance of each business for the reasons discussed in the sections entitled “The Separation and Distribution—Background” and “The Separation and Distribution—Reasons for the Separation.”

Why am I receiving this document?

Varian is delivering this document to you because you are a holder of shares of Varian common stock. If you are a holder of shares of Varian common stock as of the close of business on [●], 2017, the record date of the distribution, you will be entitled to receive one share of Varex common stock for every [●] shares of Varian common stock that you held at the close of business on such date. This document will help you understand how the separation and distribution will affect your investment in Varian and your investment in Varex after the separation and distribution.

How will the separation of Varex from Varian work?

To accomplish the separation, Varian will distribute all of the outstanding shares of Varex common stock to Varian stockholders on a pro rata basis in a distribution intended to be tax-free to Varian stockholders for U.S. federal income tax purposes.

Why is the separation of Varex structured as a distribution?

Varian believes that a distribution of shares of Varex stock to the Varian stockholders is an efficient way to separate its Imaging Components business in a manner that will create long-term value for Varian, Varex and their respective stockholders.

What is the record date for the distribution?

The record date for the distribution will be [●], 2017.

When will the distribution occur?

The completion and timing of the distribution depend on a number of conditions. Varian expects that all of the shares of Varex common stock will be distributed by Varian on [●], 2017, which is referred to as the distribution date, to holders of record of shares of Varian common stock at the close of business on [●], 2017, which is referred to as the record date for the distribution. However, no assurance can be provided as to the timing of the distribution or that all conditions to the distribution will be met.

What do stockholders need to do to
participate in the distribution?

Stockholders of Varian as of the record date for the distribution will not be required to take any action to receive Varex common stock in the distribution, but you are urged to read this entire information

statement carefully. No stockholder approval of the distribution is required or will be sought. You are not being asked for a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of Varian common stock, or take any other action to receive your shares of Varex common stock. Please do not send in your Varian stock certificates. The distribution will not affect the number of outstanding shares of Varian common stock or any rights of Varian stockholders, although it will affect the market value of each outstanding share of Varian common stock.

How will shares of Varex common stock be issued?

You will receive shares of Varex common stock through the same channels that you currently use to hold or trade shares of Varian common stock, whether through a brokerage account or other channel. Receipt of Varex shares will be documented for you in the same manner that you typically receive stockholder updates, such as monthly broker statements.

If you own shares of Varian common stock as of the close of business on the record date for the distribution, including shares owned in certificated or book-entry form, Varian, with the assistance of Computershare Trust Company, N.A. (“Computershare”), the settlement and distribution agent, will electronically distribute shares of Varex common stock to you or to your brokerage firm on your behalf in book-entry form. Computershare, as settlement and distribution agent, will mail you a book-entry account statement that reflects your shares of Varex common stock, or your bank or brokerage firm will credit your account for the shares.

How many shares of Varex common stock will I receive in the distribution?

Varian will distribute to you one share of Varex common stock for every [●] shares of Varian common stock held by you as of the record date for the distribution. Based on approximately [●] shares of Varian common stock outstanding as of [●] 2017, a total of approximately [●] shares of Varex common stock will be distributed. For additional information on the distribution, see the section entitled “The Separation and Distribution.”

Will Varian distribute fractional shares of Varex common stock in the distribution?

No. Varian will not distribute fractional shares of Varex common stock in the distribution. Fractional shares that Varian stockholders would otherwise have been entitled to receive will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of these sales will be distributed pro rata (based on the fractional share such holder would otherwise be entitled to receive) to those stockholders who would otherwise have been entitled to receive fractional shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient Varian stockholders for U.S. federal income tax purposes, as described in the section entitled “Material U.S. Federal Income Tax Consequences.”

What are the conditions to the distribution?

The distribution is subject to final approval by the Varian board of directors, as well as to a number of conditions, including, among others:

•

the transfer of assets and liabilities to Varex in accordance with the separation and distribution agreement will have been completed;

•

Varian will have received an opinion of counsel, satisfactory to the Varian board of directors, regarding the qualification of the distribution, together with certain related transactions, as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”);

•

an independent appraisal firm acceptable to Varian shall have delivered one or more opinions to the Varian board of directors confirming the solvency and financial viability of Varian before the completion of the distribution and each of Varian and Varex after completion of the distribution, and such opinions shall have been acceptable to Varian in form and substance in Varian’s sole discretion and such opinions shall not have been withdrawn or rescinded;

•

the U.S. Securities and Exchange Commission (or the “SEC”) will have declared effective the registration statement of which this information statement forms a part, no stop order suspending the effectiveness of the registration statement will be in effect, no proceedings for such purpose will be pending before or threatened by the SEC and this information statement will have been mailed to Varian stockholders;

•

the transaction agreements relating to the separation and distribution will have been duly executed and delivered by the parties;

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Varex will have assumed or entered into, as applicable, the financing arrangements described in the section entitled “Description of Material Indebtedness” and incurred at least $[●] of new indebtedness pursuant thereto;

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Varian will have received $200 million of proceeds from the cash transfer by Varex, and Varian will be satisfied in its sole and absolute discretion that, as of the effective time of the distribution, it shall have no further liability whatsoever under the financing arrangements described in the section entitled “Description of Material Indebtedness”;

•

all actions and filings necessary or appropriate under applicable U.S. federal, U.S. state or other securities laws will have been taken and, where applicable, will have become effective or been accepted by the applicable governmental authority;

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no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the separation, the distribution or any of the related transactions will be in effect;

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the shares of Varex common stock to be distributed will have been authorized for listing on NASDAQ, subject to official notice of distribution; and

•

no other event or development will have occurred or exist that, in the judgment of Varian’s board of directors, in its sole discretion, makes it inadvisable to effect the separation, the distribution or the other related transactions.

Varian and Varex cannot assure you that any or all of these conditions will be met. In addition, Varian can decline at any time to go forward with the separation and distribution. For a complete discussion of all of the conditions to the distribution, see the section entitled “The Separation and Distribution—Conditions to the Distribution.”

Can Varian decide to cancel the distribution of Varex common stock even if all the conditions have been met?

Yes. The distribution is subject to the satisfaction or waiver of certain conditions. See the section entitled “The Separation and Distribution—Conditions to the Distribution.” Until the distribution has occurred, Varian has the right to terminate the distribution, even if all of the conditions are satisfied.

What if I want to sell my shares of Varian common stock or my shares of Varex common stock?

You should consult with your advisors, such as your stockbroker, bank, tax or other financial advisor, if you want to sell your shares of Varian common stock or your shares of Varex common stock.

What is “regular-way” and “ex-distribution” trading of Varian common stock?

Beginning on or shortly before the record date for the distribution and continuing up to the distribution date, it is expected that there will be two markets in Varian common stock: a “regular-way” market and an “ex-distribution” market. Shares of Varian common stock that trade in the “regular-way” market will trade with an entitlement to shares of Varex common stock distributed pursuant to the distribution. Shares of Varian common stock that trade in the “ex-distribution” market will trade without an entitlement to shares of Varex common stock distributed pursuant to the distribution. If you hold shares of Varian common stock on the record date and then decide to sell any shares of Varian common stock before the distribution date, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your shares of Varian common stock with or without your entitlement to Varex common stock pursuant to the distribution.

Where will I be able to trade shares of Varex common stock?

Varex intends to apply to list its common stock on NASDAQ under the symbol “VREX”. Varex anticipates that trading in shares of its common stock will begin on a “when-issued” basis on or shortly before the record date for the distribution and will continue up to the distribution date and that “regular-way” trading in Varex common stock will begin on the first trading day following the completion of the distribution. If trading begins on a “when-issued” basis, you may purchase or sell Varex common stock up to the distribution date, but your transaction will not settle until after the distribution date. Varex cannot predict the trading prices for its common stock before, on or after the distribution date.

What will happen to the listing of Varian common stock?

Varian common stock will continue to trade on the New York Stock Exchange after the distribution under the symbol “VAR”.

Will the number of shares of Varian common stock that I own change as a result of the distribution?

No. The number of shares of Varian common stock that you own will not change as a result of the distribution.

Will the distribution affect the market price of my shares of Varian common stock?

Yes. As a result of the distribution, Varian expects the trading price of Varian common stock immediately following the distribution to be lower than the “regular-way” trading price of such stock immediately prior to the distribution because the trading price will no longer reflect the value of the Imaging Components business. There can be no assurance that the aggregate market value of the Varian common stock and the Varex common stock following the distribution will be higher or lower than the market value of Varian common stock if the distribution did not occur. This means, for example, that the combined trading prices of one share of Varian common stock and [●] shares of Varex common stock after the distribution (representing the number of shares of Varex common stock to be received per every one share of Varian common stock in the distribution) may be equal to, greater than or less than the trading price of one Varian common share before the distribution.

What are the material U.S. federal income tax consequences of the distribution?

It is a condition to the completion of the distribution that Varian receives an opinion of counsel satisfactory to the Varian board of directors regarding the qualification of the distribution, together with certain related transactions, as transactions that are generally tax-free under Sections 355 and 368(a)(1)(D) of the Code. Assuming the distribution, together with certain related transactions, so qualifies, no gain or loss will be recognized by you and no amount will be included in your income for U.S. federal income tax purposes, upon your receipt of shares of Varex common stock pursuant to the distribution. You will, however, recognize gain or loss for U.S. federal income tax purposes with respect to cash received in lieu of a fractional share of Varex common stock. You should consult your own tax advisor as to the particular consequences of the distribution to you, including the applicability and effect of any U.S. federal, state and local tax laws, as well as any foreign tax laws. For more information regarding the material U.S. federal income tax consequences to of the distribution, see the section entitled “Material U.S. Federal Income Tax Consequences.”

What will Varex’s relationship be with Varian following the separation?

After the distribution, Varian and Varex will be separate companies with separate management teams and separate boards of directors. Varex will enter into a separation and distribution agreement with Varian to effect the separation and distribution and provide a framework for Varex’s relationship with Varian after the separation and will enter into certain other agreements, including a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property matters agreement, a trademark license agreement and one or more supply/distribution agreements. These agreements will provide for the separation between Varex and Varian of the assets, employees, liabilities and obligations (including its employee benefits, environmental, intellectual property and tax-related assets and liabilities) of Varian and its subsidiaries attributable to periods prior to, at and after Varex’s separation from Varian and will govern certain relationships between Varex and

Varian after the separation. For additional information regarding the separation and distribution agreement and other transaction and commercial agreements, see the sections entitled “Risk Factors—Risks Related to the Separation” and “Relationships with Varian Following Separation and Distribution.”

Who will manage Varex after the separation?

Varex benefits from having in place a management team with an extensive background in and deep knowledge of the imaging components industry. After the separation, Varex’s management team is expected to be led by Sunny S. Sanyal, currently Varian’s President of the Imaging Components business, and Clarence R. Verhoef, currently Varian’s Senior Vice President, Finance and Corporate Controller. Messrs. Sanyal and Verhoef are expected to serve as Varex’s chief executive officer and chief financial officer, respectively. For more information regarding Varex’s management, see the section entitled “Management.”

Are there risks associated with owning Varex common stock?

Yes. Ownership of Varex common stock is subject to both general and specific risks, including those relating to Varex’s business, the industry in which it operates, its ongoing contractual relationships with Varian and its status as a separate, publicly traded company. Ownership of Varex common stock is also subject to risks relating to the separation. These risks are described in the section entitled “Risk Factors” beginning on page 19. You are encouraged to read that section carefully.

Does Varex plan to pay dividends?

Varex does not currently expect to pay dividends on its common stock. The declaration and payment of any dividends in the future by Varex will be subject to the sole discretion of its board of directors and will depend upon many factors. See the section entitled “Dividend Policy.”

Will Varex incur any indebtedness prior to or at the time of the distribution?

Varex anticipates entering into a secured revolving credit facility in an aggregate principal amount of up to $100.0 million and a secured term loan credit facility in an aggregate principal amount of $200.0 million on or before the distribution date. Varex intends to draw approximately $5.0 million on the revolving credit facility and the entire amount of $200.0 million of the term loan credit facility on or before the date of distribution. See the sections entitled “Description of Material Indebtedness” and “Risk Factors—Risks Related to the Separation and Distribution.”

Who will be the distribution agent, transfer agent, registrar and information agent for the Varex common stock?

The distribution agent, transfer agent and registrar for the Varex common stock will be Computershare. If you are a registered stockholder, for questions relating to the transfer or mechanics of the stock distribution, you should contact Computershare toll free at (800) 756-8200. If you hold your shares through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares. Contact them with any questions relating to the distribution.

Where can I find more information about Varian and Varex?

Before the distribution, if you have any questions relating to Varian, Varex and the performance of their businesses, you should contact:

Varian Medical Systems, Inc.

Investor Relations

3100 Hansen Way

Palo Alto, California 94304-1038

Varian’s investor website is http://investors.varian.com/.

After the distribution, Varex stockholders who have any questions relating to Varex and the performance of its business should contact Varex at:

Varex Imaging Corporation

Investor Relations

1678 S. Pioneer Road

Salt Lake City, Utah 84104

Varex’s investor website is [●].

INFORMATION STATEMENT SUMMARY

The following is a summary of material information discussed in this information statement. This summary may not contain all of the details concerning the separation, distribution or other information that may be important to you. To better understand the separation, distribution and Varex’s business and financial position, you should carefully review this entire information statement.

This information statement describes the Imaging Components business of Varian to be transferred to Varex by Varian in the separation as if the transferred business were Varex’s business for all historical periods described. References in this information statement to Varex’s historical assets, liabilities, products, businesses or activities of Varex’s business are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the Imaging Components business as part of Varian and its subsidiaries prior to the separation.

Varex Imaging Corporation

Varex is a world leader in designing and manufacturing X-ray tubes, flat panel detectors, imaging software, high voltage connectors and high-energy inspection accelerators, which are key components of X-ray imaging systems. Varex’s vision is to create the most innovative and cost-effective X-ray imaging solutions for equipment manufacturers and its mission is to be the world’s leader in imaging components through the delivery of high quality products that enable its customers’ success.

Varex is a leading manufacturer of X-ray tubes globally, with over 100,000 tubes shipped in the last five years to a group of customers that include most major radiology original equipment manufacturers (“OEMs”). Varex manufactures X-ray tubes for four primary medical diagnostic radiology applications: computed tomography (“CT”) scanners, radiographic or fluoroscopic imaging, special procedures, and mammography. Varex also offers a large line of industrial X-ray tubes, which consist of analytical X-ray tubes used for X-ray fluorescence and diffraction, as well as tubes used for non-destructive imaging and gauging and airport baggage inspection systems. Varex is also a leading manufacturer of flat panel detectors, with an installed base of over 80,000 detectors. Varex’s flat panel detectors, which are based on amorphous silicon imaging technologies, have broad application as an alternative to image intensifier tubes and X-ray film. Varex’s flat panel detector products are being incorporated into next generation filmless medical diagnostic, radiation therapy, dental, veterinary, and industrial inspection imaging systems. Varex believes that imaging equipment based on amorphous silicon technologies is more stable and reliable, needs fewer adjustments, suffers less degradation over time than image intensifier tubes, and is more cost-effective than X-ray film. Varex also offers software and image processing tools for X-ray imaging systems for a variety of modalities including fluoroscopy, angiography, cardiology, mammography and general radiography. The software may be combined with Varex’s radiographic flat panel detectors to upgrade film-based X-ray imaging systems to digital systems.

As Varex is transitioning to a stand-alone company, the Chief Executive Officer, who is its Chief Operating Decision Maker (“CODM”), re-evaluated the product groupings and how he views and measures the business performance and therefore, subsequent to the filing of the preliminary registration statement on Form 10 on August 11, 2016, Varex reorganized its two reportable operating segments into Medical and Industrial. The realigned segments better align Varex’s products and service offerings with customer use in medical and industrial markets and are consistent with how the CODM evaluates the business for the allocation of resources. The CODM allocates resources to and evaluates financial performance of each operating segment primarily based on revenues and gross margin. The new operating and reportable segment structure will provide better visibility and clarity into the financial performance of Varex’s products, and alignment between business strategies and operating results.

The Medical business segment designs, manufactures, sells and services X-ray imaging components for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, radiation therapy and computer-aided detection. Varex provides a broad range of X-ray imaging components for Medical customers including X-ray tubes, flat panel digital image detectors, high voltage connectors, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers, and buckys. Varex sells its X-ray imaging components primarily to imaging system original equipment manufacturer (“OEM”) customers that incorporate them into their medical diagnostic, radiation therapy, dental, and veterinary imaging systems. Varex also sells its X-ray imaging components to independent service companies, distributors and directly to end-users for replacement purposes.

The Industrial business segment designs, manufactures, sells and services products for use in security and industrial inspection applications, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The products include Linatron X-ray accelerators, X-ray tubes, flat panel digital image detectors, high voltage connectors, imaging processing software and image detection products for security and inspection purposes. Varex has an installed base of over 1,000 linear accelerators. Varex generally sells its Industrial products to OEM customers for incorporation into new system configurations. The OEM customers sell the systems to customs and other government agencies for use in ports and borders to screen overland, rail, and sea cargo for contraband, weapons, narcotics and explosives, as well as for manifest verification. Varex also sells its Industrial products to commercial enterprises in the casting, power, aerospace, chemical, petro-chemical and automotive industries for nondestructive product examination purposes, such as industrial inspection and manufacturing quality control.

Varex’s reputation for high quality and its broad portfolio of products, continuous innovation in imaging, deep relationships with OEMs, global scale and low cost manufacturing, and global presence for service and support uniquely position Varex to take advantage of continued opportunities for growth in the medical, security and industrial imaging markets.

Varex conducts an active research and development program to focus on new technology and applications in both the medical and industrial X-ray imaging markets and is typically the owner of the intellectual property for technologies which Varex develops. Furthermore, Varex actively pursues acquisition targets and has recently acquired several companies. During fiscal year 2015, through Varex’s acquisitions of Claymount Investments B.V. (“Claymount”) and MeVis Medical Solutions AG (“MeVis”), Varex broadened its portfolio of components by adding high voltage connectors, ionization chambers, automatic exposure control systems and image processing software for computer-aided detection.

Claymount, a Netherlands-based supplier of X-ray imaging components, is a strategic supplier to many global X-ray equipment manufacturers and is one of the world’s leading suppliers of high voltage connectors, ionization chambers, collimators, buckys, and solid state automatic exposure control systems for controlling dose during medical X-ray imaging. Claymount enhances Varex’s ability to support a continuing industry-wide transition from analog to digital X-ray imaging and will allow it to expand its line of components and integrated subsystems.

In April 2015, Varex completed the acquisition of 73.5% of the then-outstanding shares of MeVis, a publicly listed company based in Bremen, Germany that provides image processing software and services for cancer screening. Varex intends to combine MeVis’ image processing and analysis software with its portfolio of flat panel detector and imaging workstation offerings to provide integrated solutions for cancer screening and computer-aided detection.

Net earnings attributable to Varex totaled $68.5 million for the fiscal year ended September 30, 2016.

Strengths

Varex believes it possesses a number of competitive advantages that distinguish it from its competitors.

Technology and innovation. Varex shares in a 65+ year legacy of innovation in imaging components technology and has a track record for industry-altering innovations. For example, Varex developed the anode-end grounded X-ray tube that provided a lighter-weight, more powerful X-ray tube for computed tomography. Varex also developed the flat panel digital image detector that replaces X-ray film and image intensifiers. Varex’s long history, broad portfolio and technical expertise enable it to innovate quickly, including providing customized solutions tailored to customers’ individual needs. Varex holds a strong intellectual property portfolio for the technology that it has developed.

Strong, long-standing customer relationships. Varex has strong, long-standing relationships with a substantial majority of the major OEMs in the medical imaging industry. The length of its relationships with major OEMs averages over ten years and with its top five customers over approximately 40 years. Varex attributes this to its reputation for high quality products that provide cost-effective solutions to OEMs. Varex also is the long-time supplier of X-ray tubes and flat panel detectors to Varian’s Oncology Systems business for its Conebeam CT/On-Board Imager accessory product. Varex expects that this supply relationship will continue following the completion of the distribution, although there can be no assurance of this. Varex believes the strength of these relationships will continue to grow as Varex is uniquely positioned to provide a wide range of solutions to its customers.

Global footprint and scale. Varex currently has manufacturing centers in Salt Lake City, Utah; Las Vegas, Nevada; Downers Grove, Illinois; Dinxperlo, Netherlands; Calamba City, Philippines; and Liverpool, New York; and regional service centers in Charleston, South Carolina; Willich, Germany; and Wuxi, China. Varex’s global scale allows it to manufacture and transport its products in a cost-efficient manner. For Varex’s customers, local presence allows for effective customer service and logistics efficiency. From a regulatory perspective, Varex’s local presence enables tailoring of local content to local medical device regulatory and product registration requirements. From a risk management perspective, Varex’s global presence offers natural opportunities for hedging of geographic risk.

Broad Portfolio. Varex’s product breadth and development expertise allow Varex to be the partner of choice for its customers. Unlike most of its competitors, Varex has a broad imaging components portfolio, providing its customers with X-ray tubes, flat panel detectors, linear accelerators, high energy detectors, high voltage connectors and other components, high-energy inspection accelerators, software and workstations. Varex’s technical expertise in imaging applications means it can provide sub-systems of components optimized to work together, which enables its customers to develop products faster.

Deep manufacturing expertise. X-ray tubes are a complex product to manufacture that requires significant investment and expertise in complex manufacturing, assembly and material science. Throughout Varex’s 65-year history, Varex has invested in world class and high tech manufacturing operations and has developed proprietary manufacturing capabilities that position Varex as the ideal manufacturing partner for its customers.

Highly experienced and proven management and engineering teams . Varex’s leadership includes individuals with an average of over 20 years of experience in the medical and industrial industries, and with long-standing customer and supplier relationships. Varex’s engineering team has allowed Varex to establish itself as a leader in technology and innovation over the last 65 years. Varex’s management and engineering teams have been instrumental in building its imaging components business into a market leader. Varex believes that their experience and expertise will continue to be an important and differentiating asset for Varex following the completion of the distribution.

Strategies

Varex’s vision is to create the most innovative and cost-effective X-ray imaging solutions for equipment manufacturers and its mission is to be the world’s leader in imaging components through the delivery of high quality products that enable its customers’ success. By 2020, Varex aspires to be the lowest cost innovator in medical X-ray components, to offer integrated imaging subsystems using data and software, and to leverage its medical technology platform to address disruptive applications in industrial imaging and inspection.

Pursue growth opportunities in targeted markets. Healthcare is a large, stable and global market with strong, long-term growth dynamics arising from an aging population, increased disease prevalence, increased need for diagnostic testing and growing access to healthcare worldwide. Healthcare is less prone to cyclical

demand because it is necessary, government and other insurance programs are reliable payers, and there is predictable growth driven by foreseeable population dynamics. Furthermore, technological innovation can augment market growth. The Medical market segment is driven by demographic and clinical needs, many of which are expected to expand but at the same time require more cost-efficient solutions due to ongoing pricing pressures faced by OEMs.

In the medical imaging market, the flat panel detectors sector is experiencing rapid growth, driven by a market transition from analog to digital systems due to lower costs, X-ray dose reductions, increased patient throughput, and U.S.-legislated reimbursement cuts for analog systems. Product cycles are becoming shorter and there is a significant future replacement opportunity for the estimated 500,000-plus analog units that exist globally. The competitive landscape is fragmented with the potential for consolidation and many OEMs lack scale, driving them to outsource the manufacture of flat panel detectors. Varex intends to capitalize on these opportunities by leveraging its reputation as a cost-effective producer of innovative and high quality products and its strong existing relationships with its OEM customers.

The industrial and security imaging markets represent large market domains with new opportunities for Varex’s Industrial segment. As manufacturers implement more automation and utilize more disruptive technologies, such as 3D printing, they should expand the use of in-process inspection capabilities that use imaging and image detection software. In addition, the security imaging market is expected to continue to expand with governments’ demand for additional baggage and cargo inspection capabilities. Varex is well-positioned to leverage its technical expertise developed for medical imaging for use in industrial imaging applications.

Varex’s strategy includes pursuing both organic and inorganic avenues for growth in the medical components and industrial and security imaging markets. Varex intends to broaden its portfolio of components and leverage scale to compete more effectively in existing and new sectors within these markets.

Drive operational excellence. Most of Varex’s larger OEM customers have internal manufacturing capabilities for imaging components, so Varex must be able to provide cost-effective, high quality products as an alternative. Imaging components manufacturing is a capital-intensive business and Varex, as a leading components manufacturers, has been able to leverage the scale of its business to deliver very cost-effective solutions to its customers. Varex has continued to refine its quality-focused processes by utilizing six sigma and lean manufacturing principles. The combination of scale, technical expertise and manufacturing experience has positioned Varex as a global leader in the imaging components market.

specific types of customers, will better enable it to respond to individualized customer needs. Varex believes that this individualized approach, together with its global footprint, scale and broad component portfolio, will enable Varex to provide high quality products suited to its customers’ needs in a cost-effective manner.

Continuous innovation. In its Medical business, the need to reduce dose, increase gantry rotation speeds and develop low cost entry level CT systems for emerging markets are driving demand for new types of CT tubes and Varex believes that this creates significant opportunity for expansion. The flat panel detector market is rapidly changing with Varex and many competitors delivering new innovations, particularly in the wireless radiographic image detector space. Varex continues to rapidly innovate flat panel detectors by leveraging its broad technical expertise and its vertically-integrated processes, highlighted by its ownership position in dpiX LLC which provides the amorphous silicon sensor arrays. Through acquisitions, Varex has been expanding its software portfolio which is critical for the integration of components in imaging systems. In addition, while technological advancement is important to an OEM’s success, Varex believes that many OEMs are facing pressure to outsource manufacturing as a result of shrinking internal research and development budgets. Varex believes its ability to quickly innovate and to provide integrated sub-systems will continue to make it a valued partner to OEMs, both in its Medical and Industrial segments.

Summary of Risks Associated with the Business and the Separation and Distribution

An investment in Varex’s common stock is subject to a number of risks, including risks relating to the separation and distribution and risks related to Varex’s business. Set forth below are some, but not all, of these risks. Please read the information in the section captioned “Risk Factors” for a more thorough description of these and other risks.

Risks Related to Varex’s Business

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Varex sells its products to a limited number of original equipment manufacturer (“OEM”) customers, many of which are also its competitors, and a reduction in or loss of business of one or more of these customers may materially reduce its sales.

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Varex may not be able to accurately predict the demand for its products by its OEM customers.

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Varex competes in highly competitive markets, and it may lose business to its customers and other companies with greater resources or the ability to develop more effective technologies, or it could be forced to reduce its prices.

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Varex’s success depends on the successful development, introduction and commercialization of new generations of products and enhancements to or simplifications of existing product lines.

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A disruption at Varex’s manufacturing facilities in Salt Lake City, Utah; Calamba City, Philippines or Las Vegas, Nevada could materially and adversely affect its business.

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Significantly more than half of Varex’s revenues are generated from customers located outside the United States, and economic, political and other risks associated with international sales and operations could materially and adversely affect Varex’s sales or make them less predictable.

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Varex’s results have been and may continue to be affected by continuing worldwide economic instability, including changes in foreign currency exchange rates and fluctuations in the price of crude oil and other commodities.

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The loss of a supplier or any inability to obtain supplies of important components could restrict Varex’s ability to manufacture products, cause delays in its ability to deliver products, or significantly increase its costs.

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A shortage or change in source of, or increase in price of, raw materials could restrict Varex’s ability to manufacture products, cause delays, or significantly increase its cost of goods.

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Compliance with U.S. laws and regulations applicable to the marketing, manufacture and distribution of Varex’s products may be costly, and failure or delays in obtaining regulatory clearances or approvals, or failure to comply with applicable laws and regulations could prevent Varex from distributing its products, require Varex to recall its products or result in significant penalties or other harm to Varex’s business.

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Varex sells certain X-ray tube products as replacements which are subject to medical device certification and product registration laws and regulations which vary by country, and are subject to change and Varex may be unable to receive registration approval or renewal of existing registrations if Varex fails to meet regulatory approval requirements or if the process of gaining approval becomes commercially infeasible or impractical.

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Compliance with foreign laws and regulations applicable to the marketing, manufacture and distribution of Varex’s products may be costly, and failure to comply may result in significant penalties and other harm to Varex’s business.

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Existing and future healthcare reforms, including the Affordable Care Act and changes to reimbursement rates, may indirectly have a material adverse effect on Varex’s business and results of operations.

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Varex is subject to federal, state and foreign laws governing its business practices, which, if violated, could result in substantial penalties. Additionally, challenges to or investigations into Varex’s practices could cause adverse publicity and be costly to respond to and thus could harm its business.

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Warranty claims may materially and adversely affect Varex’s business.

Risks Related to the Separation

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Varex has no history operating as an independent company, and its historical and pro forma financial information is not necessarily representative of the results that it would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.

•

In connection with the separation, Varex will incur debt obligations that could adversely affect Varex’s business, profitability and ability to meet its obligations.

•

Certain contracts that will need to be assigned from Varian or its affiliates to Varex in connection with the separation may require the consent of the counterparty to such an assignment, and failure to obtain these consents could increase Varex’s expenses or otherwise reduce Varex’s profitability.

•

If the distribution, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, Varian, Varex and Varian stockholders could be subject to significant tax liabilities, and, in certain circumstances, Varex could be required to indemnify Varian for material taxes and other related amounts pursuant to indemnification obligations under the tax matters agreement.

•

Varex may not achieve some or all of the expected benefits of the separation, and the separation may materially and adversely affect Varex’s business.

•

Varian or Varex may fail to perform under various transaction agreements that will be executed as part of the separation or Varex may fail to have necessary systems and services in place when the transition services agreement expires.

Risks Related to Varex’s Common Stock

•

Varex cannot be certain that an active trading market for its common stock will develop or be sustained after the distribution and, following the distribution, Varex’s stock price may decline or fluctuate significantly.

•

There may be substantial and rapid changes in Varex’s stockholder base, which may cause Varex’s stock price to fluctuate significantly.

•

Varex does not currently expect to pay dividends on its common stock. There is no assurance as to whether or when Varex will pay any dividends on its common stock or as to the amount of any such dividends.

•

Certain provisions in Varex’s amended and restated certificate of incorporation and bylaws, and of Delaware law, may prevent or delay an acquisition of Varex, which could decrease the trading price of Varex’s common stock.

•

Varex’s amended and restated certificate of incorporation will contain an exclusive forum provision that may discourage lawsuits against Varex and Varex’s directors and officers.

The Separation and Distribution

The Varian board of directors, together with Varian management and advisors, regularly reviews its businesses for ways in which the businesses can improve their respective focus and performance. As part of these reviews, the Varian board of directors considers many factors, including the factors described below under “—Reasons for the Separation”, as well as current economic, industry and regulatory conditions. As a result of these reviews, based on the totality of the factors it considered, the Varian board of directors concluded that separating the Imaging Components business from the remainder of Varian at this time was in the best interests of Varian and its stockholders.

On May 23, 2016, Varian announced that it intended to separate its Imaging Components business from the remainder of its businesses. The separation will occur by means of pro rata distribution to Varian stockholders of all of the shares of common stock of Varex, which was formed to hold Varian’s Imaging Components business.

On [●], 2017, the Varian board of directors approved the distribution of all of Varex’s issued and outstanding shares of common stock on the basis of one share of Varex common stock for every [●] shares of Varian common stock held as of the close of business on [●], 2017, the record date for the distribution.

Varex’s Post-Separation Relationship with Varian

After the distribution, Varian and Varex will be separate companies with separate management teams and separate boards of directors. Varex will enter into a separation and distribution agreement with Varian, which is referred to in this information statement as the “separation agreement” or the “separation and distribution agreement.” In connection with the separation, Varex will also enter into various other agreements to effect the separation and provide a framework for its relationship with Varian after the separation, including a transition services agreement, a tax matters agreement, an intellectual property matters agreement, one or more supply/distribution agreements, a trademark license agreement and an employee matters agreement. These agreements provide for the allocation between Varex and Varian of Varian’s assets, employees, liabilities and obligations (including its employee benefits, environmental, intellectual property and tax-related assets and liabilities) attributable to periods prior to, at and after Varex’s separation from Varian and will govern certain relationships between Varex and Varian after the separation. For additional information regarding the separation agreement and other transaction and commercial agreements, see the sections entitled “Risk Factors—Risks Related to the Separation” and “Relationships with Varian Following Separation and Distribution.”

Reasons for the Separation

The Varian board of directors believes that separating the Imaging Components business from the remainder of Varian is in the best interests of Varian and its stockholders for a number of reasons, including that:

•

The separation will allow each business to more effectively pursue its own distinct operating priorities and strategies, and will enable the management of each company to more quickly and efficiently make decisions and concentrate efforts on the unique needs of each business and pursue distinct opportunities for long-term growth and profitability.

•

The separation will permit each company to concentrate its financial resources solely on its own operations, providing greater flexibility to invest capital in its business in a time and manner appropriate for its distinct strategy and business needs. It is anticipated that this will facilitate a more efficient allocation of capital.

•

The separation will create an independent equity structure that will afford Varex direct access to capital markets and facilitate its ability to capitalize on its unique growth opportunities and effect future acquisitions utilizing its capital stock.

•

The separation will facilitate incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business, and may enhance employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives.

•

The separation will allow investors to separately understand and value Varian and Varex based on their distinct businesses and investment identities, including the merits, performance and future prospects of their respective businesses. The separation will also provide investors with two distinct and targeted investment opportunities.

The Varian board of directors also considered a number of potentially negative factors in evaluating the separation, including that:

•

As a current part of Varian, the Imaging Components business benefits from Varian’s size and purchasing power in procuring certain goods and services, which has helped the current combined company leverage certain fixed costs. After the separation, as a separate, independent entity, Varex may be unable to obtain these goods, services and technologies at prices or on terms as favorable as those Varian obtained prior to the separation. Varex may also incur costs for certain functions previously performed by Varian, such as accounting, tax, legal, human resources, information technology and other general administrative functions that are higher than the amounts reflected in Varex’s historical financial statements, which could cause Varex’s profitability to decrease.

•

The actions required to separate Varex’s and Varian’s respective businesses could disrupt Varian’s and/or Varex’s operations.

•

Certain costs and liabilities that were otherwise less significant to Varian as a whole will be more significant for Varex as a stand-alone company.

•

Varex will incur costs in connection with the transition to being a stand-alone public company that may include accounting, tax, legal and other professional services costs, recruiting and relocation costs associated with hiring or reassigning Varex personnel, costs related to establishing a new brand identity in the marketplace and costs to separate information systems. Varex will also incur debt issuance costs in connection with the separation.

•

Varex may not achieve the anticipated benefits of the separation for a variety of reasons, including, among others: (i) the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing Varex’s business; (ii) following

the separation, Varex may be more susceptible to market fluctuations and other adverse events than if it were still a part of Varian; and (iii) following the separation, Varex’s business will be less diversified than Varian’s business prior to the separation.

•

There could be no assurance that the supply relationship between Varian and Varex will continue following the completion of the separation.

•

To preserve the tax-free treatment of the separation and the distribution to Varian for U.S. federal income tax purposes, under the tax matters agreement that Varex will enter into with Varian, Varex will be restricted from taking actions that may cause the separation and distribution to be taxable to Varian for U.S. federal income tax purposes. These restrictions may limit for a period of time Varex’s ability to pursue certain strategic transactions and equity issuances or engage in certain other transactions that might increase the value of its business.

The Varian board of directors concluded that the potential benefits of the separation outweighed these potentially negative factors. The Varian board of directors also considered, in its decision on timing of the separation, the initial stabilization of the Imaging Components business in the first half of fiscal year 2016 and its then-projected financial improvement as allowing the business to operate effectively as a standalone public company and enabling Varian and its stockholders to realize the benefits described above from a separation of the businesses. For more information, see the sections entitled “The Separation and Distribution—Reasons for the Separation,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In view of the wide variety of factors considered in connection with its evaluation of the separation, and the complexity of these matters, the Varian board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the separation. Rather, the Varian board of directors conducted an overall review of the factors described above and reached its decisions based on the totality of those factors.

Capitalization Summary

Varian and Varex intend that, prior to the distribution, Varex will transfer all cash and cash equivalents in excess of $5.0 million to Varian, other than any cash and cash equivalents held by MeVis Medical Solutions AG (“MeVis”) as of the effective time of the distribution. Following the distribution, if it is determined that as of the effective time of the distribution Varex had cash and cash equivalents in excess of $5.0 million (disregarding cash and cash equivalents of MeVis), Varex will be required to transfer such excess to Varian. The actual amount of cash that Varex will have after giving effect to any adjustment payment to Varian may be more or less than $32.0 million. Varex anticipates entering into a secured revolving credit facility in an aggregate principal amount of up to $100.0 million and a secured term loan credit facility in an aggregate principal amount of $200.0 million on or before the distribution date. Varex intends to draw approximately $5.0 million on the revolving credit facility and the entire amount of $200.0 million of the term loan credit facility on or before the date of distribution in order to fund a cash transfer to Varian of $200.0 million prior to the effective time of the distribution and to pay financing costs. See the sections entitled “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Relationships with Varian Following Separation and Distribution—Separation and Distribution Agreement.”

Emerging Growth Company Status

Varex is an “emerging growth company” as defined in the JOBS Act. As such, Varex intends to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including, but not limited to, scaled disclosure provisions with respect to

financial statements and executive compensation, compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and the requirements to hold a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. Varex cannot predict if investors will find its common stock less attractive because it intends to rely on these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may become more volatile. Varex may take advantage of these exemptions until it is no longer an emerging growth company.

In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Varex has elected not to take advantage of the benefits of this extended transition period and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. This election is irrevocable.

Varex could remain an emerging growth company until the earliest of (a) the last day of the first fiscal year in which Varex’s annual gross revenues exceed $1 billion, (b) the last day of the fiscal year following the fifth anniversary of the date of the first sale of Varex’s common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), (c) the date that Varex becomes a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur, generally, if (i) the market value of Varex common stock that is held by non-affiliates exceeds $700 million as of the last business day of Varex’s most recently completed second fiscal quarter, (ii) Varex had been subject to the reporting requirements of the Exchange Act for a period of at least twelve calendar months, and (iii) Varex had filed at least one annual report, or (d) the date on which Varex has issued more than $1 billion in non-convertible debt during the preceding three-year period.

Corporate Information

Varex was incorporated in Delaware for the purpose of holding Varian’s Imaging Components business in connection with the separation and distribution. Prior to the contribution of this business to Varex, which will be completed prior to the distribution, Varex had no operations. The address of Varex’s principal executive offices is 1678 S. Pioneer Road, Salt Lake City, Utah 84104. Varex’s telephone number is 1-800-432-4422.

Varex maintains an Internet site at [●]. Varex’s website, and the information contained therein, or connected thereto, is not incorporated by reference into this information statement or the registration statement of which this information statement forms a part.

Varex owns or has rights in the trademarks, service marks and trade names that it uses in conjunction with the operation of its business.

Reason for Furnishing This Information Statement

This information statement is being furnished solely to provide information to stockholders of Varian who will receive shares of Varex common stock in the distribution. It is not, and is not to be construed as, an inducement or encouragement to buy or sell any of Varex’s securities. The information contained in this information statement is believed by Varex to be accurate as of the date set forth on its cover. Changes may occur after that date and neither Varian nor Varex will update the information except in the normal course of their respective disclosure obligations and practices, or as required by applicable law.

Summary Historical and Pro Forma Combined Financial Data

The following summary historical financial data reflects the combined operations of Varex. Varex derived the combined statement of earnings for the fiscal years ended September 30, 2016, October 2, 2015, and September 26, 2014, and the combined balance sheet data as of September 30, 2016 and October 2, 2015, as set forth below, from its audited annual combined financial statements (the “Combined Financial Statements”), which are included elsewhere in this information statement and from its unaudited combined pro forma financial statements included in the “Unaudited Pro Forma Combined Financial Statements” section of this information statement. Varex’s underlying financial records were derived from the financial records of Varian Medical Systems, Inc. (“Varian”) for the periods reflected herein.

Varex’s historical combined financial statements includes allocations of certain Varian expenses relating to, among certain other expenses: accounting, legal, human resources, information technology, treasury, tax, facilities, research and development, insurance and other corporate and infrastructure services. These costs may not be representative of the future costs Varex will incur as an independent public company. In addition, Varex’s historical financial information does not reflect changes that it expects to experience in the future as a result of its separation and distribution from Varian, including changes in its cost structure, personnel needs, tax structure, financing and business operations. Varex’s historical combined financial statements also do not reflect certain other adjustments between Varian and Varex as reflected under “Unaudited Pro Forma Combined Financial Statements” included elsewhere in this information statement. Consequently, the financial information included here may not necessarily reflect Varex’s financial position and results of operations or what its financial position and results of operations would have been had it been an independent, publicly traded company during the periods presented or be indicative of Varex’s future performance as an independent company.

The unaudited pro forma combined balance sheet has been prepared to give effect to the Pro Forma Transactions (as defined below in the section “Unaudited Pro Forma Combined Financial Statements”) as though the Pro Forma Transactions had occurred on September 30, 2016. The unaudited pro forma combined statement of earnings has been prepared to give effect to the Pro Forma Transactions as if the Pro Forma Transactions had occurred or had become effective as of October 3, 2015, the first day of fiscal year 2016. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information.

The unaudited pro forma combined financial statements are not necessarily indicative of Varex’s results of operations or financial condition had the distribution and its anticipated post-separation capital structure been completed on the dates assumed. Also, they may not reflect the results of operations or financial condition that would have resulted had Varex been operating as an independent, publicly traded company during such periods. In addition, they are not necessarily indicative of Varex’s future results of operations, financial position or cash flows.

This summary historical and pro forma combined financial data should be reviewed in combination with “Unaudited Pro Forma Combined Financial Statements,” “Capitalization,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Combined Financial Statements and accompanying notes included in this information statement.


(In millions)	Pro Forma		Fiscal Years
	2016		2016		2015		2014
Combined statement of earnings data:
Revenues	$	620.1	$	620.1	$	632.3	$	685.2
Earnings before taxes		94.5		105.0		127.6		174.2
Net earnings attributable to Varex		61.8		68.5		80.0		110.1

	Pro Forma
	September 30, 2016		September 30, 2016		October 2, 2015
Combined balance sheet data:
Cash and cash equivalents	$	32.0	$	36.5	$	20.6
Current assets		356.4		359.9		316.1
Noncurrent assets		282.2		262.5		267.5
Total assets		638.6		622.4		583.6
Current liabilities		87.6		77.8		78.6
Long term liabilities		210.0		8.3		9.4
Total liabilities		297.6		86.1		88.0
Redeemable noncontrolling interests		10.3		10.3		—
Total equity		330.7		526.0		495.6

RISK FACTORS

You should carefully consider the following risks and other information in this information statement in evaluating Varex and Varex’s common stock. Any of the following risks could materially and adversely affect Varex’s business, results of operations or financial condition. The risk factors generally have been separated into three groups: risks related to Varex’s business, risks related to the separation and distribution and risks related to Varex’s common stock.

Risks Related to Varex’s Business

Varex sells its products to a limited number of OEM customers, many of which are also its competitors, and a reduction in or loss of business of one or more of these customers may materially reduce its sales.

Varex had one customer during fiscal year 2016 that accounted for 10% or more of its revenue. Varex’s ten largest customers as a group accounted for approximately 54%, 63% and 63% of its revenue for fiscal years 2016, 2015 and 2014, respectively. Varex’s revenue from Toshiba Medical, its largest customer, accounted for approximately $140 million of Varex’s revenue in fiscal year 2016.

Varex sells its products to a limited number of OEM customers, many of which are also its competitors with in-house X-ray tube manufacturing operations. Although Varex seeks to broaden its customer base, it will continue to depend on sales to a relatively small number of major customers. Because it often takes significant time to replace lost business, it is likely that Varex’s operating results would be materially and adversely affected if one or more of its major OEM customers were to cancel, delay, or reduce orders in the future. For example, in the second half of fiscal year 2015, Varex was notified by a major flat panel customer of their decision to in-source a significant amount of the volume being purchased from Varex, which has led to a decline in revenues in fiscal year 2016. In addition, it is expected that Varian will continue as a major customer of Varex, and while Varex expects to enter into a supply agreement with Varian, there can be no assurance that Varian will continue to source from Varex long-term. Varex’s OEM customers may cancel, delay or reduce orders due to a wide variety of factors, many of which are beyond Varex’s control. In addition, the consolidation of OEMs, such as the pending sale of Toshiba Medical to Canon Inc., could also negatively impact Varex in ways that may be difficult to quantify or predict.

Furthermore, Varex generates significant accounts receivables from the sale of its products and the provision of services to its major customers. Although Varex’s major customers are large corporations, if one or more of these customers were to become insolvent or otherwise be unable to pay for Varex products and services, Varex’s operating results and financial condition could be materially and adversely affected.

Varex may not be able to accurately predict the demand for its products by its OEM customers.

Economic uncertainties over the past few years, natural disasters and other matters beyond Varex’s control have made it difficult for its OEM customers to accurately forecast and plan future business activities. Such economic uncertainties and natural disasters, as well as other factors, have previously impacted Varex’s business, resulting in inventory reduction and slowdowns in sales at some of these customers. Similar inventory adjustments and slowdowns in sales could occur in the future. Varex’s OEM customers also face inherent competitive issues and new product introduction delays which can result in changes in forecast. As such, the market and regulatory risks faced by Varex’s OEM customers in the X-ray-based diagnostic imaging space also ultimately impact Varex’s ability to forecast future business. Varex’s agreements for imaging components may contain purchasing estimates that are based on its customers’ historical purchasing patterns, and actual purchasing volumes under the agreements may vary significantly from these estimates. The variation from forecasted purchasing volume may, in part, be due to the increasing life of X-ray tubes, which can result in reduced demand for replacement X-ray tubes in ways Varex may not be able to accurately forecast. Reductions in purchasing patterns have in the past and may in the future materially and adversely affect Varex’s operating results.

Varex competes in highly competitive markets, and it may lose business to its customers or other companies with greater resources or the ability to develop more effective technologies, or it could be forced to reduce its prices.

Rapidly evolving technology, intense competition and pricing pressure characterize the market in which Varex competes. Varex often competes with companies that have greater financial, marketing and other resources than Varex, including Varex’s customers. If these customers manufacture a greater percentage of their components in-house or otherwise lower external sourcing costs, which may occur for a number of reasons, including a strong U.S. dollar, Varex could experience reductions in purchasing volume by, or loss of, one or more of these customers. Such a reduction or loss may have a material and adverse effect on its business. Some of the major diagnostic imaging systems companies, which are the primary OEM customers for Varex’s X-ray components, also manufacture X-ray components, including X-ray tubes, for use in their own imaging systems products. Varex must compete with these in-house manufacturing operations for business. In addition, Varex competes against other stand-alone, independent X-ray tube manufacturers for both the OEM business of major diagnostic imaging equipment manufacturers and the independent servicing business for X-ray tubes. The market for flat panel detectors is also very competitive, and Varex faces intense competition from over a dozen smaller competitors. As a result of these competitive dynamics, in order for Varex to effectively retain the business of its customers and compete with its competitors, it must have an advantage in one or more significant areas, such as lower product cost, better product quality and/or superior technology and/or performance.

With Varex’s industrial products, Varex competes with other OEM suppliers, primarily outside of the United States. The market for its X-ray tube and flat panel products used for nondestructive testing in industrial applications is small and highly fragmented. In addition, some of Varex’s competitors outside the United States may have resources and support from their governments that Varex cannot replicate, such as preferences for local manufacturers, and may not be subject to the same trade compliance regulations to which Varex is subject. Therefore, Varex’s ability to compete in certain high-growth markets may be limited as compared to its competitors.

Existing competitors’ actions and new entrants may materially and adversely affect Varex’s ability to compete. These competitors could develop technologies and products that are more effective than those Varex currently uses or produces or that could render its products obsolete or noncompetitive. In addition, the timing of Varex’s competitors’ introduction of products into the market could affect the market acceptance and sales of Varex’s products. Some competitors offer specialized products that provide, or may be perceived by customers to provide, a marketing advantage over Varex’s products. Also, some of Varex’s competitors may not be subject to the same standards, regulatory and/or other legal requirements to which Varex is subject, and therefore, they could have a competitive advantage in developing, manufacturing and marketing products and services. Any inability to develop, gain regulatory approval for and supply commercial quantities of competitive products to the market as quickly and effectively as Varex’s competitors could limit market acceptance of Varex’s products and reduce its sales. In addition, some of its smaller competitors could be acquired by larger companies that have greater financial strength, which could enable them to compete more aggressively. Varex’s competitors could also acquire some of its customers, suppliers or distributors, which could disrupt supply or distribution arrangements and result in loss of customers and less predictable and reduced revenues in Varex’s businesses. Any of these competitive factors could negatively and materially affect Varex’s pricing, sales, revenues, market share and gross margins and its ability to maintain or increase its operating margins.

Varex’s success depends on the successful development, introduction and commercialization of new generations of products and enhancements to or simplifications of existing product lines.

Rapid change and technological innovation characterize the markets in which Varex operates, particularly with respect to flat panel technology. Varex’s customers use its products in their medical diagnostic, security and industrial imaging systems, and Varex must continually introduce new products at competitive costs while also improving existing products with higher quality, lower costs and increased features. In order to be successful, Varex must anticipate its customers’ needs and demands as well as potential shifts in market preferences.

Varex’s failure to do so has in the past resulted and may in the future result in the loss of customers and adverse impact to its financial performance. With a relatively strong U.S. Dollar, Varex’s ability to meet its customers’ pricing expectations is particularly challenging and may result in erosion of product margin and market share.

Varex may need to spend more time and money than it expects to develop and introduce new products or enhancements and, even if Varex succeeds, Varex may not be able to recover all or a meaningful part of its investment. Once introduced, new products may materially and adversely impact sales of Varex’s existing products, or make them less desirable or even obsolete, which could materially and adversely impact Varex’s revenues and operating results. In addition, certain costs, including installation and warranty costs, associated with new products may be proportionately greater than the costs associated with other products, and may therefore disproportionately, materially, and adversely affect Varex’s gross and operating margins. If Varex is unable to lower these costs over time, Varex’s operating results could be materially and adversely affected. Some of the electronic components and integrated circuits used in Varex’s flat panel detectors are susceptible to discontinuance and obsolescence risks, which may force Varex to incorporate newer generations of these components resulting in unplanned additional R&D expenses, delays in launch of new products, supply disruption, or inventory write downs.

Varex’s ability to successfully develop and introduce new products and product enhancements and simplifications, and the revenues and costs associated with these efforts, are affected by Varex’s ability to:

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properly identify customer needs or long-term customer demands;

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prove the feasibility of new products;

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limit the time required from proof of feasibility to routine production;

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timely and efficiently comply with internal quality assurance systems and processes;

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limit the timing and cost of regulatory approvals;

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accurately predict and control costs associated with inventory overruns caused by phase-in of new products and phase-out of old products;

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price its products competitively and profitably, which can be particularly difficult with a strong U.S. Dollar;

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manufacture, deliver and install its products in sufficient volumes on time, and accurately predict and control costs associated with manufacturing installation, warranty and maintenance of the products;

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appropriately manage its supply chain;

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manage customer acceptance and payment for products; and

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anticipate, respond to and compete successfully with competitors.

Furthermore, as discussed in greater detail elsewhere in this “Risk Factors” section, Varex cannot be sure that it will be able to successfully develop, manufacture or introduce new products or enhancements, the roll-out of which involves compliance with complex quality assurance processes, including the Quality System Regulation (“QSR”) of the U.S. Food and Drug Administration (“FDA”). Failure to complete these processes timely and efficiently could result in delays that could affect Varex’s ability to attract and retain customers, or could cause customers to delay or cancel orders, causing Varex’s revenues and operating results to be materially and adversely affected.

A disruption at Varex’s manufacturing facilities in Salt Lake City, Utah; Calamba City, Philippines or Las Vegas, Nevada could materially and adversely affect its business.

The majority of Varex’s products are manufactured in its manufacturing facility in Salt Lake City, Utah. Varex’s manufacturing operations are subject to potential power failures, the breakdown, failure or substandard

performance of equipment, the improper installation or operation of equipment, and natural or other disasters. Loss or damage to this manufacturing facility due to any of these factors or otherwise could materially and adversely affect Varex’s ability to manufacture sufficient quantities of its products or otherwise deliver products to meet customer demand or contractual requirements which may result in a loss of revenue and other adverse business consequences. Because of the time required to obtain regulatory approval and licensing of a manufacturing facility, Varex may not be available on a timely basis to replace any lost manufacturing capacity. The occurrence of these or any other operational issues at Varex’s manufacturing facilities could have a material and adverse effect on Varex’s business, financial condition and results of operations. In addition, some of Varex’s products from the Claymount acquisition are also manufactured in its Calamba City, Philippines manufacturing facility, which is subject to similar risks, but may also face additional regulatory and political risks which could impact Varex’s ability to manufacture and ship products in a timely manner or at all. Varex manufactures its security products in Las Vegas, Nevada and these operations are also subject to potential power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, and natural or other disasters which could materially and adversely affect Varex’s ability to deliver products to meet customer demand.

Varex conducts business globally. Revenues generated from customers located outside the United States accounted for approximately 65%, 62% and 64% of Varex’s total revenues during each of fiscal years 2016, 2015 and 2014, respectively. As a result, Varex must provide significant service and support globally, which in the past was in part provided by Varian. Varex intends to continue to expand its presence in international markets and expects to expend significant resources in doing so. Varex cannot be sure that it will be able to meet its sales, service and support objectives or obligations in these international markets, or recover its investments. Varex’s future results could be harmed by a variety of factors, including:

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currency fluctuations, and in particular the strength of the U.S. Dollar relative to many currencies, which have and may in the future adversely affect Varex’s financial results and cause some customers to delay purchasing decisions or move to in-sourcing supply or migrate to lower cost alternatives or ask for additional discounts;

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the longer payment cycles associated with many customers located outside the United States;

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difficulties in interpreting or enforcing agreements and collecting receivables through many foreign countries’ legal systems;

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changes in restrictions on trade between the United States and other countries or unstable regional political and economic conditions, such as those that may result from the outcome of the 2016 U.S. presidential election;

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changes in the political, regulatory, safety or economic conditions in a country or region, including as a result of the United Kingdom’s June 2016 vote to leave the European Union (“Brexit”);

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the imposition by governments of additional taxes, tariffs, global economic sanctions programs or other restrictions on foreign trade;

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any inability to obtain required export or import licenses or approvals;

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failure to comply with export laws and requirements, which may result in civil or criminal penalties and restrictions on Varex’s ability to export its products, particularly its industrial linear accelerator products;

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risks unique to the Chinese market, including import barriers and preferences for local manufacturers;

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failure to obtain proper business licenses or other documentation, or to otherwise comply with local laws and requirements regarding marketing, sales, service or any other business Varex conducts in a

foreign jurisdiction, which may result in civil or criminal penalties and restrictions on its ability to conduct business in that jurisdiction; and

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the possibility that it may be more difficult to protect Varex’s intellectual property in foreign countries.

Although Varex’s sales fluctuate from period to period, in recent years Varex’s international region has represented a larger share of its business. The more Varex depends on sales in the international region, the more vulnerable Varex becomes to these factors.

Varex’s effective tax rate is impacted by tax laws in both the United States and in the countries in which its international subsidiaries do business. Earnings from Varex’s international region are generally taxed at rates lower than U.S. rates. A change in the percentage of Varex’s total earnings from the international region, a change in the mix of particular tax jurisdictions within the international region, or a change in currency exchange rates, could cause Varex’s effective tax rate to increase or decrease. Also, Varex is not currently taxed in the United States on certain undistributed earnings of certain foreign subsidiaries. These earnings could become subject to incremental foreign withholding or U.S. federal and state taxes should they either be deemed to be or actually are remitted to the United States, in which case Varex’s financial results could be materially and adversely affected. In addition, changes in the valuation of Varex’s deferred tax assets or liabilities, changes in tax laws or rates, changes in the interpretation of tax laws or other changes beyond Varex’s control could materially and adversely affect its financial position and results of operations.

The global economy has been impacted by a number of economic and political factors. In many markets, these conditions have shrunk capital equipment budgets, slowed decision-making and made it difficult for Varex’s customers and vendors to accurately forecast and plan future business activities. This, in turn, has caused Varex’s customers to be more cautious with, and sometimes freeze, delay or dramatically reduce purchases and capital project expenditures. Some countries have adopted and may in the future adopt austerity or stimulus programs that could positively or negatively affect Varex’s results from period to period, making it difficult for investors to compare its financial results. In addition, the outcome of the 2016 U.S. presidential election and the announcement of Brexit and the withdrawal of the United Kingdom from the European Union may also create global economic uncertainty, which may cause our customers to reduce their spending, which in turn, could adversely affect our business, financial condition, operating results and cash flows. An uncertain economic environment may also disrupt supply or affect our service business, as customers’ constrained budgets may result in pricing pressure, extended warranty provisions and even cancellation of service contracts.

In addition, concerns over continued economic instability could make it more difficult for Varex to collect outstanding receivables. A continued weak or deteriorating healthcare market would inevitably materially and adversely affect Varex’s business, financial conditions and results of operations.

Because Varex’s products are generally priced in U.S. Dollars, strengthening of the U.S. Dollar has caused, and could continue to cause, some customers to ask for additional discounts, delay purchasing decisions, or consider moving to in-sourcing supply of such components or migrating to lower cost alternatives. Further, because Varex’s business is global and some payments may be made in local currency, fluctuations in foreign currency exchange rates can impact its results by affecting product demand, or its revenues and expenses, and/or the profitability in U.S. Dollars of products and services that Varex provides in foreign markets.

Changes in monetary or other policies here and abroad, including as a result of economic and/or political instability or in reaction thereto, would also likely affect foreign currency exchange rates. Furthermore, in the event that one or more European countries were to replace the Euro with another currency, Varex’s sales in these countries or in Europe generally, would likely be materially and adversely affected until such time as stable exchange rates are established.

Additionally, fluctuations in commodities prices could materially and adversely affect Varex’s performance. Rising commodities prices will increase Varex’s costs and those of Varex’s medical OEM customers, which could in turn result in reduced demand for Varex’s products. Further, Varex’s security product revenues from oil producing countries, in which Varex has a significant customer base, have in the past suffered as a result of volatility in oil prices and remain sensitive to fluctuations in the future.

Varex obtains from a limited group of suppliers or from sole-source suppliers some of the components included in its products, such as wave guides for industrial linear accelerators, transistor arrays, cesium iodide coatings and specialized integrated circuits for flat panel detectors, X-ray tube targets, housings, glass frames, high-voltage cable, bearings and various other components. For example, Varex’s major supplier of its amorphous silicon based thin film transistor arrays (flat panels) used in its digital image detectors is dpiX LLC. Although Varex holds a 40% ownership interest in dpiX, Varex does not have majority voting rights and does not have the power to direct the activities of dpiX. In addition, Varian is Varex’s sole source supplier for a key component in linear accelerators used in Varex’s security and inspection products subsystems, which are specially made for Varex. While Varex expects to enter into a supply agreement for this component, there can be no assurance that this component will continue to be available on reasonable terms, or at all.

If Varex loses any of these limited- or sole-source suppliers, if their operations are substantially interrupted, or if any of them fail to meet performance or quality specifications, Varex may be required to obtain and qualify one or more replacement suppliers. Such an event (i) may then also require Varex to redesign or modify its products to incorporate new parts and/or further require Varex to obtain clearance, qualification or certification of these products, including by the FDA, or obtain other applicable regulatory approvals in other countries, or (ii) could significantly increase costs for the affected product and cause material delays in delivery of that and other related products. In addition, manufacturing capacity limitations of any of Varex’s limited- or sole-source suppliers or other inability of these suppliers to meet increasing demand could limit growth opportunities for the affected product lines and damage customer relationships. Shortage of, and greater demand for, components and subassemblies could also increase manufacturing costs if the supply/demand imbalance increases the price of the components and subassemblies. Any of these events could materially and adversely affect Varex’s business and financial results.

A shortage or change in source of, or increase in price of, raw materials could restrict Varex’s ability to manufacture products, cause delays, or significantly increase its cost of goods.

Varex relies upon the supplies of certain raw materials such as tungsten, lead, iridium and copper for security and inspection products and copper, lead, tungsten, rhenium, molybdenum zirconium, and various high grades of steel alloy for X-ray tubes. Worldwide demand, availability and pricing of these raw materials have been volatile, and Varex expects that availability and pricing will continue to fluctuate in the future. If supplies are restricted or become unavailable or if prices increase, this could constrain Varex’s manufacturing of affected products, reduce its profit margins or otherwise materially and adversely affect its business.

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has promulgated rules regarding disclosure of the presence in a company’s products of certain metals, known as “conflict minerals,” which are metals mined from the Democratic Republic of the Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to identify the sourcing of those minerals from this region. Varex’s complex supply chain may inhibit Varex’s ability to sufficiently verify the origins of the relevant minerals used in its products through the due diligence procedures that it implements, which may harm Varex’s reputation. In addition, Varex may encounter challenges in satisfying customers who require that all of the components of Varex products are certified as conflict-free, which could place Varex at a competitive disadvantage if it is unable to do so. Moreover, complying with these rules requires investigative efforts, which has and will continue to cause Varex to incur associated costs, and could materially and adversely affect the sourcing, supply, and pricing of materials used in Varex’s products, or result in process or manufacturing modifications, all of which could materially and adversely affect its results of operations.

Some of Varex’s products and those of OEMs that incorporate Varex’s products are subject to extensive and rigorous government regulation in the United States. Compliance with these laws and regulations is expensive and time-consuming, and failure to comply with these laws and regulations could materially and adversely affect Varex’s business.

Most Varex’s products are Class I devices, with a small number of software products designated as Class II devices. Generally, Varex’s manufacturing operations for medical devices, and those of its third-party manufacturers, are required to comply with the FDA’s QSR, as well as other federal and state regulations for medical devices and radiation emitting products. The FDA makes announced and unannounced periodic and on-going inspections of medical device manufacturers to determine compliance with QSR, and in connection with these inspections, issues reports, known as Form FDA 483 reports when the FDA believes the manufacturer has failed to comply with applicable regulations and/or procedures. If observations from the FDA issued on Form FDA 483 reports are not addressed and/or corrective action taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a Warning Letter and/or proceed directly to other forms of enforcement action. Similarly, if a Warning Letter were issued, prompt corrective action to come into compliance would be required. Failure to respond timely to Form FDA 483 observations, a Warning Letter or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing an enforcement action, which could include the total shutdown of Varex’s production facilities, denial of importation rights to the U.S. for products manufactured in overseas locations, adverse publicity and criminal and civil fines. The expense and costs of any corrective actions that Varex may take, which may include products recalls, correction and removal of products from customer sites and/or changes to its product manufacturing and quality systems, could materially and adversely impact Varex’s financial results and may also divert management resources, attention and time. Additionally, if a Warning Letter were issued, customers could delay purchasing decisions or cancel orders, and Varex could face increased pressure from its competitors who could use the Warning Letter against Varex in competitive sales situations, either of which could materially and adversely affect its reputation, business and stock price.

In addition, Varex is required to timely file various reports with the FDA, including reports required by the medical device reporting regulations (“MDRs”), that require that Varex report to regulatory authorities if its devices may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur. In addition, if Varex initiates a correction or removal of a device to reduce a risk to health posed by the device, Varex would be required to submit a publicly available Correction and Removal report to the FDA and in many cases, similar reports to other regulatory agencies. This report could be classified by the FDA as a device recall which could lead to increased scrutiny by the FDA, other international regulatory agencies and Varex’s customers regarding the quality and safety of Varex’s devices. If these MDRs or correction and removal reports are not filed on a timely basis, regulators may impose sanctions and sales of Varex’s products may suffer, and Varex may be subject to product liability or regulatory enforcement actions, all of which could harm its business.

Government regulation may also cause significant delay or even prevent the marketing and full commercialization of future products or services that Varex may develop, and/or may impose costly requirements on Varex’s business. Further, as Varex enters new businesses or pursues new business opportunities, Varex will become subject to additional laws, rules and regulations, including FDA and foreign rules and regulations. Becoming familiar with and implementing the infrastructure necessary to comply with these laws, rules and regulations is costly and time consuming. In addition, failure to comply with these laws, rules and regulations could delay the introduction of new products and could materially and adversely affect Varex’s business.

If Varex or any of its suppliers, distributors, agents or customers fail to comply with FDA, Federal Trade Commission (“FTC”) and other applicable U.S. regulatory requirements or are perceived to potentially have failed to comply, Varex may face:

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adverse publicity affecting both Varex and its customers;

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increased pressures from competitors;

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investigations by governmental authorities;

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fines, injunctions, civil penalties and criminal prosecutions;

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partial suspensions or total shutdown of production facilities, or the imposition of operating restrictions;

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increased difficulty in obtaining required clearances or approvals, or losses of clearances or approvals already granted;

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seizures or recalls of Varex products or those of its customers;

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delays in purchasing decisions by customers or cancellation of existing orders;

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the inability to sell Varex products; and

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difficulty in obtaining product liability or operating insurance at a reasonable cost, or at all.

Varex is also subject to federal and state laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, manufacturing practices and other matters. Insurance coverage is not commercially available for violations of law, including the fines, penalties or investigatory costs that Varex may incur as the consequence of regulatory violations; consequently, Varex does not have insurance that would cover this type of liability.

Varex sells certain X-ray tube products as replacements which are subject to medical device certification and product registration laws and regulations which vary by country, and are subject to change, and Varex may be unable to receive registration approval or renewal of existing registrations if Varex fails to meet regulatory approval requirements or if the process of gaining approval becomes commercially infeasible or impractical.

Varex markets and distributes certain X-ray tubes through distributors and third party/multi-vendor service organizations which are used as equivalent replacements for specific OEM tubes. Varex is subject to medical device certification and product registration laws which vary by country, and are subject to periodic reviews and changes by regulatory authorities in those countries. For example, to sell X-ray tubes for replacement applications in China, the products registrations have to be approved by the Chinese FDA (“CFDA”) or province specific authorities. Registration requirements are subject to change and Varex may not be able to receive registration approval or renewal of existing registrations if Varex fails to meet regulatory approval requirements or if the process of gaining approval becomes commercially infeasible or impractical. Certain of these local laws and regulations have the effect of serving as a barrier to trade and can be difficult to navigate predictably.

In addition, certain countries in which Varex products are sold require products to undergo re-registration if the product is altered in any significant way, and it may be determined that the separation of Varex from Varian, including Varex’s new name, will require these products to be re-registered as Varex products, even if they are physically unchanged.

These registration processes can be costly and time consuming, and customers may determine to purchase products from Varex’s competitors that do not have to be involved in a re-registration process. In addition, Varex’s inability to receive or renew product registrations may prevent Varex from marketing and distributing those particular products for replacement applications in the specific country.

Regulatory requirements affecting Varex’s operations and sales outside the United States vary from country to country, often differing significantly from those in the United States. In general, outside the United States, some of Varex’s products are regulated as medical devices by foreign governmental agencies similar to the FDA.

For Varex to market its products internationally, Varex must obtain clearances or approvals for products and product modifications. These processes (including, for example, in the European Union (“EU”), the European Economic Area (“EEA”), Switzerland, China, Japan and Canada) can be time consuming, expensive and uncertain, which can delay Varex’s ability to market products in those countries. Delays in receipt of or failure to receive regulatory approvals, the inclusion of significant limitations on the indicated uses of a product, the loss of previously obtained approvals or failure to comply with existing or future regulatory requirements could restrict or prevent Varex from doing business in a country or subject Varex to a variety of enforcement actions and civil or criminal penalties, which would materially and materially and adversely affect its business. In addition, compliance with changing regulatory schemes, such as what may occur in connection with the June 23, 2016 referendum in which voters in the United Kingdom approved an exit from the EU (“Brexit”), may add additional complexity, cost and delays in marketing or selling Varex’s products. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations and, given the lack of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the United Kingdom from the EU would have and how such withdrawal would affect Varex.

Within the EU/EEA, Varex must obtain, and in turn, affix a CE mark certification, a European marking of conformity that indicates that a product meets the essential requirements of the Medical Device Directive. Compliance with the Medical Device Directive is done through a self-certification process that is then verified by an independent certification body, called a “Notified Body,” an organization empowered by the legislature to conduct this verification. Once the CE mark is affixed, the Notified Body will regularly audit Varex to ensure that it remains in compliance with the applicable European laws and Medical Device Directive. By affixing the CE mark to Varex’s product, Varex is certifying that its products comply with the laws and regulations required by the EU/EEA countries, thereby allowing the free movement of its products within these countries and others that accept CE mark standards. If Varex cannot support its performance claims and demonstrate compliance with the applicable European laws and Medical Device Directive, Varex would lose its right to affix the CE mark to its products, which would prevent Varex from selling its products within the EU/EEA/Switzerland territory and in other countries that recognize the CE mark. In September 2012, the European Commission adopted a Proposal for a Regulation of the European Parliament and of the Council on medical devices and a Proposal for a Regulation of the European Parliament and of the Council on in vitro diagnostic medical devices which will, once adopted by the European Parliament and by the Council, replace the existing three medical devices directives. Negotiation by member states of the available drafts finally yielded an agreement in May 2016 and drafts of the MDR have been published in June 2016. Official publication by the member states is expected by late 2016/early 2017 and the Regulation would enter into force in 2020. The new proposal imposes stricter requirements for the placing in the market of medical devices as well as on the Notified Bodies. Varex may be subject to risks associated with additional testing, modification, certification or amendment of its existing market authorizations, or Varex may be required to modify products already installed at its customers’ facilities to comply with the official interpretations of these revised regulations.

Varex is also subject to international laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, manufacturing practices and other matters. These are often comparable to, if not more stringent than, the equivalent regulations in the United States. Sales overseas are also affected by regulation of matters such as product standards, packaging, labeling, environmental and product recycling requirements, import and export restrictions, tariffs, duties and taxes.

In addition, Varex is required to timely file various reports with international regulatory authorities similar to the reports it is required to timely file with U.S. regulatory authorities, including reports required by international adverse event reporting regulations. If these reports are not timely filed, regulators may impose sanctions, including temporarily suspending Varex’s market authorizations or CE mark, and sales of its products may suffer.

Further, as Varex enters new businesses or pursue new business opportunities internationally, or as regulatory schemes change, Varex may become subject to additional laws, rules and regulations. Becoming familiar with and implementing the infrastructure necessary to comply with these laws, rules and regulations is costly. Additionally, in some countries, Varex relies or may rely in the future on foreign distributors and agents to assist in complying with foreign regulatory requirements, and Varex cannot be sure that they will always do so. The failure of Varex or its agents to comply with these laws, rules and regulations could delay the introduction of new products, cause reputational harm, result in investigations, fines, injunctions, civil penalties or criminal prosecutions, result in an inability to sell Varex’s products in or to import its products into certain countries, and could materially and adversely affect Varex’s business.

Sales of Varex’s products to OEMs in the medical sector indirectly depend on whether adequate reimbursement is available for its customers’ products from a variety of sources, such as government healthcare insurance programs, including U.S. Medicare and Medicaid programs and foreign government programs; private insurance plans; health maintenance organizations; and preferred provider organizations. Without adequate reimbursement, the demand for Varex’s customers’ products, and therefore indirectly Varex’s products, may be limited.

Healthcare reform proposals and medical cost containment measures in the U.S. and in many foreign countries could limit the use of Varex’s and its customers’ products, reduce reimbursement available for such use, further tax the sale or use of Varex’s products and further increase the administrative and financial burden of compliance. These reforms and measures, including the uncertainty in the medical community regarding their nature and effect, could have a material and adverse effect on Varex’s and Varex’s customers’ purchasing decisions regarding its products and treatments and could harm Varex’s business, results of operations, financial condition and prospects. Varex cannot predict the specific healthcare programs and regulations that will be ultimately implemented by local, regional and national governments globally. However, any changes that lower reimbursements for Varex’s or its customers’ products and/or procedures using these products, including, for example, existing reimbursement incentives to convert from analog to digital X-ray systems, or changes that reduce medical procedure volumes or increase cost containment pressures on Varex or others in the healthcare sector could materially and adversely affect Varex’s business and results of operations.

On March 23, 2010, President Obama signed into law the Affordable Care Act. The Affordable Care Act could adversely impact the demand for Varex’s and its customers’ products and services, and therefore its financial position and results of operations, possibly materially. Changes in access to diagnostic radiology or the reimbursement rates associated with diagnostic radiology as a result of the Affordable Care Act and similar state proposals would likely affect domestic demand for Varex’s and Varex’s customers’ products and services.

In general, employers and third-party payors in the United States have become increasingly cost-conscious, with higher deductibles imposed or encouraged in many medical plans. The imposition of higher deductibles tends to restrain individuals from seeking the same level of medical treatments as they might seek if the costs they bear are lower, particularly in the medical diagnostic portion of Varex’s business. Third-party payors have also increased utilization controls related to the use of its products by healthcare providers.

Furthermore, there is no uniform policy on reimbursement among third-party payors, and Varex cannot be sure that third-party payors will reimburse its customers for procedures using its products that will enable it to

achieve or maintain adequate sales and price levels for its products. Without adequate support from third-party payors, the market for Varex’s products may be limited.

Varex is unable to predict what effect new healthcare reform proposals or ongoing uncertainty surrounding foreign, federal and state health reform proposals will have on its customer’s purchasing decisions. However, an expansion in any government’s role in the healthcare industry may materially and adversely affect Varex’s business. In addition, it is possible that changes in administration and policy, including the potential repeal of all or parts of the Affordable Care Act, resulting from the recent U.S. presidential election could result in additional proposals and/or changes to health care system legislation which could have a material adverse effect on our business. The full effect that a full or partial repeal of the Affordable Care Act would have on our business remains unclear at this time.

Varex is subject to federal, state and foreign laws governing its business practices which, if violated, could result in substantial penalties. Additionally, challenges to or investigations into Varex’s practices could cause adverse publicity and be costly to respond to and thus could harm its business.

Anti-corruption laws and regulations . Varex is subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K. Bribery Act and the Law “On the Fundamentals of Health Protection in the Russian Federation”. In general, there is a worldwide trend to strengthen anti-corruption laws and their enforcement, and the healthcare industry and medical equipment manufacturers have been particular targets of these investigation and enforcement efforts. Any violation of these laws by Varex or its agents or distributors could create a substantial liability for Varex, subject its officers and directors to personal liability and also cause a loss of reputation in the market. Transparency International’s 2015 Corruption Perceptions Index measured the degree to which public sector corruption is perceived to exist in 168 countries/territories around the world, and found that two-thirds of the countries in the index, including many that Varex considers to be high growth areas for Varex’s products, such as China and India, scored below 50, on a scale from 100 (very clean) to 0 (highly corrupt). Varex currently operates in many countries where the public sector is perceived as being more or highly corrupt. Varex’s strategic business plans include expanding its business in regions and countries that are rated as higher risk for corruption activity by Transparency International. Becoming familiar with and implementing the infrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly. In addition, failure by Varex or its agents or distributors to comply with these laws, rules and regulations could delay its expansion into high-growth markets and could materially and adversely affect its business. This notwithstanding, Varex will inevitably do more business, directly and potentially indirectly, in countries where the public sector is perceived to be more or highly corrupt and will be engaging in business in more countries perceived to be more or highly corrupt. Increased business in higher risk countries could subject Varex and its officers and directors to increased scrutiny and increased liability from its business operations.

Competition and trade compliance laws . Varex is subject to various competition and trade compliance laws in the jurisdictions in which it operates. Regulatory authorities under whose laws Varex operates may have enforcement powers that can subject Varex to sanctions, and can impose changes or conditions in the way Varex conducts its business. In addition, an increasing number of jurisdictions also provide private rights of action for competitors or consumers to seek damages asserting claims of anti-competitive conduct. Increased government scrutiny of Varex’s actions or enforcement or private rights of action could materially and adversely affect its business or damage its reputation. In addition, Varex may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign government agencies, which could be costly and time-consuming, and could divert its management and key personnel from its business operations. An adverse outcome under any such investigation or audit could subject Varex to fines or criminal or other penalties, which could materially and adversely affect Varex’s business and financial results. Furthermore, competition laws may prohibit or increase the cost of future acquisitions that Varex may desire to undertake.

Laws and ethical rules governing interactions with healthcare providers . Generally, Varex does not sell its

products directly to healthcare providers, though occasionally it may sell its products to healthcare providers

through distributors. The U.S. Medicare and Medicaid “anti-kickback” laws, and similar state laws, prohibit payments or other remuneration that is intended to induce hospitals, physicians or others either to refer patients or to purchase, lease or order, or arrange for or recommend the purchase, lease or order of healthcare products or services for which payment may be made under federal and state healthcare programs, such as Medicare and Medicaid. These laws affect Varex’s sales, marketing and other promotional activities by limiting the kinds of financial arrangements Varex may have with hospitals, physicians or other potential purchasers of its products. They particularly impact how Varex structures its sales offerings, including discount practices, customer support, education and training programs, physician consulting, research grants and other fee-for-service arrangements. These laws are broadly written, and it is often difficult to determine precisely how these laws will be applied to specific circumstances.

Federal and state “false claims” laws generally prohibit knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other government payors that are false or fraudulent, or for items or services that were not provided as claimed. Although Varex does not submit claims directly to payors, manufacturers can be, and have been, held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by providing inaccurate billing or coding information to customers, or through certain other activities, including promoting products for uses not approved or cleared by the FDA, which is called off-label promotion. Violating “anti-kickback” and “false claims” laws can result in civil and criminal penalties, which can be substantial, and potential mandatory or discretionary exclusion from healthcare programs for noncompliance. Even an unsuccessful challenge or investigation into Varex’s practices could cause adverse publicity, and be costly to defend, and thus could harm its business and results of operations. Additionally, several recently enacted state and federal laws, including laws in Massachusetts and Vermont, and the federal Physician Payment Sunshine Act, now require, among other things, extensive tracking and maintenance of databases regarding the disclosure of equity ownership and payments to physicians, healthcare providers and hospitals. These laws may require Varex to implement the necessary and costly infrastructure to track and report certain payments to healthcare providers. Failure to comply with these new tracking and reporting laws could subject Varex to significant civil monetary penalties.

Varex is subject to similar laws in foreign countries where it conducts business. For example, within the EU, the control of unlawful marketing activities is a matter of national law in each of the member states. The member states of the EU closely monitor perceived unlawful marketing activity by companies. Varex could face civil, criminal and administrative sanctions if any member state determines that Varex has breached its obligations under such state’s national laws. Industry associations also closely monitor the activities of member companies. If these organizations or authorities name Varex as having breached its obligations under their regulations, rules or standards, its reputation would suffer and its business and financial condition could be materially and adversely affected.

Warranty claims may materially and adversely affect Varex’s business.

Varex could experience an increase in warranty claims as a result of issues with product quality or product failures as a direct result of Varex’s design or manufacturing, or issues in its supply chain. Such an occurrence may damage Varex’s market reputation, cause sales to decline, or require repairs or voluntary remedial measures to enhance customer satisfaction, which could materially and adversely impact Varex’s financial results. Increased warranty claims on any given product could cause Varex to halt production on that product and could significantly impair Varex’s liquidity and profitability, as well as cause reputational harm to Varex. Because some categories of products tend to experience higher numbers of warranty claims than others, a shift in the types of products that Varex’s customers purchase could lead to an increase in warranty claims. If actual levels of warranty claims are greater than the level of claims Varex estimates, cost of sales could increase and Varex’s financial condition could be materially and adversely affected. In addition, product quality issues could result in significant follow-on effects for Varex including, among other things, reputational harm to Varex and its customers, loss of customers, and liability as a result of product quality issues. These outcomes would materially and adversely affect Varex’s business and financial condition.

If Varex is not able to match its manufacturing capacity with demand for its products, its financial results may suffer.

Many of Varex’s products have a long production cycle, and Varex needs to anticipate demand for its products to ensure adequate manufacturing or testing capacity. If Varex is unable to anticipate demand and its manufacturing or testing capacity does not keep pace with product demand, Varex will not be able to fulfill orders in a timely manner, which may negatively impact its financial results and overall business. Conversely, if demand for Varex’s products decreases, the fixed costs associated with excess manufacturing capacity may harm its financial results.

Additionally, Varex’s manufacturing is primarily conducted at its Salt Lake City, Utah, Las Vegas, Nevada and Calamba City, Philippines facilities. If any of these facilities experiences a disruption, Varex would have no other means of manufacturing the components manufactured at each respective facility until Varex is able to restore the capability at its current facilities or develop the same capability at an alternative facility.

Delivery schedules for Varex’s security, industrial and inspection products tend to be unpredictable.

Varex designs, manufactures, sells and services Linatron X-ray accelerators, imaging processing software and image detection products for security and inspection, such as cargo screening at ports and borders and nondestructive examination for a variety of applications, as well as industrial applications. Varex generally sells security and inspection products to OEMs who incorporate its products into their inspection systems, which are then sold to customs and other government agencies, as well as to commercial organizations in the casting, power, aerospace, chemical, petro-chemical and automotive industries. Varex believes growth in its security and inspection products will be driven by security cargo screening and border protection needs, as well as by the needs of customs agencies to verify shipments for assessing duties and taxes. This business is heavily influenced by domestic and international government policies on border and port security, political change and government budgets. In addition, Varex believes growth in this product line may be driven in part by industrial customers engaged in 3-D printing, which, as a developing market, may be difficult to predict. Orders for Varex’s security and inspection products have been and may continue to be unpredictable as governmental agencies may place large orders with Varex or its OEM customers in a short time period, and then may not place any orders for a long time period thereafter. Because it is difficult to predict Varex’s OEM customer delivery, the actual timing of sales and revenue recognition varies significantly. The market for border protection systems has slowed significantly and end customers, particularly in oil-based economies and war zones in which Varex has a significant customer base, are delaying system deployments or tenders and considering moving to alternative sources, resulting in a decline in the demand for security and inspection products.

In addition, demand for Varex’s security and inspection products is heavily influenced by U.S. and foreign governmental policies on national and homeland security, border protection and customs activities, which depend upon government budgets and appropriations that are subject to economic conditions, as well as political changes and oil prices. Varex has seen customers freeze or dramatically reduce purchases and capital project expenditures, delay projects, or act cautiously as governments around the world wrestle with spending priorities. As economic growth remains sluggish in various jurisdictions and appears to be deteriorating in others, and as concerns about levels of government employment and government debt continue, Varex expects that these effects will also continue. Furthermore, bid awards in this business may be subject to challenge by third parties, as Varex has previously encountered with a large government project. These factors make this business more unpredictable and could cause volatility in Varex’s revenues and earnings, and therefore the price of Varex’s common stock.

Varex’s international manufacturing operations subject it to volatility and other risks, including high security risks, which could result in harm to its employees and contractors or substantial costs.

Varex conducts certain manufacturing operations internationally in order to reduce costs and streamline its manufacturing operations. There are administrative, legal, and governmental risks to operating internationally

that could increase operating expenses or hamper the development of these operations. The risks from operating internationally that could increase Varex’s operating expenses and materially and adversely affect its operating results, financial condition and ability to deliver its products and grow its business include, among others:

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difficulties in staffing and managing employee relations and foreign operations, particularly in attracting and retaining personnel qualified to design, sell, test and support its products;

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fluctuations in currency exchange rates;

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difficulties in coordinating its operations globally and in maintaining uniform standards, controls, procedures and policies across its operations;

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difficulties in enforcing contracts and protecting intellectual property;

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diversion of management attention;

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imposition of burdensome governmental regulations, including changing laws and regulations with respect to collection and maintenance of personally identifiable data;

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regional and country-specific political and economic instability, as discussed in greater detail below; and

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inadequacy of the local infrastructure to support its operations.

In addition, Varex’s international locations expose it to high security risks, which could result in harm to its employees and contractors or substantial costs. Some of its services are performed in or adjacent to high-risk locations where the country or location and surrounding area is suffering from political, social, or economic issues; war or civil unrest; or has a high level of criminal or terrorist activity. In those locations where Varex has employees or operations, Varex may incur substantial costs to maintain the safety of its personnel. Despite these precautions, the safety of its personnel in these locations may continue to be at risk, and Varex may in the future suffer the loss of employees and contractors, which could harm its business and operating results.

Certain of Varex’s products are subject to regulations relating to use of radioactive material, compliance with which may be costly, and a failure to comply may materially and adversely affect Varex’s business.

As a manufacturer and seller of medical devices and devices emitting radiation or utilizing radioactive by-product material, Varex and some of Varex’s suppliers and distributors are subject to extensive regulation by United States governmental authorities, such as the FDA, the Nuclear Regulatory Commission (“NRC”) and state and local regulatory agencies, such as the State of California, to ensure the devices are safe and effective and comply with laws governing products which emit, produce or control radiation. These regulations govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale and marketing and disposal of Varex’s products. Varex is also subject to international laws and regulations that apply to manufacturers of radiation emitting devices and products utilizing radioactive materials. These are often comparable to, if not more stringent than, the equivalent regulations in the United States.

Varex’s industrial and medical devices utilizing radioactive material are subject to the NRC clearance and approval requirements, and the manufacture and sale of these products are subject to extensive federal and state regulation that varies from state to state and among regions. Varex’s manufacture, distribution, installation, service and removal of industrial devices utilizing radioactive material or emitting radiation also requires Varex to obtain a number of licenses and certifications for these devices and materials. Service of these products must also be in accordance with a specific radioactive materials license. Obtaining licenses and certifications may be time consuming, expensive and uncertain.

In addition, Varex is subject to a variety of environmental laws regulating its manufacturing operations and the handling, storage, transport and disposal of hazardous substances, and which impose liability for the cleanup of any contamination from these substances. In particular, the handling and disposal of radioactive materials

resulting from the manufacture, use or disposal of Varex’s products may impose significant costs and requirements. Disposal sites for the lawful disposal of materials generated by the manufacture, use or decommissioning of Varex’s products may no longer accept these substances in the future, or may accept them on unfavorable terms.

If Varex is unable to obtain required FDA clearances or approvals for a product or is unduly delayed in doing so, or the uses of that product were limited, Varex’s business could suffer.

Typically, Varex’s OEM customers are responsible for obtaining 510(k) pre-market notification clearance on their systems that integrate Varex products, the substantial majority of which are Class I devices. A small portion of Varex’s products, however, is software that is classified as a Class II device subject to 510(k) clearance. Unless an exception applies, Varex may be required by FDA regulations to obtain a 510(k) pre-market notification clearance in connection with the manufacture of a new medical device or a new indication for use of, or other significant change in, an existing currently marketed medical device before it can market or sell those products in the United States. Modifications or enhancements to a product that could significantly affect its safety or effectiveness, or that would constitute a major change in the intended use of the device, technology, materials, labeling, packaging, or manufacturing process also require a new 510(k) clearance. Although manufacturers make the initial determination whether a change to a cleared device requires a new 510(k) clearance, Varex cannot assure you that the FDA will agree with its decisions not to seek additional approvals or clearances for particular modifications to its products or that Varex will be successful in obtaining new 510(k) clearances for modifications. Obtaining clearances or approvals is time-consuming, expensive and uncertain. Varex may not be able to obtain the necessary clearances or approvals or may be unduly delayed in doing so, which could harm its business. Furthermore, even if Varex is granted regulatory clearances or approvals, they may include significant limitations on the indicated uses of the product, which may limit the market for the product. If Varex is unable to obtain required FDA clearance or approval for a product or is unduly delayed in doing so, or the uses of that product were limited, Varex’s business could suffer.

Disruption of critical information systems or material breaches in the security of Varex’s products may materially and adversely affect its business and customer relations.

Information technology helps Varex operate efficiently, interface with and support its customers, maintain financial accuracy and efficiency, and produce its financial statements. There is an increasing threat of information security attacks that pose risk to companies, including Varex. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, Varex may be unable to anticipate these techniques or to implement adequate preventative measures. If Varex does not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, Varex could be subject to, among other things, transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through a security breach or misappropriation of intellectual property. Such security breaches could expose Varex to a risk of loss of information, litigation and possible liability to employees, customers and regulatory authorities. If Varex’s data management systems do not effectively collect, secure, store, process and report relevant data for the operation of its business, whether due to equipment malfunction or constraints, software deficiencies, or human error, Varex’s ability to effectively plan, forecast and execute its business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect Varex’s financial condition, results of operations, cash flows and the timeliness with which Varex reports its operating results internally and externally.

Moreover, Varex offers cloud-based training software. A security breach, whether of Varex’s products, of Varex’s customers’ network security and systems or of third party hosting services could disrupt access to Varex’s customers’ stored information and could lead to the loss of, damage to or public disclosure of Varex’s customers’ stored information, including patient health information. Such an event could have serious negative consequences, including possible patient injury, regulatory action, fines, penalties and damages, reduced demand

for Varex’s solutions, an unwillingness of its customers to use its solutions, harm to its reputation and brand, and time-consuming and expensive litigation, any of which could have a material and adverse effect on Varex’s financial results.

Protecting Varex’s intellectual property can be costly and Varex may not be able to maintain licensed rights, and in either case, its competitive position would be harmed if Varex is not able to do so.

Varex files applications as appropriate for patents covering new products and manufacturing processes. Varex cannot be sure, however, that its current patents, the claims allowed under its current patents, or patents for technologies licensed to Varex will be sufficiently broad to protect its technology position against competitors. Issued patents owned by, or licensed to, Varex may be challenged, invalidated or circumvented, or the rights granted under the patents may not provide Varex with competitive advantages. Varex also cannot be sure that patents will be issued from any of Varex’s pending or future patent applications. Asserting Varex’s patent rights against others in litigation or other legal proceedings is costly and diverts managerial resources. In addition, Varex may not be able to detect patent infringement by others or may lose its competitive position in the market before Varex is able to do so.

Varex also relies on a combination of copyright, trade secret and other laws, and contractual restrictions on disclosure, copying and transferring title (including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants and other third parties), to protect its proprietary and other confidential rights. These protections may prove inadequate, since agreements may still be breached and Varex may not have adequate remedies for a breach, and its trade secrets may otherwise become known to or be independently developed by others, including as a result of misappropriation by unauthorized access to Varex’s technology systems. In the event that Varex’s proprietary or confidential information is misappropriated, its business and financial results could be materially and adversely impacted. Varex has trademarks, both registered and unregistered, that are maintained and enforced to provide customer recognition for its products in the marketplace, but unauthorized third parties may still use them. Varex also has agreements with third parties that license to Varex certain patented or proprietary technologies. In some cases products with substantial revenues may depend on these license rights. If Varex were to lose the rights to license these technologies, or its costs to license these technologies were to materially increase, its business would suffer.

Third parties may claim Varex is infringing their intellectual property, and Varex could suffer significant litigation or licensing expenses or be prevented from selling its products.

There is a substantial amount of litigation over patent and other intellectual property rights in the industries in which Varex competes. Varex’s competitors, like companies in many high technology businesses, continually review other companies’ activities for possible conflicts with their own intellectual property rights. In addition, non-practicing entities may review Varex’s activities for conflicts with their patent rights. Determining whether a product infringes a third party’s intellectual property rights involves complex legal and factual issues, and the outcome of this type of litigation is often uncertain. Third parties may claim that Varex is infringing their intellectual property rights. Varex may not be aware of intellectual property rights of others that relate to its products, services or technologies. From time to time, Varex has received notices from third parties asserting infringement and Varex has been subject to lawsuits alleging infringement of third-party patent or other intellectual property rights. Any dispute regarding patents or other intellectual property could be costly and time consuming, and could divert Varex’s management and key personnel from its business operations. Varex may not prevail in a dispute. Varex does not maintain insurance for intellectual property infringement, so costs of defense, whether or not Varex is successful in defending an infringement claim, will be borne by Varex and could be significant. If Varex is unsuccessful in defending or appealing an infringement claim, Varex may be subject to significant damages and its combined financial position, results of operations or cash flows could be materially and adversely affected. If actual liabilities significantly exceed its estimates regarding potential liabilities, its combined financial position, results of operations or cash flows could be materially and adversely affected. Varex may also be subject to injunctions against development and sale of its products, the effect of

which could be to materially reduce its revenues. Furthermore, a third party claiming infringement may not be willing to license its rights to Varex, and even if a third-party rights holder is willing to do so, the amounts Varex might be required to pay under the associated royalty or license agreement could be significant. As such, Varex could decide to alter its business strategy or voluntarily cease the allegedly infringing actions rather than face litigation or pay a royalty, which could materially and adversely impact its business and results of operations.

Product defects or misuse may result in material product liability or professional errors and omissions claims, litigation, investigation by regulatory authorities or product recalls that could harm Varex’s future revenues and require it to pay material uninsured claims.

Varex’s business exposes it to potential product liability claims that are inherent in the manufacture, sale, installation, servicing and support of components that are used in medical devices and other devices that deliver radiation. Because Varex’s products, through incorporation in OEMs’ systems, are involved in the intentional delivery of radiation to the human body and other situations where people may come into contact with radiation (for example, when Varex’s security and inspection products are being used to scan cargo) and the diagnoses of medical problems, the possibility for significant injury and/or death exists to the intended or unintended recipient of the delivery. In addition, although Varex’s products are incorporated into OEMs’ systems, and thus only perform pursuant to the design and operating systems of OEMs, Varex may also be subject to claims for property damage, personal injury or economic loss related to or resulting from any errors or defects in its products, or the installation, servicing and support of its products. Any accident or mistreatment could subject Varex to legal costs, litigation, adverse publicity and damage to its reputation, whether or not its products or services were a factor.

If Varex’s X-ray inspection systems fail to detect the presence of bombs, explosives, weapons, contraband or other threats to personal safety, Varex could be subject to product and other liability claims and negative publicity, which could result in increased costs, reduced sales, and a decline in the market price of Varex’s common stock. There are many factors beyond Varex’s control that could result in the failure of its products to detect the presence of bombs, explosives, weapons, contraband or other threats to personal safety. Examples of these factors include operator error or misuse of or malfunction of Varex equipment. The failure of Varex’s systems to detect the presence of these dangerous materials may lead to personal injury, loss of life, and extensive property damage and may result in potential claims against Varex.

Product liability actions are subject to significant uncertainty and may be expensive, time-consuming, and disruptive to Varex’s operations. For these and other reasons, Varex may choose to settle product liability claims against it, regardless of their actual merit. If a product liability action were finally determined against Varex, it could result in adverse publicity or significant damages, including the possibility of punitive damages and Varex’s combined financial position, results of operations or cash flows could be materially and adversely affected.

In addition, if a product Varex designs or manufactures were defective (whether due to design, labeling or manufacturing defects, improper use of the product or other reasons) or found to be so by a competent regulatory authority, Varex may be required to correct or recall the product and notify other regulatory authorities. The adverse publicity resulting from a correction or recall, however imposed, could damage Varex’s reputation and cause customers to review and potentially terminate their relationships with Varex. A product correction or recall could consume management time and have an adverse financial impact on its business, including incurring substantial costs, losing revenues and accruing losses under Generally Accepted Accounting Principles (“GAAP”).

Varex maintains limited product liability insurance coverage and currently self-insures professional liability/errors and omissions liability. Varex’s product liability insurance policies are expensive and have high deductible amounts and self-insured retentions. Varex’s insurance coverage may also prove to be inadequate, and future policies may not be available on acceptable terms or in sufficient amounts, if at all. If a material claim is successfully brought against Varex relating to a self-insured liability or a liability that is in excess of its insurance coverage, or for which insurance coverage is denied or limited, Varex could have to pay substantial damages, which could have a material and adverse effect on its financial position and results of operations.

Unfavorable results of legal proceedings could materially and adversely affect Varex’s financial results.

From time to time, Varex is a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and other legal matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. Legal proceedings are often lengthy, taking place over a period of years with interim motions or judgments subject to multiple levels of review (such as appeals or rehearings) before the outcome is final. Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to Varex’s operations. For these and other reasons, Varex may choose to settle legal proceedings and claims, regardless of their actual merit.

If a legal proceeding were finally resolved against Varex, it could result in significant compensatory damages, and in certain circumstances punitive or trebled damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief imposed on Varex. If Varex’s existing insurance does not cover the amount or types of damages awarded, or if other resolution or actions taken as a result of the legal proceeding were to restrain its ability to market one or more of its material products or services, its combined financial position, results of operations or cash flows could be materially and adversely affected. In addition, legal proceedings, and any adverse resolution thereof, can result in adverse publicity and damage to Varex’s reputation, which could materially and adversely impact its business.

Varex’s business may suffer if it is not able to hire and retain qualified personnel.

Varex’s future success depends, to a great degree, on its ability to retain, attract, expand, integrate and train its management team and other key personnel, such as qualified engineering, service, sales, marketing and other staff. Varex competes for key personnel with other medical equipment and software manufacturers and technology companies, as well as universities and research institutions. Because this competition is intense, particularly in Utah, where unemployment rates are relatively low, compensation-related costs could increase significantly if the supply of qualified personnel decreases or demand increases. If Varex is unable to hire and train qualified personnel, Varex may not be able to maintain or expand its business. Additionally, if Varex is unable to retain key personnel, Varex may not be able to replace them readily or on terms that are reasonable, which also could hurt its business.

Varex may be unable to complete future acquisitions or realize expected benefits from acquisitions of or investments in new businesses, products, or technologies, which could harm Varex’s business.

Varex’s ability to identify and take advantage of attractive acquisitions or other business development opportunities is an important component in implementing its overall business strategy. Varex needs to grow Varex’s businesses in response to changing technologies, customer demands and competitive pressures. In some circumstances, Varex may decide to grow its business through the acquisition of complementary businesses, products or technologies rather than through internal development. For example, during fiscal year 2015, Varex acquired Claymount and MeVis. Identifying suitable acquisition candidates can be difficult, time-consuming and costly, and Varex may not be able to identify suitable candidates or successfully complete or finance identified acquisitions, including as a result of failing to obtain regulatory or competition clearances, which could impair Varex’s growth and ability to compete. In addition, completing an acquisition can divert Varex’s management and key personnel from its current business operations, which could harm its business and affect its financial results. Even if Varex completes an acquisition, Varex may not be able to successfully integrate newly acquired organizations, products, technologies or employees into its operations, or may not fully realize some of the expected synergies.

Integrating an acquisition can also be expensive and time-consuming, and may strain Varex’s resources. It may cost Varex more to commercialize new products than originally anticipated or cause Varex to increase its expenses related to research and development, either of which could materially and adversely impact its results of operations. In many instances, integrating a new business will also involve implementing or improving

internal controls appropriate for a public company into a business that lacks them. It is also possible that an acquisition could increase Varex’s risk of litigation, as a third party may be more likely to assert a legal claim following an acquisition because of perceived deeper pockets or perceived greater value of a claim. In addition, Varex may be unable to retain the employees of acquired companies, or the acquired company’s customers, suppliers, distributors or other partners for a variety of reasons, including the fact that these entities may be Varex’s competitors or may have close relationships with its competitors.

Further, Varex may find that it needs to restructure or divest acquired businesses, or assets of those businesses. Even if it does so, an acquisition may not produce the full efficiencies, growth or benefits it expected. If Varex decides to sell assets or a business, it may be difficult to identify buyers or alternative exit strategies on acceptable terms, in a timely manner or at all, which could delay the accomplishment of its strategic objectives. Varex may be required to dispose of a business at a lower price or on less advantageous terms, or to recognize greater losses than it had anticipated.

If Varex acquires a business, it allocates the total purchase price to the acquired businesses’ tangible assets and liabilities, identifiable intangible assets and liabilities based on their fair values as of the date of the acquisition, and record the excess of the purchase price over those fair values as goodwill. If it fails to achieve the anticipated growth from an acquisition, or if it decides to sell assets or a business, it may be required to recognize an impairment loss on the write down of its assets and goodwill, which could materially and adversely affect its financial results. In addition, acquisitions can result in potentially dilutive issuances of equity securities or the incurrence of debt, contingent liabilities or expenses, or other charges, any of which could harm Varex’s business and affect its financial results.

Additionally, Varex has investments in privately held companies, for example, dpiX LLC, that are subject to risk of loss of investment capital. These investments are inherently risky, in some instances because the markets for the technologies or products these companies have under development may never materialize. If these companies do not succeed, Varex could lose some or all of its investment in these companies.

Varex may face additional risks from the acquisition or development of new lines of business.

From time to time, Varex may acquire or develop new lines of business. There are substantial risks and uncertainties associated with new lines of business, particularly in instances where the markets are not fully developed. Risks include developing knowledge of and experience in the new business, recruiting market professionals, increasing research and development expenditures, and developing and capitalizing on new relationships with experienced market participants. This may mean significant investment and involvement of Varex’s senior management to acquire or develop, then integrate, the business into its operations. Timelines for integration of new businesses may not be achieved and price and profitability targets may not prove feasible, as new products can carry lower gross margins than existing products. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact whether implementation of a new business will be successful. Failure to manage these risks could have a material and adverse effect on its business, results of operations and financial condition.

Fluctuations in Varex’s operating results, including quarterly revenues, and margins, may cause its stock price to be volatile, which could cause losses for its stockholders.

Varex has experienced and expects in the future to experience fluctuations in its operating results, including revenues and margins, from period to period.

Varex’s quarterly operating results, including its revenues and margins, may be affected by a number of other factors, including:

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the introduction and timing of announcement of new products or product enhancements by Varex and its competitors;

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change in its or its competitors’ pricing or discount levels;

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changes in foreign currency exchange rates and other economic uncertainty;

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changes in the relative portion of its revenues represented by its various products, including the relative mix between higher margin and lower margin products;

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changes in the relative portion of its revenues represented by its international region as a whole, by regions within the overall region, as well as by individual countries (notably, those in emerging markets);

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fluctuation in its effective tax rate, which may or may not be known to Varex in advance;

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the availability of economic stimulus packages or other government funding, or reductions thereof;

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disruptions in the supply or changes in the costs of raw materials, labor, product components or transportation services;

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changes to its organizational structure, which may result in restructuring or other charges;

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disruptions in its operations, including its ability to manufacture products, caused by events such as earthquakes, fires, floods, terrorist attacks or the outbreak of epidemic diseases;

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the unfavorable outcome of any litigation or administrative proceeding or inquiry, as well as ongoing costs associated with legal proceedings; and

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accounting changes and adoption of new accounting pronouncements.

Because many of Varex’s operating expenses are based on anticipated capacity levels and a high percentage of these expenses are fixed for the short term, a small variation in the timing of revenue recognition can cause significant variations in operating results from quarter to quarter. If Varex’s gross margins fall below the expectation of securities analysts and investors, the trading price of Varex common stock would almost certainly decline.

In addition, as discussed in more detail elsewhere in this information statement, significant changes may occur in Varex’s cost structure, management, financing and business operations as a result of operating as a company separate from Varian.

Varex intends to enter into a secured revolving credit facility and a secured term loan credit facility in connection with the separation, each of which will restrict certain activities, and failure to comply with these facilities may have an adverse effect on its business, liquidity and financial position.

Varex intends to enter into a secured revolving credit facility and a secured term loan credit facility in connection with the separation, each of which will contain restrictive financial covenants, including financial covenants that require Varex to comply with specified financial ratios. Varex may have to curtail some of its operations to comply with these covenants. In addition, its credit facilities will contain other affirmative and negative covenants that could restrict its operating and financing activities. These provisions will limit its ability to, among other things, incur future indebtedness, contingent obligations or liens, guarantee indebtedness, make certain investments and capital expenditures, sell stock or assets and pay dividends, and consummate certain mergers or acquisitions. If Varex fails to comply with the credit facility requirements, it may be in default. Upon an event of default, if a credit agreement is not amended or the event of default is not waived, the lender could declare all amounts then outstanding, together with accrued interest, to be immediately due and payable. If this happens, Varex may not be able to make those payments or borrow sufficient funds from alternative sources to make those payments. Even if Varex were to obtain additional financing, that financing may be on unfavorable terms.

In connection with the separation, Varex will incur debt obligations that could adversely affect Varex’s business, profitability and ability to meet its obligations.

As of September 30, 2016, on a pro forma basis after giving effect to the new financing arrangements that Varex expects to enter into in connection with the separation and after giving effect to the application of the net proceeds of such financing, Varex’s total combined indebtedness would have been $205.0 million.

This debt could potentially have important consequences to Varex and its debt and equity investors, including:

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requiring that a portion of Varex’s cash flow from operations be used to make interest payments on this debt following the separation, which would reduce cash flow available for other corporate purposes;

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increasing Varex’s vulnerability to shifts in interest rates and to general adverse economic and industry conditions;

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limiting Varex’s flexibility in planning for, or reacting to, changes in its business and the industry; and

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limiting Varex’s ability to borrow additional funds as needed, or increasing the costs of any such borrowing.

To the extent that Varex incurs additional indebtedness, the foregoing risks could increase. In addition, Varex’s actual cash requirements in the future may be greater than expected. Varex’s cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and Varex may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance Varex’s debt.

Changes in interpretation or application of generally accepted accounting principles may materially and adversely affect Varex’s operating results.

Varex prepares its financial statements to conform to GAAP. These principles are subject to interpretation by the Financial Accounting Standards Board (“FASB”), American Institute of Certified Public Accountants, the SEC and various other regulatory or accounting bodies. A change in interpretations of, or its application of, these principles can have a significant effect on Varex’s reported results and may even affect its reporting of transactions completed before a change is announced. In addition, when Varex is required to adopt new accounting standards, Varex’s methods of accounting for certain items may change, which could cause its results of operations to fluctuate from period to period and make it more difficult to compare its financial results to prior periods.

As its operations evolve over time, Varex may introduce new products or new technologies that require Varex to apply different accounting principles, including ones regarding revenue recognition, than Varex has applied in past periods. The application of different types of accounting principles and related potential changes may make it more difficult to compare its financial results from quarter to quarter, and the trading price of Varex common stock could suffer or become more volatile as a result.

Environmental laws impose compliance costs on its business and can also result in liability.

Varex is subject to environmental laws around the world. These laws regulate many aspects of its operations, including its handling, storage, transport and disposal of hazardous substances, such as the chemicals and materials that Varex uses in the course of its manufacturing operations. They can also impose cleanup liabilities, including with respect to discontinued operations. As a consequence, Varex can incur significant environmental costs and liabilities, some recurring and others not recurring. Although Varex follows procedures intended to comply with existing environmental laws, Varex, like other businesses, may mishandle or inadequately manage hazardous substances used in its manufacturing operations and can never completely eliminate the risk of contamination or injury from certain materials that Varex uses in its business and, therefore, the prospect of resulting claims and damage payments. Varex may also be assessed fines or penalties for failure

to comply with environmental laws and regulations. Insurance has provided coverage for portions of cleanup costs resulting from historical occurrences, but Varex does not expect to maintain insurance coverage for costs or claims that might result from any future contamination.

Future changes in environmental laws could also increase its costs of doing business, perhaps significantly. Several countries, including some in the EU, now require medical equipment manufacturers to bear certain disposal costs of products at the end of the product’s useful life, increasing its costs. The EU has also adopted directives that may lead to restrictions on the use of certain hazardous substances or other regulated substances in some of its products sold there. These directives, along with another that requires substance information to be provided upon request, could increase its operating costs in order to maintain access to certain markets. All of these costs, and any future violations or liabilities under environmental laws or regulations, could have a material adverse effect on its business.

Varex’s operations are vulnerable to interruption or loss due to natural or other disasters, power loss, strikes and other events beyond its control.

Varex conducts some of its activities, including manufacturing, research and development, administration and data processing at facilities located in areas that have in the past experienced or may in the future experience natural disasters. Varex’s insurance coverage for such disasters may not be adequate or continue to be available at commercially reasonable terms, or at all. A major disaster (such as a major fire, hurricane, earthquake, flood, tsunami, volcanic eruption or terrorist attack) affecting Varex’s facilities, or those of its suppliers, could significantly disrupt its operations, and delay or prevent product manufacture and shipment during the time required to repair, rebuild or replace its or its suppliers’ damaged manufacturing facilities. These delays could be lengthy and costly. If any of its customers’ facilities are adversely affected by a disaster, shipments of its products could be delayed. Additionally, customers may delay purchases of its products until operations return to normal. For example, following the earthquake and tsunami disasters in Japan in 2011, Toshiba’s operations were impacted and, as a consequence, orders to and product shipment from the Imaging Components business were delayed for several months. Even if Varex is able to quickly respond to a disaster, the ongoing effects of the disaster could create some uncertainty in the operations of its businesses. In addition, its facilities may be subject to a shortage of available electrical power and other energy supplies. Any shortages may increase its costs for power and energy supplies or could result in blackouts, which could disrupt the operations of its affected facilities and harm its business. Further, its products are typically shipped from a limited number of ports, and any disaster, strike or other event blocking shipment from these ports could delay or prevent shipments and harm its business. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil or an outbreak of epidemic diseases, such as Ebola, severe acute respiratory syndrome (SARS) or avian flu virus, could have a negative effect on its business operations, those of its suppliers and customers, and the ability to travel, resulting in adverse consequences on Varex’s revenues and financial performance.

Risks Related to the Separation

Varex has no history of operating as an independent company, and its historical and pro forma financial information is not necessarily representative of the results that it would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.

The historical information about Varex in this information statement refers to Varex’s business as operated by and integrated with Varian. Varex’s historical and pro forma financial information included in this information statement is derived from the consolidated financial statements and accounting records of Varian. Accordingly, the historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that Varex would have achieved as a separate, publicly traded company during the periods presented or those that Varex will achieve in the future primarily as a result of the factors described below:

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Prior to the separation, Varex’s business has been operated by Varian as part of its broader corporate organization, rather than as an independent company. Varian or one of its affiliates performed various

corporate functions for Varex such as accounting, legal, human resources, information technology, treasury, tax, facilities, research and development, insurance and other corporate and infrastructure services. Varex’s historical and pro forma financial results reflect allocations of corporate expenses from Varian for such functions and are likely to be less than the expenses Varex would have incurred had it operated as a separate publicly traded company. Following the separation, Varex’s costs related to such functions previously performed by Varian may therefore increase.

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Currently, Varex’s business is integrated with the other businesses of Varian. Historically, Varex has shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. Although Varex will enter into a transition services agreement with Varian, the arrangements provided by such agreement may not fully capture the benefits that Varex has enjoyed as a result of being integrated with Varian and may result in Varex paying higher charges than in the past for these services. This could have a material and adverse effect on Varex’s results of operations and financial condition following the completion of the separation.

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Generally, Varex’s working capital requirements and capital for its general corporate purposes, including acquisitions and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Varian. Following the completion of the separation, Varex may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, which may or may not be available and may be more costly.

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After the completion of the separation, the cost of capital for Varex’s business is expected to be higher than Varian’s cost of capital prior to the separation.

Other significant changes are likely to occur in Varex’s cost structure, management, financing and business operations as a result of operating as a company separate from Varian, including as a result of additional costs that will be incurred by Varex as a result of the separation. For additional information about the past financial performance of Varex’s business and the basis of presentation of the historical combined financial statements and the unaudited pro forma combined financial statements of Varex’s business, see the section entitled “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and accompanying notes included elsewhere in this information statement.

The separation and distribution agreement will provide that, in connection with Varex’s separation, a number of contracts are to be assigned from Varian or its affiliates to Varex or Varex’s affiliates. It is possible that some parties may use any consent requirement to seek more favorable contractual terms from Varex. If Varex is unable to obtain these consents, Varex may be unable to obtain some of the benefits, assets and contractual commitments that are intended to be allocated to Varex as part of the separation. If Varex is unable to obtain these consents, the loss of these contracts could increase Varex’s expenses or otherwise reduce Varex’s profitability.

Potential indemnification liabilities to Varian pursuant to the separation and distribution agreement could materially and adversely affect Varex’s business, financial condition, results of operations and cash flows.

The separation and distribution agreement will provide for, among other things, indemnification obligations designed to make Varex financially responsible for any Varex Liabilities (defined below and discussed further in “Relationships with Varian Following Separation and Distribution—The Separation and Distribution Agreement—Transfer of Assets and Assumption of Liabilities”); the failure of Varex to pay, perform or otherwise promptly discharge any Varex Liabilities or contracts, in accordance with their respective terms, whether prior to, at or after

the distribution; any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding by Varian for the benefit of Varex, unless related to Varian Liabilities (defined below and discussed further in “Relationships with Varian Following Separation and Distribution—The Separation and Distribution Agreement—Transfer of Assets and Assumption of Liabilities”); any breach by Varex of the separation agreement or any of the ancillary agreements or any action by Varex in contravention of its amended and restated certificate of incorporation or amended and restated bylaws; and any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the registration statement of which this information statement forms a part, this information statement (as amended or supplemented) or any other disclosure document that describes the separation or the distribution or Varex and its subsidiaries or primarily relates to the transactions contemplated by the separation and distribution agreement, subject to certain exceptions. If Varex is required to indemnify Varian under the circumstances set forth in the separation and distribution agreement, Varex may be subject to substantial liabilities. See “Relationships with Varian Following Separation and Distribution—The Separation and Distribution Agreement.”

In connection with Varex’s separation from Varian, Varian will indemnify Varex for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure Varex against the full amount of such liabilities, or that Varian’s ability to satisfy its indemnification obligation will not be impaired in the future.

Pursuant to the separation and distribution agreement and certain other agreements with Varian, Varian will agree to indemnify Varex for certain liabilities as discussed further in “Relationships with Varian Following Separation and Distribution—The Separation and Distribution Agreement—Indemnification.” However, third parties could also seek to hold Varex responsible for any of the liabilities that Varian expects to retain, and there can be no assurance that the indemnity from Varian will be sufficient to protect Varex against the full amount of such liabilities, or that Varian will be able to fully satisfy its indemnification obligations. In addition, Varian’s insurers may attempt to deny coverage to Varex for liabilities associated with certain occurrences of indemnified liabilities prior to the separation. Moreover, even if Varex ultimately succeeds in recovering from Varian or such insurance providers any amounts for which Varex is held liable, Varex may be temporarily required to bear these losses. Each of these risks could negatively affect Varex’s business, financial position, results of operations and cash flows.

It is a condition to the distribution that Varian receive an opinion of counsel, satisfactory to the Varian board of directors, regarding the qualification of the distribution, together with certain related transactions, as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. The opinion of counsel will be based upon and rely on, among other things, certain facts and assumptions, as well as certain representations, statements and undertakings of Varian and Varex, including those relating to the past and future conduct of Varian and Varex. If any of these representations, statements or undertakings are, or become, inaccurate or incomplete, or if Varian or Varex breaches any of its covenants in the separation documents, the opinion of counsel may be invalid and the conclusions reached therein could be jeopardized. Notwithstanding the opinion of counsel, the Internal Revenue Service (the “IRS”) could determine that the distribution, together with certain related transactions, should be treated as a taxable transaction if it determines that any of the facts, assumptions, representations, statements or undertakings upon which the opinion of counsel was based are false or have been violated, or if it disagrees with the conclusions in the opinion of counsel. The opinion of counsel is not binding on the IRS and there can be no assurance that the IRS will not assert a contrary position.

If the distribution, together with certain related transactions, fails to qualify as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, in general, Varian would recognize taxable gain as if it had sold the Varex common stock in a taxable sale for its fair market value, and Varian stockholders who receive Varex shares in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares. For more information, see “Material U.S. Federal Income Tax Consequences.”

Under the tax matters agreement to be entered into by Varian and Varex in connection with the separation, Varex generally would be required to indemnify Varian for any taxes resulting from the separation (and any related costs and other damages) to the extent such amounts resulted from (i) an acquisition of all or a portion of the equity securities or assets of Varex, whether by merger or otherwise (and regardless of whether Varex participated in or otherwise facilitated the acquisition), (ii) other actions or failures to act by Varex or (iii) any of the representations or undertaking of Varex contained in any of the separation-related agreements or in the documents relating to the opinion of counsel being incorrect or violated. Any such indemnity obligations could be material. For a more detailed discussion, see the section entitled “Relationships with Varian Following Separation and Distribution—Tax Matters Agreement.”

Varex may not be able to engage in desirable strategic or capital-raising transactions following the separation.

Under current law, a spin-off can be rendered taxable to the parent corporation and its stockholders as a result of certain post-spin-off acquisitions of shares or assets of the spun-off corporation. For example, a spin-off may result in taxable gain to the parent corporation under Section 355(e) of the Code if the spin-off were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, shares representing a 50% or greater interest (by vote or value) in the spun-off corporation. To preserve the tax-free treatment of the separation and the distribution, and in addition to Varex’s indemnity obligation described immediately above, the tax matters agreement will restrict Varex, for the two-year period following the separation, except in specific circumstances, from: (i) entering into any transaction pursuant to which all or a portion of the shares of Varex common stock would be acquired, whether by merger or otherwise, (ii) issuing equity securities beyond certain thresholds, (iii) repurchasing shares of Varex common stock other than in certain open-market transactions, and (iv) ceasing to actively conduct certain of its businesses. The tax matters agreement will also prohibit Varex from taking or failing to take any other action that would prevent the distribution and certain related transactions from qualifying as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. These restrictions may limit Varex’s ability to pursue certain strategic transactions, equity issuances or repurchases or other transactions that it may believe to be in the best interests of its stockholders or that might increase the value of its business. For more information, see the section entitled “Relationships with Varian Following Separation and Distribution—Tax Matters Agreement” and “Material U.S. Federal Income Tax Consequences.”

After the distribution, certain members of management and directors will hold stock in both Varian and Varex, and as a result may face actual or potential conflicts of interest.

After the distribution, certain of the management and directors of each of Varian and Varex may own both Varian common stock and Varex common stock. This ownership overlap could create, or appear to create, potential conflicts of interest when Varex management and directors and Varian’s management and directors face decisions that could have different implications for Varex and Varian. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between Varex and Varian regarding the terms of the agreements governing the distribution and Varex’s relationship with Varian thereafter. These agreements include the separation and distribution agreement, the tax matters agreement, the employee matters agreement, the transition services agreement, intellectual property matters agreement, a trademark license agreement and one or more supply/distribution agreements. Potential conflicts of interest may also arise out of any commercial arrangements that Varex or Varian may enter into in the future.

Until the separation and distribution occur, Varian has sole discretion to change the terms of the separation and distribution in ways that may be unfavorable to Varex.

Until the separation and distribution occur, Varex will be a wholly owned subsidiary of Varian. Accordingly, Varian will effectively have the sole and absolute discretion to determine and change the terms of the separation and distribution, including the establishment of the record date for the distribution and the distribution date. These changes could be unfavorable to Varex. In addition, Varian may decide at any time not to proceed with the separation and distribution.

Varex may not achieve some or all of the expected benefits of the separation, and the separation may materially and adversely affect Varex’s business.

Varex may not be able to achieve the full strategic and financial benefits expected to result from the separation, or such benefits may be delayed or not occur at all. The separation and distribution is expected to provide the following benefits, among others:

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more effective pursuit of each company’s distinct operating priorities and strategies;

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more efficient allocation of capital for both Varian and Varex;

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direct access by Varex to the capital markets;

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facilitation of incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business, and potential enhancement of employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives, while at the same time creating an independent equity structure that will facilitate Varex’s ability to effect future acquisitions utilizing Varex common stock; and

•

a distinct investment identity allowing investors to evaluate the merits, performance and future prospects of Varex separately from Varian.

Varex may not achieve these and other anticipated benefits for a variety of reasons, including, among others: (i) the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing Varex’s business; (ii) following the separation, Varex may be more susceptible to market fluctuations and other adverse events than if it were still a part of Varian; (iii) following the separation, Varex’s business will be less diversified and have less scale than Varian’s business prior to the separation; and (iv) the other actions required to separate Varian’s and Varex’s respective businesses could disrupt Varex’s operations. If Varex fails to achieve some or all of the benefits expected to result from the separation, or if such benefits are delayed, the business, operating results and financial condition of Varex could be materially and adversely affected.

Varex or Varian may fail to perform under various transaction agreements that will be executed as part of the separation or Varex may fail to have necessary systems and services in place when certain of the transaction agreements expire.

In connection with the separation, Varex and Varian will enter into a separation agreement and will also enter into various other agreements, including a transition services agreement, intellectual property matters agreement, a tax matters agreement, one or more supply/distribution agreements, a trademark license agreement and an employee matters agreement. The separation agreement, tax matters agreement, employee matters agreement and intellectual property matters agreement will determine the allocation of assets and liabilities between the companies following the separation for those respective areas and include any necessary indemnifications related to liabilities and obligations. The transition services agreement will provide for the performance of certain services by each company for the benefit of the other for a limited period of time after the separation, and the supply/distribution agreements will provide for the provision of products and services by each

company and for the benefit of the other. Varex will rely on Varian to satisfy its performance and payment obligations under these agreements. If Varian is unable to satisfy its obligations under these agreements, including its indemnification obligations, Varex could incur operational difficulties or losses. If Varex does not have in place its own systems and services, or if Varex does not have agreements with other providers of these services once certain transaction agreements expire, Varex may not be able to operate its business effectively and its profitability may decline.

Potential liabilities may arise due to fraudulent transfer considerations, which could materially and adversely affect Varex’s financial condition and its results of operations.

In connection with the separation and distribution, Varian has undertaken and will undertake several corporate restructuring transactions which, along with the separation and distribution, may be subject to federal and state fraudulent conveyance and transfer laws. If, under these laws, a court were to determine that, at the time of the separation and distribution, any entity involved in these restructuring transactions or the separation and distribution:

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was insolvent;

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was rendered insolvent by reason of the separation and distribution;

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had remaining assets constituting unreasonably small capital; or

•

intended to incur, or believed it would incur, debts beyond its ability to pay these debts as they matured,

then the court could void the separation and distribution, in whole or in part, as a fraudulent conveyance or transfer. The court could then require Varex’s stockholders to return to Varian some or all of the shares of Varex common stock issued in the distribution, or require Varian or Varex, as the case may be, to fund liabilities of the other company for the benefit of creditors. The measure of insolvency will vary depending upon the jurisdiction whose law is being applied. Generally, however, an entity would be considered insolvent if the fair value of its assets was less than the amount of its liabilities or if it incurred debt beyond its ability to repay the debt as it matures.

Fulfilling Varex’s obligations incidental to being a public company, including with respect to the requirements of and related rules under the Sarbanes-Oxley Act of 2002, will place significant demands on Varex’s management, administrative and operational resources, including accounting and information technology resources.

As a public company, Varex will become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and will be required to prepare its financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that Varex file annual, quarterly and current reports. Varex’s failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict Varex’s ability to access financing.

In addition, the Sarbanes-Oxley Act requires that Varex, among other things, establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in Varex’s business, or changes in applicable accounting rules. Varex cannot assure that its internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which it had previously believed that internal controls were effective. If Varex is not able to maintain or document effective internal control over financial reporting, its independent registered public accounting firm will not be able to certify as to the effectiveness of Varex’s internal control over financial reporting.

Matters impacting Varex’s internal controls may cause Varex to be unable to report its financial information on a timely basis, or may cause Varex to restate previously issued financial information, and thereby subject Varex to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in Varex and the reliability of its financial statements. In addition, by virtue of its smaller size, Varex will be subject to a lower materiality threshold than Varian. Confidence in the reliability of Varex’s financial statements is also likely to suffer if Varex or its independent registered public accounting firm report a material weakness in Varex’s internal control over financial reporting. This could have a material adverse effect on Varex by, for example, leading to a decline in its share price and impairing its ability to raise additional capital.

For as long as Varex is an emerging growth company under the recently enacted JOBS Act, its independent registered public accounting firm will not be required to attest to the effectiveness of Varex’s internal control over financial reporting pursuant to Section 404(b). An independent assessment of the effectiveness of Varex’s internal controls could detect problems that Varex’s management’s assessment might not. Undetected material weaknesses in Varex’s internal controls could lead to financial statement restatements and require Varex to incur the expense of remediation.

Risks Related to Varex’s Common Stock

Varex cannot be certain that an active trading market for its common stock will develop or be sustained after the distribution, and following the distribution, Varex’s stock price may decline or fluctuate significantly.

A public market for Varex common stock does not currently exist. Varex anticipates that on or prior to the record date for the distribution, trading of shares of its common stock will begin on a “when-issued” basis and will continue through the distribution date. However, Varex cannot guarantee that an active trading market will develop or be sustained for its common stock after the distribution. Nor can Varex predict the prices at which shares of its common stock may trade after the distribution. Similarly, Varex cannot predict the effect of the distribution on the trading prices of its common stock or whether the combined market value of the shares of Varex common stock and the shares of Varian common stock will be less than, equal to or greater than the market value of shares of Varian common stock prior to the distribution.

The market price of Varex common stock may decline or fluctuate significantly due to a number of factors, some of which may be beyond Varex’s control, including:

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actual or anticipated fluctuations in Varex’s operating results;

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changes in earnings estimated by securities analysts or Varex’s ability to meet those estimates;

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the operating and stock price performance of comparable companies;

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changes in Varex’s stockholder base due to the separation;

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changes to the regulatory and legal environment in which Varex operates; and

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domestic and worldwide economic conditions.

There may be substantial and rapid changes in Varex’s stockholder base, which may cause Varex’s stock price to fluctuate significantly.

Many investors holding shares of Varian common stock may hold that stock because of a decision to invest in a company with Varian’s profile. Following the distribution, the shares of Varex common stock held by those investors will represent an investment in an imaging components company with a different profile. This may not be aligned with a holder’s investment strategy and may cause the holder to sell the shares rapidly. In addition, since Varex will not be in the S&P 500 index following the distribution, Varian investors who have an

investment strategy of tracking an index fund, such as the S&P 500 index, will likely promptly and rapidly sell the shares of Varex common stock that they receive in the distribution. As a result, the price of Varex common stock may decline or experience volatility as Varex’s stockholder base changes.

Varex does not currently expect to pay dividends on its common stock. The payment of any dividends in the future, and the timing and amount thereof, to Varex stockholders will fall within the discretion of Varex’s board of directors. The board’s decisions regarding the payment of dividends will depend on many factors, such as Varex’s financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in Varex’s debt, industry practice, legal requirements, regulatory constraints and other factors that the board deems relevant. For more information, see “Dividend Policy.” Varex’s ability to pay dividends will depend on its ongoing ability to generate cash from operations and on its access to the capital markets. Varex cannot guarantee that it will pay a dividend in the future or continue to pay any dividends if Varex commences paying dividends.

Varex is an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, its common stock may be less attractive to investors.

Varex is an “emerging growth company,” as defined in the JOBS Act, and it intends to take advantage of some of the exemptions from the reporting requirements that are afforded to emerging growth companies including, but not limited to, scaled disclosure requirements relating to financial statements and executive compensation, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Varex cannot predict if investors will find its common stock less attractive because it intends to rely on these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may become more volatile. Varex may take advantage of these exemptions until it is no longer an emerging growth company.

Your percentage ownership in Varex may be diluted in the future.

In the future, your percentage ownership in Varex may be diluted because of equity awards that Varex will be granting to Varex’s directors, officers and employees or otherwise as a result of equity issuances for acquisitions or capital market transactions. Varex’s employees will have awards in respect of shares of its common stock after the distribution as a result of conversion of their Varian stock awards (in whole or in part) to Varex stock awards. Varex anticipates its executive compensation committee will grant additional stock-based awards to its employees after the distribution. Such awards will have a dilutive effect on Varex’s earnings per share, which could adversely affect the market price of Varex common stock. From time to time, Varex will issue additional stock-based awards to its employees under Varex’s employee benefits plans.

In addition, Varex’s amended and restated certificate of incorporation will authorize Varex to issue, without the approval of Varex’s stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over Varex’s common stock respecting dividends and distributions, as Varex’s board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of Varex’s common stock. For example, Varex could grant the holders of preferred stock the right to elect some number of Varex’s directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences that Varex could assign to holders of preferred stock could affect the residual value of the common stock. See the section entitled “Description of Varex’s Capital Stock.”

Varex’s amended and restated certificate of incorporation and amended and restated bylaws will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with Varex’s board of directors rather than to attempt a hostile takeover. These provisions include, among others:

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the inability of Varex’s stockholders to call a special meeting;

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the inability of Varex’s stockholders to act without a meeting of stockholders;

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rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings;

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the right of Varex’s board of directors to issue preferred stock without stockholder approval;

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the division of Varex’s board of directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult, until 2022 annual meeting of stockholders, after which directors will be elected annually;

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a provision that stockholders may only remove directors with cause while the board is classified;

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the ability of Varex’s directors, and not stockholders, to fill vacancies on Varex’s board of directors; and

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the requirement that the affirmative vote of stockholders holding at least 66 2/3% of Varex’s voting stock is required to amend certain provisions in Varex’s amended and restated certificate of incorporation (relating to the term and removal of its directors, the filling of its board vacancies, the calling of special meetings of stockholders, stockholder action by written consent, the elimination of liability of directors to the extent permitted by Delaware law and indemnification of directors and officers), provided, however, that the provisions of the amended and restated certificate of incorporation relating to the 66 2/3% voting threshold will be of no force and effect effective as of the completion of the 2021 annual meeting of stockholders and the amended and restated certificate of incorporation may thereafter be amended by the affirmative vote of the holders of at least a majority of the outstanding voting stock then-outstanding.

In addition, because Varex will not elect to be exempt from Section 203 of the Delaware General Corporation Law (the “DGCL”), this provision could also delay or prevent a change of control that you may favor. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the

board of directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.

Varex believes these provisions will protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with Varex’s board of directors and by providing Varex’s board of directors with more time to assess any acquisition proposal. These provisions are not intended to make Varex immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that Varex’s board of directors determines is not in the best interests of Varex and Varex’s stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

In addition, an acquisition or further issuance of Varex’s stock could trigger the application of Section 355(e) of the Code, causing the distribution to be taxable to Varian. For a discussion of Section 355(e) of the Code, see “Material U.S. Federal Income Tax Consequences.” Under the tax matters agreement, Varex would be required to indemnify Varian for the resulting tax, and this indemnity obligation might discourage, delay or prevent a change of control that you may consider favorable.

Varex’s amended and restated certificate of incorporation will contain an exclusive forum provision that may discourage lawsuits against Varex and Varex’s directors and officers.

Varex’s amended and restated certificate of incorporation will provide that unless the board of directors otherwise determines, the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Varex, any action asserting a claim of breach of a fiduciary duty owed by any director or officer of Varex to Varex or Varex’s stockholders, any action asserting a claim against Varex or any director or officer of Varex arising pursuant to any provision of the DGCL or Varex’s amended and restated certificate of incorporation or bylaws, or any action asserting a claim against Varex or any director or officer of Varex governed by the internal affairs doctrine. This exclusive forum provision may limit the ability of Varex’s stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with Varex or Varex’s directors or officers, which may discourage such lawsuits against Varex and Varex’s directors and officers. Alternatively, if a court outside of Delaware were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Varex may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect Varex’s business, financial condition or results of operations.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This information statement and other materials Varian and Varex have filed or will file with the SEC contain, or will contain, certain forward-looking statements regarding business strategies, market potential, future financial performance and other matters. The words “will,” “should,” “believe,” “expect,” “anticipate,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. In particular, information included under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “The Separation and Distribution” contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Varex’s management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Except as may be required by law, Varex and Varian undertake no obligation to modify or revise any forward-looking statements to reflect events or circumstances occurring after the date of this information statement. Factors that could cause actual results or events to differ materially from those anticipated include, but are not limited to, the matters described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

DIVIDEND POLICY

Varex does not currently expect to pay dividends on its common stock. The payment of any dividends in the future, and the timing and amount thereof, is within the discretion of Varex’s board of directors. The board’s decisions regarding the payment of dividends will depend on many factors, such as Varex’s financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in Varex’s debt, industry practice, legal requirements, regulatory constraints and other factors that the board deems relevant. Varex’s ability to pay dividends will depend on its ongoing ability to generate cash from operations and on its access to the capital markets. Varex cannot guarantee that it will pay a dividend in the future or continue to pay any dividends if Varex commences paying dividends.

CAPITALIZATION

The following table sets forth Varex’s capitalization as of September 30, 2016, on a historical basis and on a pro forma basis to give effect to the pro forma adjustments included in Varex’s unaudited pro forma combined financial information. The information below is not necessarily indicative of what Varex’s capitalization would have been had the separation, distribution and related transactions been completed as of September 30, 2016. In addition, it is not indicative of Varex’s future capitalization. This table should be read in conjunction with “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Varex’s Combined Financial Statements and notes thereto included elsewhere in this information statement.


	As of September 30, 2016 (Unaudited)
(In millions, except par values)	Historical		Pro Forma
Cash and cash equivalents ⁽¹⁾	$	36.5	$	32.0


Debt:
Short-term borrowings	$	—	$	5.0
Long-term debt		—		200.0

Total debt ⁽²⁾		—		205.0

Equity:
Common stock, $0.01 par value, [●] shares authorized, [●] issued and outstanding on a pro forma basis		—		—
Additional paid-in-capital		—		—
Net parent investment ⁽³⁾		526.0		330.7

Total equity		526.0		330.7

Total capitalization	$	526.0	$	535.7

(1)

(2)

Varex anticipates entering into a secured revolving credit facility in an aggregate principal amount of up to $100.0 million and a secured term loan credit facility in an aggregate principal amount of $200.0 million on or before the distribution date. Varex intends to draw approximately $5.0 million on the revolving credit facility and the entire amount of $200.0 million of the term loan credit facility on or before the date of distribution in order to fund a cash transfer to Varian of $200.0 million prior to the effective time of the distribution and to pay financing costs.

(3)

Reflects the net parent investment impact as a result of the anticipated post-distribution capital structure. Upon the separation and distribution date, net parent investment will be redesignated as Varex stockholders’ equity and will be allocated between common stock and additional paid-in-capital based on the number of shares of Varex common stock outstanding at the distribution date.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined financial statements presented below have been derived from Varex’s combined financial statements for the fiscal year ended September 30, 2016. The unaudited pro forma combined statement of earnings has been prepared to give effect to the Pro Forma Transactions (as defined below) as if the Pro Forma Transactions (as defined below) had occurred or had become effective as of October 3, 2015, the first day of fiscal year 2016. The unaudited pro forma combined balance sheet has been prepared to give effect to the Pro Forma Transactions as though the Pro Forma Transactions had occurred on September 30, 2016.

Varex’s unaudited pro forma combined financial statements have been prepared based on available information, assumptions, and estimates that management believes are reasonable. The unaudited pro forma combined financial statements are for illustrative and informational purposes only, and do not reflect what Varex’s financial position and results of operations would have been had the separation occurred on the dates indicated and are not necessarily indicative of its future financial position and future results of operations.

Varex’s unaudited pro forma combined financial statements have been prepared to reflect adjustments to its audited historical combined financial statements that are: (i) factually supportable, (ii) directly attributable to the separation, and, for purposes of the combined statements of earnings, (iii) expected to have continuing impact on Varex’s results of operations. The unaudited pro forma combined financial statements have been adjusted to give effect to the following (which are collectively referred to in this information statement as the “Pro Forma Transactions”):

•

The distribution of [●] shares of Varex common stock to Varian stockholders, and the resulting elimination of net parent investment;

•

Qualification of the distribution, together with certain related transactions, as a transaction that is generally tax-free for U.S. federal income tax purposes;

•

The secured term loan and revolving credit facility arrangements anticipated to be entered into by the Company;

•

The cash transfer to Varian prior to the distribution;

•

The transfers of certain assets and liabilities from Varian to Varex; and

•

The impact of the transactions contemplated by the separation and distribution agreement, transition services agreement, tax matters agreement, employee matters agreement and intellectual property matters agreement.

Varex’s historical combined statement of earnings includes allocations of certain Varian expenses relating to, among certain other expenses: accounting, legal, human resources, information systems, treasury, tax, facilities, research and development, insurance and other corporate and infrastructure services. To operate as an independent public company, Varex expects to incur costs to replace those services previously provided by Varian in addition to incremental stand-alone costs. Varex expects the total of these costs to be between $35 million to $45 million on an annual pre-tax basis.

In connection with the separation, Varex expects to enter into a transition services agreement with Varian, pursuant to which Varian and Varex will provide to each other certain specified services on a temporary basis, including various information technology, financial and administrative services. The charges for the transition services generally are expected to allow the providing company to fully recover all direct costs and expenses it incurs in connection with providing the service, plus, in some cases, the allocated indirect costs of providing the services.

VAREX IMAGING CORPORATION

UNAUDITED PRO FORMA COMBINED STATEMENTS OF EARNINGS

(In millions, except per share amounts)


	Year ended September 30, 2016
	Historical			Pro Forma Adjustments			Notes			Pro Forma
Revenues	$	620.1			—					$	620.1
Cost of revenues		371.7			—						371.7

Gross margin		248.4			—						248.4

Operating expenses:
Research and development		53.5			—						53.5
Selling, general and administrative		85.8			3.1			(a	)		88.9

Total operating expenses		139.3			3.1						142.4

Operating earnings		109.1			(3.1	)					106.0

Interest income		0.3			—						0.3
Interest expense		(1.9	)		(7.4	)		(b	)		(9.3	)
Other expense, net		(2.5	)		—						(2.5	)

Interest and other expense, net		(4.1	)		(7.4	)					(11.5	)

Earnings before taxes		105.0			(10.5	)					94.5
Taxes on earnings		36.0			(3.8	)		(c	)		32.2

Net earnings		69.0			(6.7	)					62.3
Less: Net earnings attributable to noncontrolling interests		0.5			—						0.5

Net earnings attributable to Varex	$	68.5			(6.7	)				$	61.8

Net earnings per share—basic		—			—			(d	)		—
Net earnings per share—diluted		—			—			(d	)		—

Shares used in the calculation of net earnings per share:
Weighted average shares outstanding—basic		—			—			(d	)		—
Weighted average shares outstanding—diluted		—			—			(d	)		—

VAREX IMAGING CORPORATION

UNAUDITED PRO FORMA COMBINED BALANCE SHEETS

(In millions, except par values)


	As of September 30, 2016
	Historical		Pro Forma Adjustments			Notes		Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	36.5		(4.5	)		(e)	$	32.0
Accounts receivable, net of allowance for doubtful accounts of $0.2 at September 30, 2016		122.2		—					122.2
Inventories		197.4		—					197.4
Prepaid expenses and other current assets		3.8		1.0			(f)		4.8

Total current assets		359.9		(3.5	)				356.4
Property, plant and equipment, net		108.9		11.6			(g)		120.5
Goodwill		74.7		—					74.7
Investments in privately held companies		49.3		—					49.3
Deferred tax assets		5.5		1.8			(h)		7.3
Other assets		24.1		6.3			(f)(g)		30.4

Total assets	$	622.4		16.2				$	638.6

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable	$	41.9		—				$	41.9
Accrued liabilities		23.9		4.8			(g)		28.7
Deferred revenues		12.0		—					12.0
Short-term borrowings		—		5.0			(f)		5.0

Total current liabilities		77.8		9.8					87.6
Long-term debt		—		200.0			(f)		200.0
Other long-term liabilities		8.3		1.7			(g)		10.0

Total liabilities		86.1		211.5					297.6

Commitments and contingencies (Note 7)
Redeemable noncontrolling interests		10.3		—					10.3
Equity:
Common Stock, $0.01 par value, [●] shares authorized, [●] issued and outstanding on a pro forma basis		—		—			(i)		—
Additional paid-in-capital		—		—			(j)		—
Net parent investment		526.0		(195.3	)		(i)		330.7

Total equity		526.0		(195.3	)				330.7

Total liabilities, redeemable noncontrolling interests and equity	$	622.4		16.2				$	638.6

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Reflects fees associated with services relating to Information Technology included in the transition services agreement with Varian on a transitional basis after completion of the separation. Fees for other services, such as finance, engineering, and human resources, in the transition services agreement, are not expected to have a material impact on the pro forma combined statements of earnings. These fees are subject to change upon finalization of the transition services agreement.

Reflects the estimated interest expense and amortization of financing costs related to the approximately $200.0 million secured term loan credit facility and the expected draw down of $5.0 million on the secured revolving credit facility that the Company expects to incur. The Company expects the interest rate on both the secured term loan credit facility and the secured revolving credit facility to be approximately 3.0%. Actual interest expense may be higher or lower based on final terms of the debt arrangement. A 1% change to the annual interest rate would change interest expense by approximately $2.1 million on an annual basis.

c.	Reflects the tax effect of pro forma adjustments using the effective statutory tax rate for the year ended September 30, 2016.

The calculations of pro forma basic earnings per share and average shares outstanding for the period presented are based on the number of shares used to calculate Varian common stock assumed to be outstanding for the year ended September 30, 2016, adjusted for the assumed distribution ratio of one share of Varex common stock for every [●] shares of Varian common stock outstanding.

The calculations of pro forma diluted earnings per share and weighted-average shares outstanding for the period presented are based on the assumed number of shares used to calculate Varian diluted earnings per share for the year ended September 30, 2016, adjusted for the same distribution ratio. This calculation may not be indicative of the dilutive effect that will actually result from Varex stock-based awards issued in connection with the adjustment of outstanding Varian stock-based awards or the grant of new stock-based awards. The number of dilutive shares of Varex common stock underlying Varex stock-based awards issued in connection with the adjustment of outstanding Varian stock-based awards will not be determined until after the distribution date.

Reflects the estimated proceeds of $205.0 million of new debt, comprised of a $200.0 million secured term loan credit facility and the expected draw down of approximately $5.0 million on the secured revolving credit facility, and the related debt issuance cost of approximately $5.0 million as if it had taken place on September 30, 2016. Proceeds from this anticipated borrowing are expected to be used to fund a cash transfer from Varex to Varian of $200.0 million and to pay financing costs, in addition to an adjustment payment from Varex to Varian as calculated in e) above.

Reflects the carrying value of various corporate and other assets and liabilities to be transferred to Varex. The transfer of assets will primarily include property, assets of Varex’s employees under Varian’s employee benefit plans pursuant to the terms of the employee matters agreement, and certain other fixed assets. The transfer of liabilities primarily relates to liabilities of Varex’s employees under Varian’s employee benefit plans, and shared environmental liabilities. There may be additional assets and liabilities, including certain indemnification obligations between Varian and Varex, to be transferred in connection with the separation that have not been determined or finalized. The expenses, including depreciation, related to these assets and liabilities to be transferred to Varex were previously charged through allocations from Varian; accordingly, no incremental expenses are included in the pro forma combined statements of earnings.

h.	Represents the tax effect of temporary differences between the tax basis of assets and liabilities of various corporate and other assets and liabilities to be transferred to Varex and their reported amounts in the combined financial statements.

j.	Represents the distribution of approximately [●] shares of Varex common stock at par value $0.01 per share to holders of Varian common stock and the resulting elimination of net parent investment.

SELECTED HISTORICAL COMBINED FINANCIAL DATA

The following selected combined financial data reflects the combined operations of Varex Imaging Corporation. Varex derived the selected combined statement of earnings data for the fiscal years 2016, 2015 and 2014 and the selected combined balance sheet data as of September 30, 2016 and October 2, 2015, as set forth below, from its audited combined financial statements, which are included elsewhere in this information statement. Varex derived the selected combined statements of earnings and the selected combined balance sheet data as of fiscal years ended 2016, 2015 and 2014 from Varian’s underlying financial records.

The selected historical combined data presented below reflects Varex’s results as historically operated as a part of Varian and does not necessarily indicate the results expected for any future period. The selected combined financial data presented below should be read in conjunction with “Unaudited Pro Forma Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and accompanying notes included elsewhere in this information statement.

Historical basic and diluted earnings per share (“EPS”) are not presented because Varex’s business was wholly-owned by Varian during the periods presented. Accordingly, the historical financial information contained in this information statement has not been prepared for a single legal entity that had share capital throughout the entire historical period and EPS for these periods has not been provided.


	Fiscal Years
(In millions)	2016		2015		2014
Combined Statements of Earnings Data:
Revenues	$	620.1	$	632.3	$	685.2
Earnings before taxes		105.0		127.6		174.2
Taxes on earnings		36.0		46.8		64.1

Net earnings		69.0		80.8		110.1
Less: Net earnings attributable to noncontrolling interests		0.5		0.8		—

Net earnings attributable to Varex	$	68.5	$	80.0	$	110.1


	September 30, 2016		October 2, 2015
Combined Balance Sheet Data:
Working capital	$	282.1	$	237.5
Total assets		622.4		583.6
Total equity		526.0		495.6

BUSINESS

Overview

Varex is a leading manufacturer of X-ray tubes globally, with over 100,000 tubes shipped in the last five years to a group of customers that include most major radiology OEMs. Varex manufactures X-ray tubes for four primary medical diagnostic radiology applications: CT scanners, radiographic or fluoroscopic imaging, special procedures, and mammography. Varex also offers a large line of industrial X-ray tubes, which consist of analytical X-ray tubes used for X-ray fluorescence and diffraction, as well as tubes used for non-destructive imaging and gauging and airport baggage inspection systems. Varex is also a leading manufacturer of flat panel detectors, with an installed base of over 80,000 detectors. Varex’s flat panel detectors, which are based on amorphous silicon imaging technologies, have broad application as an alternative to image intensifier tubes and X-ray film. Varex’s flat panel detector products are being incorporated into next generation filmless medical diagnostic, radiation therapy, dental, veterinary, and industrial inspection imaging systems. Varex believes that imaging equipment based on amorphous silicon technologies is more stable and reliable, needs fewer adjustments, suffers less degradation over time than image intensifier tubes, and is more cost-effective than X-ray film. Varex also offers software and image processing tools for X-ray imaging systems for a variety of modalities including fluoroscopy, angiography, cardiology, mammography and general radiography. The software may be combined with Varex’s radiographic flat panel detectors to upgrade film-based X-ray imaging systems to digital systems.

The Medical business segment designs, manufactures, sells and services X-ray imaging components for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, radiation therapy and computer-aided detection. Varex provides a broad range of X-ray imaging components for Medical customers including X-ray tubes, flat panel digital image detectors, high voltage connectors, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers, and buckys. Varex sells its X-ray imaging components primarily to imaging system OEM customers that incorporate them into their medical diagnostic, radiation therapy, dental, and veterinary imaging systems. Varex also sells its X-ray imaging components to independent service companies, distributors and directly to end-users for replacement purposes.

Industrial products to OEM customers for incorporation into new system configurations. The OEM customers sell the systems to customs and other government agencies for use in ports and borders to screen overland, rail, and sea cargo for contraband, weapons, narcotics and explosives, as well as for manifest verification. Varex also sells its industrial products to commercial enterprises in the casting, power, aerospace, chemical, petro-chemical and automotive industries for nondestructive product examination purposes, such as industrial inspection and manufacturing quality control.

Varex conducts an active research and development program to focus on new technology and applications in both the medical and industrial X-ray imaging markets and is typically the owner of the intellectual property for technologies which Varex develops. Furthermore, Varex actively pursues acquisition targets. During fiscal year 2015, through the acquisitions of Claymount and MeVis, Varex broadened its portfolio of components by adding high voltage connectors, ionization chambers, automatic exposure control systems and image processing software for computer-aided detection.

Claymount, a Netherlands-based supplier of X-ray imaging components, is a strategic supplier to many global X-ray equipment manufacturers and is one of the world’s leading suppliers of high voltage connectors, ionization chambers, collimators, buckys and solid state automatic exposure control systems for controlling dose during medical X-ray imaging. Claymount enhances Varex’s ability to support a continuing industry-wide transition from analog to digital X-ray imaging and will allow it to expand its line of components and integrated subsystems.

Varex is headquartered in Salt Lake City, Utah.

Net earnings attributable to Varex totaled $68.5 million for the fiscal year ended September 30, 2016.

History

Varian Medical Systems, Inc., is a Delaware corporation originally incorporated in 1948 as Varian Associates, Inc.

On April 2, 1999, Varian Associates reorganized into three separate publicly traded companies by spinning off two of its businesses to stockholders, resulting in the following three companies: (i) Varian (renamed from Varian Associates, Inc. to Varian Medical Systems, Inc.); (ii) Varian, Inc., which became a wholly owned subsidiary of Agilent Technologies Inc. in May 2010; and (iii) Varian Semiconductor Equipment Associates, Inc., which became a wholly owned subsidiary of Applied Materials, Inc. in November 2011. Varian’s Imaging Components segment was formed in 2014 when Varian combined its X-ray Products and Security and Inspection Products businesses into one segment.

Varex has a 65+ year history of dedication to the imaging industry, dating back to the founding of a predecessor company, Varian Associates. Varex is uniquely able to build on decades of technology experience and expertise to offer state-of-the-art imaging components for medical, scientific, industrial, and security and inspection applications to customers worldwide.

Strengths

Varex believes it possesses a number of competitive advantages that distinguish it from its competitors.

Technology and innovation. Varex shares in a 65+ year legacy of innovation in imaging components technology and has a track record for industry-altering innovations. For example, Varex developed the anode-end grounded X-ray tube which provided a lighter-weight, more powerful X-ray tube for computed tomography. Varex also developed the flat panel digital image detector which replaces X-ray film and image intensifiers. Varex’s long history, broad portfolio and technical expertise also enable it to innovate quickly, including providing customized solutions tailored to customers’ individual needs. Varex holds a strong intellectual property portfolio for the technology that it has developed.

Global footprint and scale. Varex currently has manufacturing centers in Salt Lake City, Utah; Las Vegas, Nevada; Downers Grove, Illinois; Dinxperlo, Netherlands; Calamba City, Philippines; and Liverpool, New York; and regional service centers in Charleston, South Carolina; Willich, Germany; and Wuxi, China. Varex’s global scale allows it to manufacture and transport its product in a cost-efficient manner. For Varex’s customers, local presence allows for effective customer service and logistics efficiency. From a regulatory perspective, Varex’s local presence enables tailoring of local content to local medical device regulatory and product registration requirements. From a risk management perspective, Varex’s global presence offers natural opportunities for hedging of geographic risk.

Broad Portfolio. Varex’s product breadth and development expertise allow Varex to be the partner of choice for its customers. Unlike most of its competitors, Varex has a broad imaging components portfolio, providing its customers with X-ray tubes, flat panel detectors, linear accelerators, high energy detectors, high voltage connectors and other components, high-energy inspection accelerators, software and workstations. Varex’s technical expertise in imaging applications can provide sub-systems of components optimized to work together, which enables its customers to develop products faster.

Highly experienced and proven management and engineering teams . Varex’s leadership includes individuals with an average of over 20 years of experience in the medical and industrial industries, and with long-standing customer and supplier relationships. Varex’s engineering team has allowed Varex to establish itself as a leader in technology and innovation over the last 65 years. Varex’s management and engineering teams have been instrumental in building its Imaging Components business into a market leader. Varex believes that their experience and expertise will continue to be an important and differentiating asset for Varex following the completion of the distribution.

Strategy

quality products that enable its customers’ success. By 2020, Varex aspires to be the lowest cost innovator in medical X-ray components, to offer integrated imaging subsystems using data and software, and to leverage its medical technology platform to address disruptive applications in industrial imaging and inspection.

Pursue growth opportunities in targeted markets. Healthcare is a large, stable and global market with strong, long term growth dynamics arising from an aging population, increased disease prevalence, increased need for diagnostic testing and growing access to healthcare worldwide. Healthcare is less prone to cyclical demand because it is necessary, government and other insurance programs are reliable payers, and there is predictable growth driven by foreseeable population dynamics. Furthermore, technological innovation can augment market growth. The Medical market segment is driven by demographic and clinical needs, many of which are expected to expand but at the same time require more cost-efficient solutions due to ongoing pricing pressures faced by OEMs.

Continued development and leveraging of Varex’s strong relationships with its OEM customers. Varex has a legacy of strong relationships with its customers, including the Oncology Systems business of Varian, and remains focused on further cultivating these relationships going forward. Varex intends to increase its footprint within existing customers by offering additional components and services and capitalize on trends for outsourcing components by OEMs. Varex believes its transformation of its account management system, including by providing a one-to-one account management approach for complex accounts and by realigning its salesforce to be tailored to specific types of customers, will better enable it to respond to individualized customer needs. Varex believes that this individualized approach, together with its global footprint, scale and broad component portfolio, will enable Varex to provide high quality products suited to its customers’ needs in a cost-effective manner.

and Varex believes that this creates significant opportunity for expansion. The flat panel detector market is rapidly changing with Varex and many competitors delivering new innovations, particularly in the wireless radiographic image detector space. Varex continues to rapidly innovate flat panel detectors by leveraging its broad technical expertise and its vertically-integrated processes, highlighted by its ownership position in dpiX LLC which provides the amorphous silicon sensor arrays. Through acquisitions, Varex has been expanding its software portfolio which is critical for the integration of components in imaging systems. In addition, while technological advancement is important to an OEMs success, Varex believes that many OEMs are facing pressure to outsource manufacturing as a result of shrinking internal research and development budgets. Varex believes its ability to quickly innovate and to provide integrated sub-systems will continue to make it a valued partner to OEMs, both in its Medical and Industrial segments.

Marketing and Sales

Total revenues for Varex were $620.1 million, $632.3 million and $685.2 million for fiscal years 2016, 2015 and 2014, respectively. Varex divides its market segments revenues by region, based on the known final destination of products sold, into The Americas, EMEA, and APAC, and these regions constituted 36%, 29%, and 35% respectively, of Varex’s revenues during fiscal year 2016; 39%, 24%, and 37% respectively, of Varex’s revenues during fiscal year 2015; 37%, 27%, and 36%, respectively, of Varex’s revenues during fiscal year 2014.

Medical

Varex employs a combination of direct sales and independent distributors for sales in all of its regions and sells a high proportion of its Medical products to a limited number of OEM customers. Varex’s long-term fundamental growth driver is the ongoing success of its key OEM customers, and Varex expects that revenues from relatively few customers will continue to account for a high percentage of Varex’s revenues in the foreseeable future. The Medical segment’s five largest OEM customers collectively represented approximately 40%, 49% and 49% of the revenues of Varex as a whole during fiscal years 2016, 2015 and 2014, respectively. Varex’s largest customer accounted for approximately 23% of Varex’s revenues in fiscal year 2016 and 26% of Varex’s revenues in each of fiscal years 2015 and 2014. A significant portion of Varex’s Medical customers are outside of the United States.

Industrial

Varex sells its Industrial products to regional integrators outside the United States, as well as commercial enterprises in the casting, power, aerospace, chemical, petro-chemical and automotive industries for use in non-destructive investigation and testing applications. Varex believes demand for its Industrial products is driven primarily by cargo screening, border protection, and non-destructive testing needs domestically and internationally. This business is heavily influenced by domestic and international government policies on border and port security, political change, price of oil, and government budgets. International sales of certain of Varex’s linear accelerators are subject to U.S. export licenses that are issued at the discretion of the U.S. government. Orders and revenues for Varex’s security products have been and may continue to be unpredictable as governmental agencies may postpone purchasing decisions and delay installations of products. These postponements and delays have been and may in the future be related to re-evaluating program priorities, evaluating funding options, and collaboration between individual government agencies. The market for border protection systems has slowed significantly and end customers, particularly in oil-based economies in which Varex has a significant customer base, are delaying system deployments or tenders, resulting in a decline in the demand for security products. In 2015, sales of security products were negatively impacted due to tender delays from certain oil-based economies. The Industrial segment’s five largest OEM customers collectively represented approximately 7%, 6% and 9% of the revenues of Varex as a whole during fiscal years 2016, 2015 and 2014, respectively. None of the Industrial segment’s customers accounted for more than 10% of Varex’s total revenues.

Customers

Varex’s customers are primarily large OEMs. Its top five customers, measured by revenue, are Toshiba Medical Systems, Carestream Health Inc., Hologic, Inc., Shimadzu Corporation and Varian, which collectively accounted for approximately 40% of Varex’s revenues in the fiscal year ended September 30, 2016. Varex’s two largest customers, Toshiba Medical Systems and Carestream Health, accounted for approximately 23% and 6%, respectively of its total revenues in fiscal 2016, approximately 26% and 12%, respectively, of its total revenues in fiscal 2015, and approximately 26% and 13% of Varex’s revenues, respectively, in fiscal year 2014. Following the separation, Varex expects that Varian will continue to be a significant customer. The loss of one or more of Varex’s top customers would have a material and adverse effect on Varex’s business. For more information, see “Risk Factors—Risks Related to Varex’s Business.”

Backlog

Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Orders are generally filled on a current basis and order backlog is not material to Varex’s business. Orders may be revised or canceled, either according to their terms or as customers’ needs change; consequently, it is difficult to predict with certainty the amount of backlog that will result in revenues. Varex’s backlog at the end of fiscal year 2016 was $248.4 million. Varex’s backlog at the end of fiscal year 2015 was $288.6 million, of which $253.7 million was recognized as revenues in the fiscal year 2016.

Competition

Medical

Varex often competes with the in-house manufacturing operations of major diagnostic imaging systems companies, which are the primary OEM customers for Varex’s Medical products. In order to effectively compete with these in-house alternatives, Varex must have a competitive advantage in one or more significant areas, which may include lower product cost, better product quality or superior technology and/or performance. Consequently, Varex sells a significant volume of its X-ray tubes to OEM customers that have in-house X-ray tube production capability. In addition, Varex competes with some OEM customers, such as Toshiba Medical Systems Corporation and Dunlee, a division of Philips Healthcare, who sell X-ray tubes to other manufacturers, with non-OEM customers, such as Comet AG and other non-OEMs, such as IAE Industria Applicazioni Elettroniche Spa, as well as small start-up manufacturers in China. These companies compete with Varex for both the manufacturing and servicing businesses. High capital costs and mastery of complex manufacturing processes that drive production yield are significant characteristics of the X-ray tubes business.

The market for flat panel detectors is also very competitive. Unlike in the case of X-ray tubes, most OEMs have outsourced a significant portion, if not all, of flat panel development and manufacturing. Varex sells its flat panel detectors to a number of OEM customers that incorporate Varex’s flat panel detectors into their medical diagnostic, radiation therapy, dental, veterinary and industrial imaging systems. Varex’s amorphous silicon based flat panel detector technology competes with other detector technologies, such as amorphous selenium, charge-coupled devices and variations of amorphous silicon scintillators. Varex believes that its products provide a competitive advantage due to lower product cost and better product quality and performance. In the flat panel market, Varex primarily competes against Perkin-Elmer, Inc., Trixell S.A.S., Canon, Inc., Vieworks Co., Ltd., and Hamamatsu Corporation, as well as emerging low-cost manufacturers from China such as iRay Technology (Shanghai) Limited, and Jiangsu CareRay Medical Systems Co., Ltd.

Industrial

In the Industrial segment, Varex competes with other OEM suppliers and some components suppliers, such as General Electric, Toshiba Medical Systems Corporation, Nuctech Company Limited (“Nuctech”) and Comet AG. While there are other manufacturers of X-ray tubes for specialized and niche industrial applications, Varex’s

products are designed for a broad range of applications in inspection, analysis, and testing. The industrial inspection space is evolving rapidly with a few large OEMs and several niche players. In the high energy market, Varex competes against technologies from Nuctech, Siemens AG, and Foton Ltd., whose X-ray sources are used in applications ranging from cargo and container scanning, border security, aerospace applications, castings and pressure vessel inspections.

Customer Services and Support

Varex generally warrants its products for 12 months. In certain cases, the warranty may be specified by usage metrics such as number of scans, to account for the difference in usage across countries and types of facilities. It provides technical advice and consultation to major OEM customers from its offices in Salt Lake City, Utah; Las Vegas, Nevada; Charleston, South Carolina; Liverpool, New York; Lincolnshire, Illinois; and Downers Grove, Illinois; and internationally in the Philippines, China, Netherlands, Germany, France, the United Kingdom, Italy and Japan. Varex’s applications specialists and engineers make recommendations to meet the customer’s technical requirements within the customer’s budgetary constraints. Varex often develops specifications for a unique product that will be designed and manufactured to meet a specific customer’s requirements.

Manufacturing and Supplies

Varex manufactures its products in Salt Lake City, Utah; Las Vegas, Nevada; Liverpool, New York; Downers Grove, Illinois; Dinxperlo, Netherlands; and Calamba City, Philippines. These facilities employ state-of-the-art manufacturing techniques and several have been honored by the press, governments and trade organizations for their commitment to quality improvement. These manufacturing facilities are certified by International Standards Organization (“ISO”) under ISO 9001 (for industrial products) or ISO 13485 (for medical devices). In addition, Varex has service centers in North Charleston, South Carolina; Willich, Germany; and Wuxi, China. The combined medical and industrial manufacturing infrastructure enables Varex to leverage production scale to achieve productivity and low cost advantage as well as research and development synergies.

Manufacturing processes at Varex’s various facilities include machining, fabrication, subassembly, system assembly and final testing. Varex has invested in various automated and semi-automated equipment for the fabrication and machining of the parts and assemblies that it incorporates into its products. Varex may, from time to time, invest further in such equipment. Varex’s quality assurance program includes various quality control measures from inspection of raw materials, purchased parts and assemblies through inline inspection. In some cases, Varex may outsource the manufacturing of subassemblies while still performing system design, final assembly and testing in-house. In such cases, Varex believes outsourcing enables it to reduce or maintain fixed costs and capital expenditures, while also providing it with the flexibility to increase production capacity. Varex purchases material and components from various suppliers that are either standard products or customized to its specifications. Some of the components included in Varex’s products may be sourced from a limited group of suppliers or from a single source supplier, such as the wave guides for linear accelerators; transistor arrays and cesium iodide coatings for flat panel detectors and specialized integrated circuits, X-ray tube targets, housings, bearings and various other components. Varex requires certain raw materials, such as copper, lead, tungsten, rhenium, molybdenum zirconium, and various high grades of steel alloy for X-ray tubes and industrial products. Worldwide demand, availability and pricing of these raw materials have been volatile, and Varex expects that availability and pricing will continue to fluctuate in the future.

Research and Development

Developing products, systems and services based on advanced technology is essential to Varex’s ability to compete effectively in the marketplace. It maintains a research and development and engineering staff responsible for product design and engineering. Research and development expenses totaled $53.5 million, $50.4 million and $40.0 million in fiscal years 2016, 2015 and 2014, respectively.

Development is primarily conducted at Varex’s Salt Lake City, Utah; Palo Alto, California; Las Vegas, Nevada; Liverpool, New York; Lincolnshire, Illinois; and Downers Grove, Illinois facilities domestically and at its Netherlands and Germany facilities internationally and is primarily focused on developing and improving imaging component technology. Current X-ray Product development areas include improvements to tube life and tube stability and reduction of tube noise. Varex is also working on X-ray tube designs that will enable OEMs to continue to reduce dose delivered, and improve image resolution, cost effectively. Research in imaging technology is aimed at developing new panel technologies for low-cost radiographic imaging, wireless panel interfaces, better dose utilization, improved image quality for cone beam CT and new image processing tools for advanced applications.

Industrial products share some of the same base technology competencies and platforms as medical products and Varex’s medical and industrial development teams are therefore co-located in Salt Lake City, Palo Alto, Dinxperlo, and in Bremen. One of Varex’s competitive advantages is that some of the foundational technologies and software components developed for medical applications may also be applicable in industrial components, and vice versa. In addition to these product development synergies, Varex is also able to realize sourcing, production, service center, and logistics synergies across the different markets.

Product and Other Liabilities

Varex’s business exposes it to potential product liability claims that are inherent in the manufacture, sale, installation, servicing and support of medical devices, related software and other devices that contain hazardous material and/or deliver radiation. Because its products are involved in the intentional delivery of radiation to the human body and other situations where people may come in contact with radiation (for example, when Varex’s Industrial products are being used to scan cargo) as well as the detection, planning and treatment of medical problems, the possibility for significant injury and/or death exists. Varex may face substantial liability to patients, its customers and others for damages resulting from the faulty, or allegedly faulty, design, manufacture, installation, servicing, support, testing or interoperability of Varex’s and its customers’ products, or their misuse or failure. Varex may also be subject to claims for property damages or economic loss related to or resulting from any errors or defects in its products, or the installation, servicing and support of its products. Any accident or mistreatment could subject Varex to legal costs, litigation, adverse publicity and damage to Varex’s reputation, whether or not its products or services were a factor. In addition, if a product Varex designs or manufactures were defective (whether due to design, labeling or manufacturing defects, improper use of the product or other reasons), or found to be so by a competent regulatory authority, Varex may be required to correct or recall the product and notify other regulatory authorities. Varex maintains limited product liability insurance coverage and currently self-insures professional liability/errors and omissions liability.

Government Regulation

U.S. Regulations

Laws governing marketing a medical device . In the United States, as a manufacturer and seller of medical devices and devices emitting radiation or utilizing radioactive by-product material, Varex and some of its suppliers and distributors are subject to extensive regulation by federal governmental authorities, such as the FDA, Nuclear Regulatory Commission (“NRC”), and state and local regulatory agencies, such as the State of California, to ensure the devices are safe and effective and comply with laws governing products which emit, produce or control radiation. Similar international regulations apply overseas. These regulations, which include the U.S. Food, Drug and Cosmetic Act (the “FDC Act”) and regulations promulgated by the FDA, govern, among other things, the design, development, testing, manufacturing, packaging, labeling, distribution, import/export, sale and marketing and disposal of medical devices, post market surveillance and reporting of serious injuries and death, repairs, replacements, recalls and other matters relating to medical devices, radiation emitting devices and devices utilizing radioactive by-product material. State regulations are extensive and vary from state to state. Varex’s X-ray tube products, imaging workstations and flat panel detectors are considered medical devices. Under the FDC Act, each medical device manufacturer must comply with quality system regulations that are strictly enforced by the FDA.

Unless an exception applies, the FDA requires that the manufacturer of a new medical device or a new indication for use of, or other significant change in, existing currently marketed medical device obtain either 510(k) pre-market notification clearance or pre-market approval (“PMA”) before it can market or sell those products in the United States. The 510(k) clearance process is applicable when the device introduced into commercial distribution is substantially equivalent to a legally marketed device. The process of obtaining 510(k) clearance generally takes at least six months from the date the application is filed, but could take significantly longer, and generally requires submitting supporting testing data. After a product receives 510(k) clearance, any modifications or enhancements to a product that could significantly affect its safety or effectiveness, or that would constitute a major change in the intended use of the device, technology, materials, labeling, packaging, or manufacturing process may require a new 510(k) clearance. The FDA requires each manufacturer to make this determination in the first instance, but the FDA can review any such decision. If the FDA disagrees with the manufacturer’s decision, it may retroactively require the manufacturer to submit a request for 510(k) pre-market notification clearance and can require the manufacturer to cease marketing and/or recall the product until 510(k) clearance is obtained. The FDA has issued draft guidance that, if finalized and implemented, will result in manufacturers needing to seek a significant number of new clearances for changes made to legally marketed devices. If Varex cannot establish that a proposed product is substantially equivalent to a legally marketed device, it must seek pre-market approval through a PMA application. Under the PMA process, the applicant submits extensive supporting data, including, in most cases, data from clinical studies, in the PMA application to establish reasonable evidence of the safety and effectiveness of the product. This process typically takes at least one to two years from the date the PMA is accepted for filing, but can take significantly longer for the FDA to review.

Most of Varex’s products are Class I medical devices, which do not require 510(k) clearance. Varex’s X-ray tubes and flat panel detectors are Class I medical devices and certain of Varex’s software products, workstations and accessories are Class II medical devices.

Quality systems . Varex’s manufacturing operations for medical devices, and those of its third-party manufacturers, are required to comply with the FDA’s Quality System Regulation (“QSR”), which addresses a company’s responsibility for product design, testing, and manufacturing quality assurance, and the maintenance of records and documentation. The QSR requires that each manufacturer establish a quality systems program by which the manufacturer monitors the manufacturing process and maintains records that show compliance with FDA regulations and the manufacturer’s written specifications and procedures relating to the devices. QSR compliance is necessary to receive and maintain FDA clearance or approval to market new and existing products. The FDA makes announced and unannounced periodic and ongoing inspections of medical device manufacturers to determine compliance with the QSR. If in connection with these inspections the FDA believes the manufacturer has failed to comply with applicable regulations and/or procedures, it may issue observations that would necessitate prompt corrective action. If FDA inspection observations are not addressed and/or corrective action taken in a timely manner and to the FDA’s satisfaction, the FDA may issue a Warning Letter (which would similarly necessitate prompt corrective action) and/or proceed directly to other forms of enforcement action. Failure to respond timely to FDA inspection observations, a Warning Letter or other notice of noncompliance and to promptly come into compliance could result in the FDA bringing enforcement action against us, which could include the total shutdown of Varex’s production facilities, denial of importation rights to the United States for products manufactured in overseas locations and denial of export rights for U.S. products and criminal and civil fines.

The FDA and the Federal Trade Commission (the “FTC”) also regulate advertising and promotion of Varex’s products to ensure that the claims it makes are consistent with its regulatory clearances, that it has adequate and reasonable scientific data to substantiate the claims and that its promotional labeling and advertising is neither false nor misleading. Varex may not promote or advertise its products for uses not within the scope of its intended use statement in its clearances or approvals or make unsupported safety and effectiveness claims.

It is also important that Varex’s products comply with electrical safety and environmental standards, such as those of Underwriters Laboratories (“UL”), the Canadian Standards Association (“CSA”), and the International Electrotechnical Commission (“IEC”). In addition, the manufacture and distribution of medical devices utilizing radioactive material requires a specific radioactive material license. For the United States, manufacture and distribution of these radioactive sources and devices also must be in accordance with a model-specific certificate issued by either the NRC or by an Agreement State. In essentially every country and state, installation and service of these products must be in accordance with a specific radioactive materials license issued by the applicable radiation control agency. Service of these products must be in accordance with a specific radioactive materials license. Varex is also subject to a variety of additional environmental laws regulating Varex’s manufacturing operations and the handling, storage, transport and disposal of hazardous substances, and which impose liability for the cleanup of any contamination from these substances.

Other applicable U.S. regulations . As a participant in the healthcare industry, Varex is also subject to extensive laws and regulations protecting the privacy and integrity of patient medical information that it receives, including the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), “fraud and abuse” laws and regulations, including, physician self-referral prohibitions, and false claims laws. From time to time, these laws and regulations may be revised or interpreted in ways that could make it more difficult for Varex’s customers to conduct their businesses, such as recent proposed revisions to the laws prohibiting physician self-referrals, and such revisions could have an adverse effect on the demand for Varex’s products, and therefore its business and results of operations. Varex also must comply with numerous federal, state and local laws of more general applicability relating to such matters as environmental protection, safe working conditions, manufacturing practices, fire hazard control and other matters.

The laws and regulations and their enforcement are constantly undergoing change, and Varex cannot predict what effect, if any, changes to these laws and regulations may have on its business. For example, national and state laws regulate privacy and may regulate Varex’s use of data. Furthermore, HIPAA was amended by the HITECH Act to provide that business associates who have access to patient health information provided by hospitals and healthcare providers are now directly subject to HIPAA, including the associated enforcement scheme and inspection requirements.

Medicare and Medicaid Reimbursement

The federal and state governments of the United States establish guidelines and pay reimbursements to hospitals and free-standing clinics for diagnostic examinations and therapeutic procedures under Medicare at the federal level and Medicaid at the state level. Private insurers often establish payment levels and policies based on reimbursement rates and guidelines established by the government.

The federal government and Congress review and adjust rates annually, and from time to time consider various Medicare and other healthcare reform proposals that could significantly affect both private and public reimbursement for healthcare services in hospitals and free-standing clinics. In the past, Varex has seen demand for its customers’ systems (in which Varex’s products are incorporated) negatively impacted by the uncertainties surrounding reimbursement rates in the United States. State government reimbursement for services is determined pursuant to each state’s Medicaid plan, which is established by state law and regulations, subject to requirements of federal law and regulations.

The provisions of the Affordable Care Act went into effect in 2012. Specifically, one of the components of the law is a 2.3% excise tax on sales of most medical devices, which may in the future negatively affect Varex’s customers and have an indirect negative effect on Varex’s gross margin, although it was suspended for 2016 and 2017. Other elements of this legislation, including comparative effectiveness research, an independent payment advisory board, payment system reforms (including shared savings pilots) and other provisions, could meaningfully change the way healthcare is developed and delivered, and may materially impact numerous aspects of Varex’s business, including the demand and availability of its products. Various healthcare reform proposals have also emerged at the state level, and Varex is unable to predict which, if any, of these proposals

will be enacted. Varex believes that the uncertainty created by healthcare reform in the United States has complicated its customers’ decision-making process and, therefore, impacted its business, and may continue to do so.

The sale of medical devices, the referral of patients for diagnostic examinations and treatments utilizing such devices, and the submission of claims to third-party payors (including Medicare and Medicaid) seeking reimbursement for such services, are subject to various federal and state laws pertaining to healthcare “fraud and abuse.” Anti-kickback laws make it illegal to solicit, induce, offer, receive or pay any remuneration in exchange for the referral of business, including the purchase of medical devices from a particular manufacturer or the referral of patients to a particular supplier of diagnostic services utilizing such devices. False claims laws prohibit anyone from knowingly and willfully presenting, or causing to be presented, claims for payment to third-party payors (including Medicare and Medicaid) that are false or fraudulent, for services not provided as claimed, or for medically unnecessary services. The Office of the Inspector General prosecutes violations of fraud and abuse laws and any violation may result in criminal and/or civil sanctions, including, in some instances, imprisonment and exclusion from participation in federal healthcare programs such as Medicare and Medicaid, which may negatively impact the demand for Varex’s products.

Foreign Regulations

Varex’s operations, sales and service of its products outside the United States are subject to regulatory requirements that vary from country to country and may differ significantly from those in the United States. In general, Varex’s products are regulated outside the United States as medical devices by foreign governmental agencies similar to the FDA.

Marketing a medical device internationally . For Varex to market its products internationally, it must obtain clearances or approvals for products and product modifications. Varex is required to affix the CE mark to its products to sell them in member countries of the European Union (“EU”). The CE mark is an international symbol of adherence to certain essential principles of safety and effectiveness, which once affixed enables a product to be sold in member countries of the EEA. The CE mark is also recognized in many countries outside the EU, such as Switzerland and Norway and can assist in the clearance process. To receive permission to affix the CE mark to its medical devices products, Varex must obtain Quality System certification, e.g ., ISO 13485, and must otherwise have a quality management system that complies with the EU Medical Device Directive. The ISO promulgates standards for certification of quality assurance operations. Varex is certified as complying with the ISO 9001 for its security and inspection products and ISO 13485 for its medical devices. Several Asian countries, including Japan and China, have adopted regulatory schemes that are comparable, and in some cases more stringent, than the EU scheme. To import medical devices into Japan, the requirements of Japan’s New Medical Device Regulation must be met and a “shonin,” the approval to sell medical products in Japan, must be obtained. Similarly, in China, a registration certification issued by the State Food and Drug Administration and a China Compulsory Certification mark for certain products are required to sell medical devices in that country. Obtaining such certifications on its products can be time-consuming and can cause Varex to delay marketing or sales of certain products in such countries. Similarly, prior to selling a device in Canada, manufacturers of Class II, III and IV devices must obtain a medical device license, though Varex does not currently sell these types of devices in Canada. Additionally, many countries have laws and regulations relating to radiation and radiation safety that also apply to Varex’s products. In most countries, radiological regulatory agencies require some form of licensing or registration by the facility prior to acquisition and operation of an X-ray generating device or a radiation source. The handling, transportation and recycling of radioactive metals and source materials are also highly regulated.

A number of countries, including the members of the EU, have implemented or are implementing regulations that would require manufacturers to dispose, or bear certain disposal costs, of products at the end of a product’s useful life and restrict the use of some hazardous substances in certain products sold in those countries.

Manufacturing and selling a device internationally . Varex is also subject to laws and regulations outside the United States applicable to manufacturers of radiation-producing devices and products utilizing radioactive

materials, and laws and regulations of general applicability relating to matters such as environmental protection, safe working conditions, manufacturing practices and other matters, in each case that are often comparable to, if not more stringent than, regulations in the United States. In addition, Varex’s sales of products in foreign countries are also subject to regulation of matters such as product standards, packaging requirements, labeling requirements, import restrictions, environmental and product recycling requirements, tariff regulations, duties and tax requirements. In some countries, Varex relies on its foreign distributors and agents to assist Varex in complying with foreign regulatory requirements.

Other applicable international regulations . In addition to the U.S. laws regarding the privacy and integrity of patient medical information, Varex is subject to similar laws and regulations in foreign countries covering data privacy and other protection of health and employee information. Particularly within Europe, data protection legislation is comprehensive and complex and there has been a recent trend toward more stringent enforcement of requirements regarding protection and confidentiality of personal data, as well as enactment of stricter legislation. Varex is also subject to international “fraud and abuse” laws and regulations, as well as false claims and misleading advertisement laws. Varex also must comply with numerous international laws of more general applicability relating to such matters as environmental protection, safe working conditions, manufacturing practices, fire hazard control and other matters.

On June 23, 2016, the United Kingdom (the “U.K.”) held a referendum in which voters approved an exit from the E.U., commonly referred to as “Brexit”. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate. Given the lack of comparable precedent, it is unclear what financial, regulatory and legal implications the withdrawal of the U.K. from the E.U. would have and how such withdrawal would affect Varex.

Anti-Corruption Laws and Regulations

Varex is subject to the U.S. Foreign Corrupt Practices Act and anti-corruption laws, and similar laws in foreign countries, such as the U.K. Bribery Act of 2010, which became effective on July 1, 2011, and the law “On the Fundamentals of Health Protection in the Russian Federation,” which became effective in January 2012. In general, there is a worldwide trend to strengthen anti-corruption laws and their enforcement, and the healthcare industry and medical equipment manufacturers have been particular targets of these investigation and enforcement efforts. Any violation of these laws by Varex or its agents or distributors could create a substantial liability for Varex, subject Varex’s officers and directors to personal liability and also cause a loss of reputation in the market.

Transparency International’s 2015 Corruption Perceptions Index measured the degree to which public sector corruption is perceived to exist in 168 countries/territories around the world, and found that two-thirds of the countries in the index, including many that Varex considers to be high-growth areas for its products, such as China and India, scored below 50, on a scale from 100 (very clean) to 0 (highly corrupt). Varex currently operates in many countries where the public sector is perceived as being more or highly corrupt and its strategic business plans include expanding Varex’s business in regions and countries that are rated as higher risk for corruption activity by Transparency International.

Increased business in higher-risk countries could subject Varex and its officers and directors to increased scrutiny and increased liability. In addition, becoming familiar with and implementing the infrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly. Failure by Varex or its agents or distributors to comply with these laws, rules and regulations could delay its expansion into high-growth markets and could materially and adversely affect its business.

Competition and Trade Compliance Laws

Varex is subject to various competition and trade compliance laws in the jurisdictions in which it operates. Regulatory authorities under whose laws Varex operates may have enforcement powers that can subject Varex to

sanctions, and can impose changes or conditions in the way Varex conducts its business. In addition, an increasing number of jurisdictions also provide private rights of action for competitors or consumers to seek damages asserting claims of anti-competitive conduct. Increased government scrutiny of Varex’s actions or enforcement or private rights of action could materially and adversely affect its business or damage its reputation. In addition, Varex may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign government agencies, which could be costly and time-consuming, and could divert its management and key personnel from its business operations. An adverse outcome under any such investigation or audit could subject Varex to fines or criminal or other penalties, which could materially and adversely affect Varex’s business and financial results. Furthermore, competition laws may prohibit or increase the cost of future acquisitions that Varex may desire to undertake.

Intellectual Property

Varex places considerable importance on obtaining and maintaining patent, copyright and trade secret protection for significant new technologies, products and processes, because of the length of time and expense associated with bringing new products through the development process and to the marketplace.

Varex generally relies upon a combination of patents, copyrights, trademarks, trade secret and other laws, and contractual restrictions on disclosure, copying and transferring title, including confidentiality agreements with vendors, strategic partners, co-developers, employees, consultants and other third parties, to protect Varex’s proprietary rights in the developments, improvements and inventions that Varex has originated and which are incorporated in its products or that fall within its fields of interest. As of September 30, 2016, Varian owned, in the Imaging Components business, 209 patents issued in the United States and 115 patents issued throughout the rest of the world and had 125 patent applications on file with various patent agencies worldwide. These patents and patent applications will be transferred to Varex as part of the spin-off transaction. The patents and patents issuing from the pending applications generally expire between 2016 and 2035. Varex intends to file additional patent applications as appropriate. Varex has trademarks, both registered and unregistered, that are maintained and enforced to provide customer recognition for its products in the marketplace. Varex also has agreements with third parties that provide for licensing of patented or proprietary technology, including royalty-bearing licenses and technology cross-licenses. These licenses generally can only be terminated for breach. Loss of the licenses or the royalty-bearing licenses would not affect a material portion of the business. In addition, Varex and Varian expect to enter into an Intellectual Property Matters Agreement, pursuant to which, among other things, each of Varex and Varian will grant the other licenses to use certain intellectual property. See “Relationships with Varian Following Separation and Distribution—Intellectual Property Matters Agreement” for more information.

Environmental Matters

Varex’s operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances. In connection with those laws and certain of Varex’s past and present operations and facilities, Varex will be obligated to indemnify Varian for 20% of the cleanup liabilities related to corporate, discontinued or sold operations prior to the 1999 separation and distribution (after adjusting for any insurance proceeds or tax benefits received by Varian), as well as fully indemnify Varian for other liabilities arising from the operations of the business transferred to it as part of the separation. Those include facilities sold as part of Varian’s electron devices business in 1995 and thin film systems business in 1997. In addition, the U.S. Environmental Protection Agency (“EPA”) or third parties have named Varian as a potentially responsible party under the amended Comprehensive Environmental Response Compensation and Liability Act of 1980 (“CERCLA”), at sites to which Varian or the facilities of the businesses sold in 1995 and 1997 were alleged to have shipped waste for recycling or disposal (the “CERCLA sites”). It is anticipated that Varex will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these CERCLA sites (after adjusting for any insurance proceeds or tax benefits received by Varian). In connection with the CERCLA sites, to date Varian has been required to pay only a small portion of the total amount as its contribution to the cleanup efforts and Varex anticipates that any reimbursement to Varian in the future will not be material. For all environmental

cleanup costs (including non-CERCLA sites), third-party claim costs, project management costs and legal costs, Varian spent a total of approximately $1.1 million, $1.3 million and $1.2 million during fiscal years 2016, 2015 and 2014, respectively.

Financial Information about Geographic Areas

Varex does business globally, with manufacturing, engineering, and research and development in the United States, Europe, Philippines and China, and sales and service operations and customers throughout the world. More than half of Varex’s revenues are generated from its international regions. In addition to the potentially adverse impact of foreign regulations, see “Government Regulation—Foreign Regulations,” Varex also may be affected by other factors related to its international sales, such as: lower average selling prices and profit margins and longer time periods from shipment to cash collection (which increases days sales outstanding (“DSO”)). To the extent that the geographic distribution of Varex’s sales continues to shift more towards international regions, its overall revenues and margins may suffer. Although a significant portion of Varex customers are outside of the United States, its products are generally priced in U.S. Dollars. As a result, the demand for products can be negatively impacted by pricing pressures resulting from the strengthening of the U.S. Dollar as customers may ask for additional discounts, delay purchasing decisions, or consider in-sourcing the supply of such components or migrate to lower cost alternatives. In fiscal year 2015, the U.S. Dollar significantly strengthened against the Euro, the Japanese Yen and other foreign currencies, which had a negative impact on Varex’s financial performance, compared to the year-ago period.

Varex is also exposed to other economic, political and other risks inherent in doing business globally. For an additional discussion of these risks, see Item 1A, “Risk Factors.”

Employees

As of September 30, 2016, Varex had approximately 1,400 full-time and part-time employees worldwide, including approximately 960 in the United States and approximately 440 elsewhere. None of its employees based in the United States are unionized or subject to collective bargaining agreements. Employees based in some foreign countries may, from time to time, be represented by works councils or unions or subject to collective bargaining agreements. Varex currently considers its relations with its employees to be good.

Properties

Varex’s business is primarily located in Salt Lake City, Utah, where it owns approximately 37 acres of land and approximately 494,000 square feet of space used for office and manufacturing. It also has a facility in Liverpool, New York, where it owns three acres of land and approximately 27,000 square feet of space used for light assembly manufacturing. In Las Vegas, Nevada, Varex manufactures its industrial products in approximately 94,000 square feet of space in a shared Varian facility. Varex also leases 92,000 square feet of office and manufacturing space in Calamba, Philippines, and leases additional facilities in the United States and abroad for sales and service.

Substantially all of this space is fully utilized for its intended purpose. Varex believes that its facilities and equipment are generally well maintained, in good operating condition and adequate for its present operations.

Legal Proceedings

From time to time, Varex is involved in legal proceedings arising in the ordinary course of its business or otherwise and, from time to time, as may be acquired as part of business acquisitions that it makes. Varex does not believe that any material liability will be imposed as a result of these matters. If actual liabilities significantly exceed the estimates made, Varex’s combined financial position, results of operations, comprehensive earnings or cash flows could be materially and adversely affected. Legal expenses relating to legal matters are expensed as incurred.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the audited combined financial statements and the corresponding notes, and the unaudited pro forma combined financial statements and the corresponding notes included elsewhere in this information statement. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements. Please see the sections entitled “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Separation and Distribution

On May 23, 2016, Varian Medical Systems, Inc. (“Varian”) announced its intent to separate its Imaging Components business from the remainder of its businesses through a pro rata distribution of the common stock of a new entity, named Varex Imaging Corporation (“we,” “our,” “us,” the “Company,” “Varex,” or “Varex Imaging”). Varex was incorporated in Delaware on July 18, 2016 for the purpose of holding the assets and liabilities associated with the Imaging Components business. Following the separation and distribution, Varex will be an independent, publicly traded company.

The Imaging Components business includes the design, manufacture, sale and service of a broad range of X-ray imaging components including X-ray tubes, flat panel digital image detectors and accessories, high voltage connectors, high-energy inspection accelerators, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers and buckys, for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, CT scanners, computer-aided detection, radiation therapy and industrial applications, in addition to the manufacture, sale and service of industrial products, which include Linatron X-ray accelerators, image processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications.

The distribution is subject to certain conditions described in more detail elsewhere in this information statement, including, among others, final approval of the Varian board of directors, receipt of one or more opinions with respect to certain U.S. federal income tax matters relating to the separation and the effectiveness of the registration statement on Form 10 of which this information statement forms a part. See “The Separation and Distribution-Conditions to the Distribution” for further information.

Basis of Presentation

Our historical combined financial statements have been prepared on a stand-alone basis and are derived from Varian’s consolidated financial statements and records as we were operated as part of Varian prior to the distribution. The combined financial statements reflect our financial position, results of operations, comprehensive earnings and cash flows in conformity with U.S. generally accepted accounting principles (“GAAP”).

The combined financial statements include an allocation of certain Varian corporate expenses, including costs of accounting, legal, human resources, information technology, treasury, tax, facilities, insurance, and other corporate and infrastructure services. In addition, allocated costs include research and development expenses from Varian’s scientific research facility. These costs have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, headcount or other systematic measures that reflect utilization of services provided to or benefits received by us. We consider the expense allocation methodology and results to be reasonable for all periods presented. The combined financial statements also

include certain assets and liabilities that have historically been held at the Varian corporate level, but which are specifically identifiable and attributable to us. Our combined financial position, results of operations, comprehensive earnings and cash flows may not be indicative of our results had we been a separate stand-alone entity during the periods presented, nor are the results stated herein indicative of what our financial position, results of operations, comprehensive earnings, and cash flows may be in the future.

Cash and cash equivalents held by Varian were not allocated to us. Cash and cash equivalents included in the Combined Balance Sheets primarily reflects cash and cash equivalents from acquired entities that are specifically attributable to us. Varian’s debt has not been allocated to us for any of the periods presented since we are not the legal obligor of the debt. Varian’s debt was utilized for corporate activities that benefited all businesses and therefore interest expense relating to Varian’s corporate borrowings has been allocated to us. Interest expense and interest income has been allocated based on our total assets as a percentage of total assets of Varian.

Overview

As Varex is transitioning to a stand-alone company, the Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), re-evaluated the product groupings and how he views and measures the business performance and therefore, subsequent to the filing of the preliminary registration statement on Form 10 on August 11, 2016, we reorganized our two reportable operating segments into Medical and Industrial. The realigned segments better align our products and service offerings with customer use in medical and industrial markets and are consistent with how the CODM evaluates the business for the allocation of resources. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on revenues and gross margin. The new operating and reportable segment structure will provide better visibility and clarity into the financial performance of our products, and alignment between business strategies and operating results.

Our products are sold in three geographic regions: The Americas; EMEA; and APAC. The Americas includes North America (primarily United States and Canada) and Latin America. EMEA includes Europe, Russia, the Middle East and Africa. APAC includes Asia and Australia. Revenues by region are based on the known final destination of products sold.

Medical. Our Medical business segment designs, manufactures, sells and services X-ray imaging components for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, radiation therapy and computer-aided detection. We provide a broad range of X-ray imaging components for Medical customers including X-ray tubes, flat panel digital image detectors, high voltage connectors, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers and buckys. Our X-ray imaging components are primarily sold to imaging system original equipment manufacturer (“OEM”) customers that incorporate them into their medical diagnostic, radiation therapy, dental and veterinary imaging systems. We also sell our X-ray imaging components to independent service companies, distributors and directly to end-users for replacement purposes.

Industrial. The Industrial business segment designs, manufactures, sells and services products for use in security and industrial inspection applications, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The products include Linatron X-ray accelerators, X-ray tubes, flat panel digital image detectors, high voltage connectors, imaging processing software and image detection products that we generally sell to OEM customers that incorporate these products into their inspection systems.

Our success depends upon our ability to anticipate changes in our markets, the direction of technological innovation and the demands of our customers. A significant portion of our customers are outside of the United States and our products are generally priced in U.S. Dollars. As a result, the demand for our products has been negatively impacted by the strengthening of the U.S. Dollar, which began in the fourth quarter of fiscal year

2014, and this has caused our products to be priced higher compared to products sold in non-U.S. Dollar currencies. In addition, some customers have asked for additional discounts, delayed purchasing decisions, or moved to in-sourcing the supply of such components or migrated to lower cost alternatives. In the event of a continued strengthening U.S. Dollar, we expect that demand and pricing will continue to be negatively impacted for our products. The market for border protection systems has slowed significantly and end customers, particularly in oil-based economies and war zones in which we have a significant customer base, are delaying tenders, resulting in a decline in the demand for security and inspection products.

In August 2015, we completed the acquisition of Claymount, a Netherlands-based supplier of components and subsystems for X-ray imaging equipment manufacturers. The acquisition of Claymount enhanced our ability to support continuing transitions from analog to digital X-ray imaging and was integrated into our previous X-ray Products reporting unit. The total purchase price of the acquisition was $58.0 million.

In April 2015, we completed the acquisition of 73.5% of the then outstanding shares of MeVis Medical Solutions AG (“MeVis”), a public company based in Bremen, Germany, that provides image processing software and services for cancer screening. We integrated MeVis into our previous X-ray reporting unit. The total purchase price of the acquisition was $25.5 million.

Critical Accounting Estimates

The preparation of our financial statements and related disclosures in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are based on historical experience and on various other factors that we believe are reasonable under the circumstances. We periodically review our accounting policies, estimates and assumptions and make adjustments when facts and circumstances dictate. In addition to the accounting policies that are more fully described in the Notes to the Combined Financial Statements included elsewhere in this Information Statement, we consider the critical accounting policies described below to be affected by critical accounting estimates. Our critical accounting policies that are affected by accounting estimates require us to use judgments, often as a result of the need to make estimates and assumptions regarding matters that are inherently uncertain, and actual results could differ materially from these estimates. For a discussion of how these estimates and other factors may affect our business, see “Risk Factors.”

Revenue Recognition

Our revenues are derived primarily from the sale of hardware and software products, as well as services. We recognize revenues net of any value added or sales tax and net of sales discounts.

We occasionally enter into sales arrangements with customers that contain multiple elements or deliverables such as hardware, software and services. Judgments as to the allocation of consideration from an arrangement to the multiple elements of the arrangement, and the appropriate timing of revenue recognition are critical with respect to these arrangements to ensure compliance with GAAP.

The allocation of consideration in a multiple element arrangement is affected by the determination of whether any software deliverables that function together with other hardware components to deliver the hardware products’ essential functionality are considered as non-software products for purposes of revenue recognition. The allocation of consideration to each non-software deliverable is based on the assumptions we use to establish its selling price, which are based on vendor-specific objective evidence of selling price, if it exists, otherwise, third-party evidence of selling price, if it exists, and, if not, on estimated selling prices.

Changes to the elements in an arrangement and the amounts allocated to each element could affect the timing and amount of revenue recognition. Revenue recognition also depends on the timing of shipment, availability of products or customer acceptance terms. If shipments are not made on scheduled timelines or if the products are not accepted by the customer in a timely manner, our reported revenues may differ materially from expectations.

Service revenues include revenues from hardware service contracts, software service agreements, bundled support arrangements, paid services and trainings, and parts that are sold by the service department. Revenues allocated to service contracts are generally recognized ratably over the period of the related contracts.

Corporate Allocations

We have historically operated as part of Varian and not as a stand-alone company. Accordingly, certain shared costs have been allocated to us and are reflected as expenses in the accompanying financial statements. Management considers the allocation methodologies used to be reasonable and appropriate reflections of the related expenses attributable to us for purposes of the carve-out financial statements; however, the expenses reflected in these financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if we had operated as a separate stand-alone entity. The allocation methods include revenue, headcount, actual usage of services, and others. In addition, the expenses reflected in the financial statements may not be indicative of expenses that will be incurred in the future by the Company. See Note 6, “Related Party Transactions” of the Notes to the audited combined financial statements for a description of our corporate allocations and related-party transactions.

Share-based Compensation Expense

Our employees have historically participated in Varian’s equity-based incentive plans. Share-based compensation expense includes expense related to awards and terms granted to our employees as well as allocation of expenses from Varian’s corporate employees.

We value stock options granted and the option component of the shares of common stock purchased under the Varian Employee Stock Purchase Plan using the Black-Scholes option-pricing model. Share-based compensation expense for restricted stock units is measured using the fair value of Varian’s stock on the date of grant and is amortized over the award’s respective service period. Varian uses the Monte Carlo simulation model to estimate the fair value of performance units. The determination of fair value of share-based payment awards on the date of grant under both the Black-Scholes option-pricing model and the Monte Carlo simulation model is affected by Varian’s stock price, as well as the input of other subjective assumptions, including the expected terms of share-based awards and the expected price volatilities of shares of Varian common stock and peer companies that are used to assess certain performance targets over the expected term of the awards, and the expected dividend yield of shares of Varian common stock.

We measure and recognize expense for all share-based payment awards based on their fair values. Share-based compensation expense recognized in the Combined Statements of Earnings includes compensation expense for the share-based payment awards based on the grant date fair value estimated in accordance with the guidance on share-based compensation. Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest. We attribute the value of share-based compensation to expense using the straight-line method. We consider only the direct tax impacts of share-based compensation awards when calculating the amount of tax windfalls or shortfalls.

Allowance for Doubtful Accounts

We evaluate the creditworthiness of our customers prior to authorizing shipment for all major sale transactions. On a quarterly basis, we evaluate aged items in the accounts receivable aging report and provide an allowance in an amount we deem adequate for doubtful accounts. If our evaluation of our customers’ financial conditions does not reflect our future ability to collect outstanding receivables, additional provisions may be needed and our operating results could be negatively affected.

Inventories

Our inventories include high technology parts and components that are highly specialized in nature and that are subject to technological obsolescence. We have programs to minimize the required inventories on hand and

we regularly review inventory quantities on hand and on order and adjust for excess and obsolete inventory based primarily on historical usage rates and our estimates of product demand and production. Actual demand may differ from our estimates, in which case we may have understated or overstated the provision required for obsolete and excess inventory, which would have an impact on our operating results.

Goodwill and Intangible Assets

Goodwill is initially recorded when the purchase price paid for a business acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Our future operating performance will be impacted by the future amortization of these acquired intangible assets and potential impairment charges related to these intangibles or to goodwill if indicators of impairment exist. The allocation of the purchase price from business acquisitions to goodwill and intangible assets could have a material impact on our future operating results. In addition, the allocation of the purchase price of the acquired businesses to goodwill and intangible assets requires us to make significant estimates and assumptions, including estimates of future cash flows expected to be generated by the acquired assets and the appropriate discount rate for those cash flows. Should conditions differ from management’s estimates at the time of the acquisition, material write-downs of intangible assets and/or goodwill may be required, which would adversely affect our operating results.

We evaluate goodwill for impairment at least annually or whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The evaluation includes consideration of qualitative factors including industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit. If we determine that a quantitative analysis is necessary, the impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. We determine the fair value of our reporting units based on a combination of income and market approaches. The income approach is based on the present value of estimated future cash flows of the reporting units and the market approach is based on a market multiple calculated for each reporting unit based on market data of other companies engaged in similar business. If the carrying amount of the reporting unit is in excess of its fair value, step two requires the comparison of the implied fair value of the reporting unit’s goodwill against the carrying amount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

As a result of the segment realignment in the fourth quarter of fiscal year 2016, goodwill was re-allocated to the Medical and Industrial reporting units based on their relative fair values. No impairment charges were recognized as a result of the change in reporting units.

In fiscal years 2016, 2015 and 2014, we performed the annual goodwill impairment test for our two previous reporting units (i) X-ray Products and (ii) Industrial, and found no impairment. We performed the annual goodwill analysis as of the first day of the fourth quarter of each fiscal year (using balances as of the end of the third quarter of that fiscal year). For both reporting units, based upon the annual goodwill analysis that we performed as of the first day of the fourth quarter of the respective fiscal years, either step one of the impairment test was not completed based on evaluation of qualitative factors or, if step one was completed, the fair value was substantially in excess of carrying value. However, significant changes in our projections about our operating results or other factors could cause us to make interim assessments of impairments in any quarter that could result in some or all of the goodwill being impaired.

We will continue to make assessments of impairment on an annual basis or more frequently if indicators of potential impairment arise.

Warranty Obligations

We warrant most of our products for a specific period of time, usually 12 months from delivery or acceptance, against material defects. We provide for the estimated future costs of warranty obligations in cost of

revenues when the related revenues are recognized. The accrued warranty costs represent our best estimate at the time of sale of the total costs that we will incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs obligation for established products is primarily based on historical experience as to product failures adjusted for current information on repair costs. For new products, estimates will include historical experience of similar products, as well as reasonable allowance for start-up expenses. Actual warranty costs could differ from the estimated amounts. On a quarterly basis, we review the accrued balances of our warranty obligations and update the historical warranty cost trends, if required. If we were required to accrue additional warranty costs in the future, it would have a negative effect on our operating results.

Loss Contingencies

From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations or other legal matters, both inside and outside the United States, arising in the ordinary course of our business or otherwise. We accrue amounts, to the extent they can be reasonably estimated, that we believe are adequate to address any liabilities related to legal proceedings and other loss contingencies that we believe will result in a probable loss. Such matters are subject to many uncertainties, outcomes are not predictable with assurance, and actual liabilities could materially exceed our estimates of potential liabilities. In addition, we are subject to a variety of environmental laws around the world. Those laws regulate multiple aspects of our operations, including the handling, storage, transport and disposal of hazardous substances. They may impose costs on our operations.

Impairment of Investments

We have investments in privately held companies that are accounted for under the equity method of accounting as we hold at least a 20% ownership interest or have the ability to exercise significant influence in these investments. We monitor these investments for events or circumstances indicative of potential impairment, and we make appropriate reductions in carrying values if we determine that an impairment charge is required, based primarily on the financial condition, near-term prospects and recent financing activities of the investee.

Taxes on Earnings

Taxes on earnings, as presented, are calculated on a separate return basis. Under this method, we compute taxes on earnings as if we were a separate taxpayer filing our own income tax returns. However, the amounts recorded are not necessarily representative of the amounts that would have been reflected in the financial statements had we been an entity that operated independently of Varian. It is possible that we will make different tax accounting elections and assertions, such as the amount of earnings that will be permanently reinvested outside the United States following our separation from Varian. Consequently, our future results after our separation from Varian may be materially different from our historical results.

We are subject to taxes on earnings in the United States and numerous foreign jurisdictions. As a global taxpayer, significant judgments and estimates are required in evaluating our tax positions and determining our provision for taxes on earnings. The Company accounts for uncertainty in income taxes following a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates that it is more likely than not that, based on the technical merits, the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Recognition and measurement are based on management’s best judgment given the facts, circumstances and information available at the end of the accounting period.

Generally, the carrying value of our net deferred tax assets assumes that we will be able to generate sufficient future taxable earnings in the applicable tax jurisdictions to utilize these deferred tax assets. Should we conclude it is more likely than not that we will be unable to recover our net deferred tax assets in these tax

jurisdictions, we would increase our valuation allowance and our tax provision would increase in the period in which we make such a determination.

Our foreign earnings are generally taxed at rates lower than U.S. rates. Our effective tax rate is impacted by existing tax laws in both the United States and in the respective countries in which our foreign subsidiaries do business. In addition, a decrease in the percentage of our total earnings from our foreign countries, or a change in the mix of foreign countries among particular tax jurisdictions could increase or decrease our effective tax rate. Our current effective tax rate does not assume U.S. taxes on certain undistributed profits of certain foreign subsidiaries. These earnings could become subject to incremental foreign withholding or U.S. federal and state taxes should they either be deemed or actually remitted to the United States.

Discussion of Results of Operations for Fiscal Years 2016, 2015 and 2014

Fiscal Year

Our fiscal year is the 52- or 53-week period ending on the Friday nearest September 30. Fiscal year 2016 was the 52-week period that ended on September 30, 2016. Fiscal year 2015 was the 53-week period that ended on October 2, 2015 and fiscal year 2014 was the 52-week period that ended on September 26, 2014. Set forth below is a discussion of our results of operations for fiscal years 2016, 2015 and 2014.

Revenues


	Fiscal Years
(Dollars in millions)	2016		Percent Change			2015		Percent Change			2014
Revenues	$	620.1		(2	)%	$	632.3		(8	)%	$	685.2

Revenues decreased in fiscal year 2016 over fiscal year 2015 primarily due to a decrease in revenues from Medical, partially offset by increased revenues from Industrial. Revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to decreases in revenues from Industrial and Medical. Revenues in fiscal year 2016 benefited from a full-year of revenues from our acquisitions completed in the second half of 2015.

Because our sales transactions are generally denominated in U.S. Dollars, fluctuations in currency exchange rates did not have a material direct translational impact on our international revenues. However, a strong U.S. Dollar against certain foreign currencies has increased pricing pressures and has made our X-ray tube and flat panel products relatively more expensive as compared to competitors’ products sold in non-U.S. Dollar currencies.

Revenues by Segment


	Fiscal Years
(Dollars in millions)	2016			Percent Change			2015			Percent Change			2014
Medical	$	505.8			(5	)%	$	534.3			(4	)%	$	556.2
As a percentage of total revenues		82	%					85	%					81	%
Industrial		114.3			17	%		98.0			(24	)%		129.0
As a percentage of total revenues		18	%					15	%					19	%

Revenues	$	620.1			(2	)%	$	632.3			(8	)%	$	685.2

Medical revenues decreased in fiscal year 2016 over fiscal year 2015 primarily due to decreases in revenues from flat panel products and X-ray tube products, partially offset by an increase in revenues of $36.9 million from our acquisitions completed in the second half of fiscal year 2015. Revenues from our flat panel and X-ray

tube products decreased primarily due to pricing pressures resulting from a strong U.S. Dollar, customers migrating to lower cost alternatives, and the decision of a key customer to in-source some of its flat panel products in the second half of fiscal year 2015. In addition, lower purchases from a key customer with higher X-ray tube inventory, due in part to longer tube life, also contributed to the declines in revenues.

Medical revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to decreases in revenues from our flat panel products and X-ray tube products as a result of pricing pressures from the strengthening of the U.S. Dollar, and the decision of a key customer to in-source some of the products that they had previously purchased from our flat panel business. These decreases in Medical revenues were partially offset by revenues of $13.6 million from our acquisitions completed in the second half of fiscal year 2015.

Industrial revenues increased in fiscal year 2016 over fiscal year 2015 primarily due to an increase in revenues from our flat panel Industrial customers, in addition to an increase in revenues of $5.7 million from our acquisitions, and to a lesser extent an increase from security products.

Industrial revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to delays in system deployments or tenders in which our customers participate. The market for border protection systems slowed significantly and end customers, particularly in oil-based economies in which we have a significant customer base, delayed system deployments or tenders, resulting in a decline in the demand for security products. The decrease in Industrial revenues was partially offset by revenues of $1.0 million from an acquisition completed in the second half of fiscal year 2015 and increases in X-ray tube product revenues.

Revenues by Region


	Fiscal Years
(Dollars in millions)	2016			Percent Change			2015			Percent Change			2014
Americas	$	224.7			(10	)%	$	249.2			(2	)%	$	255.0
As a percentage of total revenues		36	%					39	%					37	%
EMEA		179.5			17	%		153.0			(19	)%		188.1
As a percentage of total revenues		29	%					24	%					27	%
APAC		215.9			(6	)%		230.1			(5	)%		242.1
As a percentage of total revenues		35	%					37	%					36	%

Revenues	$	620.1			(2	)%	$	632.3			(8	)%	$	685.2

The Americas revenues decreased in fiscal year 2016 over fiscal year 2015 primarily due to a decrease in revenues from flat panel products, partially offset by an increase of $16.8 million in revenues from our acquisitions completed in the second half of fiscal year 2015. The decrease in revenues from flat panel products was primarily due to a decision of a key customer to in-source some of the products they had purchased from us, in the second half of fiscal year 2015. The Americas revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to decreases in revenues from flat panel, X-ray tube products and security and inspection products, partially offset by $9.8 million in revenues from our acquisitions completed in the second half of fiscal year 2015. The decrease from flat panel products was primarily due to the decision of a key customer to in-source some of the products that they had previously purchased from us.

EMEA revenues increased in fiscal year 2016 over fiscal year 2015 primarily due to an increase of $16.7 million in revenues from our acquisitions completed in the second half of fiscal year 2015 and increases in revenues from flat panel products and security and inspection products, partially offset by a decrease in revenues from X-ray tube products. EMEA revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to a decrease in revenues from security and inspection products, and to a lesser extent a decrease in revenues from flat panel and X-ray tube products, partially offset by $2.7 million in revenues from our acquisitions completed in the second half of fiscal year 2015.

APAC revenues decreased in fiscal year 2016 over fiscal year 2015 primarily due to a decrease in revenues from X-ray tube products, and to a lesser extent, a decrease in revenues from flat panel products, partially offset by an increase of $8.8 million in revenues from our acquisitions completed in the second half of fiscal year 2015. The decrease in revenues from X-ray tube products was primarily due to lower purchases from a key customer with higher X-ray tube inventory, due in part to longer tube life. In addition, the decrease in revenues from flat panel products was primarily due to pricing pressures resulting from a strong U.S. Dollar. APAC revenues decreased in fiscal year 2015 over fiscal year 2014 primarily due to decreases in revenues from flat panel and X-ray tube products, and to a lesser extent, a decrease in revenues from security and inspection products, partially offset by $2.1 million in revenues from our acquisitions completed in the second half of fiscal year 2015.

Gross Margin by Segment


	Fiscal Years
(Dollars in millions)	2016			Percent Change			2015			Percent Change			2014
Medical	$	195.8			(5	)%	$	207.1			(7	)%	$	223.7
As a percentage of Medical revenues		38.7	%					38.8	%					40.2	%
Industrial		52.6			21	%		43.5			(21	)%		54.9
As a percentage of Industrial revenues		46.0	%					44.4	%					42.6	%

Gross margin	$	248.4			(1	)%	$	250.6			(10	)%	$	278.6

As a percentage of total revenues		40.1	%					39.6	%					40.7	%

Medical gross margin percentage remained flat in fiscal year 2016 over fiscal year 2015. Favorable product mix and productivity improvements were offset by increased quality costs and pricing pressures. Medical gross margin percentage decreased in fiscal year 2015 over fiscal year 2014 primarily due to increased pricing pressures resulting from the strengthening of the U.S. Dollar.

Industrial gross margin percentage increased in fiscal year 2016 over fiscal year 2015 primarily due to favorable product mix partially offset by lower margins from industrial products from our acquisitions. Industrial gross margin percentage increased in fiscal year 2015 over fiscal year 2014 primarily due to a higher mix of revenues from services, inspection products, and software products, which generally have higher margins, and the completion of certain low-margin government contracts, partially offset by pricing pressures for security products.

Operating Expenses


	Fiscal Years
(Dollars in millions)	2016			Percent Change			2015			Percent Change			2014
Research and development ⁽¹⁾	$	53.5			6	%	$	50.4			26	%	$	40.0
As a percentage of total revenues		9	%					8	%					6	%
Selling, general and administrative ⁽²⁾		85.8			18	%		72.7			16	%		62.6
As a percentage of total revenues		14	%					11	%					9	%

Operating expenses	$	139.3			13	%	$	123.1			20	%	$	102.6

As a percentage of total revenues		23	%					19	%					15	%

(1)	Research and development expenses include $1.2 million, $1.4 million, and $1.5 million of research and development costs allocated to us by Varian in fiscal years 2016, 2015 and 2014, respectively.

(2)	Selling, general and administrative expenses include $37.7 million, $38.0 million and $32.2 million, of corporate costs allocated to us by Varian in fiscal years 2016, 2015 and 2014, respectively.

Research and Development

Research and development expenses increased in fiscal year 2016 over fiscal year 2015 primarily due to $7.1 million in additional expenses from our acquisitions completed in the second half of fiscal year 2015, partially offset by a reduction in spending on our current projects.

Research and development expenses increased in fiscal year 2015 over fiscal year 2014 primarily due to new product development projects and enhancement of existing products. In addition, the increase in expenses includes $3.7 million in additional research and development expenses related to our acquisitions completed in the second half of fiscal year 2015.

Selling, General and Administrative

Selling, general and administrative expenses increased in fiscal year 2016 over fiscal year 2015 due to $10.2 million in additional operating expenses from our acquisitions completed in the second half of fiscal year 2015.

Selling, general and administrative expenses increased in fiscal year 2015 over fiscal year 2014 primarily due to an increase in corporate costs allocated by Varian and $3.7 million in additional expenses resulting from our acquisitions completed in the second half of fiscal year 2015. Corporate costs allocated by Varian increased as a result of transaction costs from acquisitions, and restructuring charges in connection with Varian’s retirement and workforce reduction programs. These increases were partially offset by a decrease in third-party commissions in fiscal year 2015 as a result of the decline in revenues from products in the Industrial segment.

Interest and Other Income (Expense), Net

The following table summarizes the Company’s interest and other income (expense), net:


	Fiscal Years
(Dollars in millions)	2016			Percent Change			2015			Percent Change			2014
Interest income	$	0.3			(40	)%	$	0.5			67	%	$	0.3
Interest expense		(1.9	)		58	%		(1.2	)		33	%		(0.9	)
(Loss) income from equity method investments		(1.6	)		(633	)%		0.3			(138	)%		(0.8	)
Other		(0.9	)		(280	)%		0.5			(225	)%		(0.4	)

Interest and other income (expense), net	$	(4.1	)		n/m		$	0.1			(106	)%	$	(1.8	)

n/m = not meaningful

The change in interest and other income (expense), net in fiscal year 2016 compared to fiscal year 2015 was primarily due to a loss from our equity method investments in fiscal year 2016, compared to income in the year-ago period, and higher interest expense allocated to us as a result of Varian’s increased borrowings in fiscal year 2016.

The change in interest and other income (expense), net in fiscal year 2015 compared to fiscal year 2014, was primarily due to income from our equity method investments in fiscal year 2015 compared to a loss in the year-ago period, and higher interest expense allocated to us as a result of Varian’s increased borrowings in fiscal year 2015.

Taxes on Earnings


	Fiscal Years
	2016			Percent Change			2015			Percent Change			2014
Effective tax rate		34.3	%		(2.4	)%		36.7	%		(0.1	)%		36.8	%

Our effective tax rate decreased in fiscal year 2016 over fiscal year 2015 primarily due to the retroactive reinstatement of the federal research and development credit. Due to the timing of the prior lapse and the retroactive reinstatement of the federal research and development credit, the Company received seven quarters of benefit in fiscal year 2016, but only four quarters of benefit in fiscal year 2015.

Our effective tax rate decreased slightly in fiscal year 2015 over fiscal year 2014 as the retroactive reinstatement of the federal research and development credit was mostly offset by the geographic mix of earnings. Due to the timing of the prior lapse and the retroactive reinstatement of the federal research and development credit, the Company received four quarters of benefit in fiscal year 2015, but only one quarter of benefit in fiscal year 2014.

In general, our effective income tax rate differs from the U.S. federal statutory rate with increases due to our domestic earnings being subject to state income taxes and decreases because we are eligible for the domestic production activities deduction and the federal research and development credit. See Note 10, “Taxes on Earnings” of the Notes to the audited combined financial statements for further information.

Backlog

Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our total backlog at September 30, 2016 was $248.4 million, which was a decrease of 14% over the backlog at October 2, 2015.

Orders may be revised or canceled, either according to their terms or as customers’ needs change. Consequently, it is difficult to predict with certainty the amount of backlog that will result in revenues. We perform a quarterly review to verify that outstanding orders in the backlog remain valid. Aged orders that are not expected to be converted to revenues are deemed dormant and are reflected as a reduction in the backlog amounts in the period identified.

Liquidity and Capital Resources

Historically, Varian has provided financing, cash management and other treasury services to us. As part of Varian, the Company is dependent upon Varian for all of its working capital and financing requirements as Varian uses a centralized approach to cash management and financing of its operations. Cash transferred to and from Varian is reflected in net parent investment in the accompanying historical combined financial statements. Accordingly, none of Varian’s cash, cash equivalents or debt at the corporate level has been assigned to us in the combined financial statements. Cash and cash equivalents included in the combined balance sheets primarily reflects cash and cash equivalents from acquired entities that are specifically attributable to us.

We assess our liquidity in terms of our ability to generate cash to fund our operating and investing activities. We continue to generate substantial cash from operating activities and believe that our operating cash flow and other sources of liquidity will be sufficient to allow us to continue investing in our existing businesses, consummating strategic acquisitions and managing our capital structure on a short and long-term basis. Although we believe that our future cash from operations, together with our access to banking and capital markets, will provide adequate resources to fund our operating and financing needs, our access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) our credit rating, (ii) the liquidity of the overall capital markets and (iii) the current state of the economy. There can be no assurances that we will continue to have access to these markets on terms acceptable to us. See “Risk Factors” for a further discussion.

Moreover, to preserve the tax-free treatment of the separation and distribution, we may not be able to engage in certain strategic or capital-raising transactions following the distribution, such as issuing equity securities beyond certain thresholds, which may limit our access to capital markets, ability to raise capital

through equity issuances, and ability to make acquisitions, some or all of which may potentially require us to issue more debt than would otherwise be optimal.

We and Varian intend that, prior to the distribution, we will transfer all cash and cash equivalents in excess of $5.0 million to Varian, other than any cash and cash equivalents held by MeVis as of the effective time of the distribution. Following the distribution, if it is determined that as of the effective time of the distribution we had cash and cash equivalents in excess of $5.0 million (disregarding cash and cash equivalents of MeVis), we will be required to transfer such excess to Varian. Additionally, on or before the separation and distribution date, we anticipate entering into a secured revolving credit facility in an aggregate principal amount of up to $100.0 million and a secured term loan credit facility in an aggregate principal amount of $200.0 million. Proceeds from this anticipated borrowing is expected to be used to fund a cash transfer from us to Varian of $200.0 million in addition to an adjustment payment from us to Varian as mentioned above.

Cash and Cash Equivalents

The following table summarizes our cash and cash equivalents:


	September 30,		October 2,
(In millions)	2016		2015		Increase
Cash and cash equivalents	$	36.5	$	20.6	$	15.9

At September 30, 2016, we held $36.5 million of cash and cash equivalents which were predominantly held abroad in Euros and U.S. Dollars and were primarily held as bank deposits. The increase in cash and cash equivalents from fiscal year 2016 compared to fiscal year 2015 primarily relates to cash generated from our acquired entities.

Cash Flows


	Fiscal Years
(In millions)	2016			2015			2014
Net cash flow provided by (used in):
Operating activities	$	74.2		$	85.2		$	118.6
Investing activities		(21.6	)		(102.1	)		(28.6	)
Financing activities		(36.8	)		36.7			(89.9	)
Effects of exchange rate changes on cash and cash equivalents		0.1			0.3			—

Net increase in cash and cash equivalents	$	15.9		$	20.1		$	0.1

Our primary cash inflows and outflows for fiscal years 2016, 2015 and 2014, were as follows:

•

We generated net cash from operating activities of $74.2 million in fiscal year 2016 compared to $85.2 million in fiscal year 2015. The $11.0 million decrease in net cash from operating activities during fiscal year 2016 compared to fiscal year 2015 was due to a decrease of $11.8 million in net earnings, and a decrease of $11.1 million in the net change from operating assets and liabilities, net of effects of acquisitions, partially offset by an increase of $11.9 million in non-cash items.

The major contributors to the net change from operating assets and liabilities, net of effects of acquisitions, in fiscal year 2016 were as follows:

•

Inventories increased $23.5 million due to anticipation of future demand across all product lines.

•

Accounts receivable increased $4.6 million primarily due to longer payment cycles.

We generated net cash from operating activities of $85.2 million in fiscal year 2015 compared to $118.6 million in fiscal year 2014. The $33.4 million decrease in net cash from operating activities during fiscal

year 2015 compared to fiscal year 2014 was due to a decrease of $29.3 million in net earnings, and a decrease of $6.9 million in net change from operating assets and liabilities, net of effects of acquisitions, partially offset by an increase of $2.8 million in non-cash items.

The major contributors to the net change from operating assets and liabilities, net of effects of acquisitions, in fiscal year 2015 were as follows:

•

Inventories increased $25.9 million due to higher unit volumes year-over-year and in anticipation of future demand across all product lines. In particular, an increase in inventories in our Industrial segment was due to delayed deliveries of our security products. Also, inventories increased in our Medical segment due to anticipated future demand for products in our international X-ray tubes business and world-wide flat panel business.

•

Accounts receivable decreased $19.3 million primarily due to the timing of payments from key Industrial segment customers and a decrease in revenues in fiscal year 2015.

•

Accrued liabilities and other long-term liabilities decreased $7.2 million primarily due to the reduction in accruals for employee incentive programs and a decrease in warranty accruals which was a result of improved quality in both our Industrial and X-ray tube products.

•

Accounts payable decreased $4.3 million primarily due to the timing of payments.

We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors, including fluctuations in our operating results, timing of product shipments, accounts receivable collections, inventory management, and the timing and amount of tax and other payments. See, “Risk Factors.”

•

Investing activities used $21.6 million, $102.1 million, and $28.6 million of net cash in fiscal years 2016, 2015 and 2014, respectively. Cash used in investing activities in fiscal year 2016 was primarily for the purchase of property, plant and equipment of $28.9 million, partially offset by the cash received of $8.6 million from the sale of available-for-sale securities. Cash used in investing activities in fiscal year 2015 was primarily for the acquisitions of MeVis and Claymount of $67.9 million and for the purchases of property, plant, and equipment of $34.3 million. Cash used in investing activities in fiscal year 2014 was predominantly for the purchase of property, plant, and equipment of $23.2 million.

•

Financing activities used $36.8 million, provided $36.7 million, and used $89.9 million of net cash in fiscal 2016, 2015 and 2014, respectively, was predominantly due to net transfers to and from Varian.

We expect our capital expenditures, which typically represent construction and/or purchases of facilities, manufacturing equipment, office equipment and furniture and fixtures, will be approximately 2% of revenues in fiscal year 2017.

Our liquidity is affected by many factors, some of which result from the normal ongoing operations of our business and some of which arise from uncertainties and conditions in the United States and global economies. Although our cash requirements will fluctuate as a result of the shifting influences of these factors, we believe that the anticipated cash contribution from Varian, existing cash, and cash equivalents and cash to be generated from operations and from future credit facilities will be sufficient to satisfy anticipated commitments for capital expenditures and other cash requirements for the next 12 months and into the foreseeable future.

Days Sales Outstanding

Trade accounts receivable days sales outstanding (“DSO”) was 66 days at both September 30, 2016 and October 2, 2015. Our accounts receivable and DSO are impacted by a number of factors, primarily including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of continued economic instability.

Contractual Obligations

The following summarizes our contractual obligations as of September 30, 2016 and the effect such obligations are expected to have on our liquidity and cash flows in future periods:


	Payments Due By Period
	Fiscal Year		Fiscal Years		Fiscal Years
(In millions)	2017		2018-2019		2020-2021		Beyond		Total
Operating leases ⁽¹⁾	$	3.1	$	4.1	$	2.4	$	7.6	$	17.2

(1)	Operating leases include future minimum lease payments under all our non-cancelable operating leases as of September 30, 2016.

The following items are not included in the contractual obligations table above:

Long-term income taxes payable includes the liability for uncertain tax positions, including interest and penalties, and may also include other long-term tax liabilities. As of September 30, 2016, our total liability for uncertain tax positions was $4.9 million, of which we do not anticipate a payment in the next 12 months. We are unable to reliably estimate the timing of future payments related to uncertain tax positions. We believe that existing cash and cash equivalents and cash to be generated from operations and current or future credit facilities will be sufficient to satisfy any payment obligations that may arise related to our liability for uncertain tax positions.

As of September 30, 2016, we had an estimated fixed cost commitment of $4.5 million, related to dpiX’s amended agreement through December 31, 2016. The fixed cost commitment for future periods will be determined and approved by the dpiX board of directors at the beginning of each calendar year.

In October 2015, we committed to grant the noncontrolling shareholders of MeVis: (1) an annual recurring net compensation of €0.95 per MeVis share and (2) a put right for their MeVis shares at €19.77 per MeVis share. As of September 30, 2016, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.4% of the outstanding shares.

Contingencies

From time to time, we are a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and other legal matters both inside and outside the United States, arising in the ordinary course of our business or otherwise. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. See note on “Commitments and Contingencies” in the Notes to the Combined Financial Statements, which discussion is incorporated herein by reference.

Off-Balance Sheet Arrangements

In conjunction with the sale of our products in the ordinary course of business, we provide standard indemnification of business partners and customers for losses suffered or incurred for property damages, death and injury and for patent, copyright or any other intellectual property infringement claims by any third parties with respect to our products. The terms of these indemnification arrangements are generally perpetual. Except for losses related to property damages, the maximum potential amount of future payments we could be required to make under these arrangements is unlimited. As of September 30, 2016, we have not incurred any material costs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, we believe the estimated fair value of these arrangements is minimal.

We have indemnification obligations to our directors and officers and certain of our employees that serve as officers or directors of our foreign subsidiaries that may require us to indemnify our directors and officers and those certain employees against liabilities that may arise by reason of their status or service as directors or

officers, and to advance their expenses incurred as a result of any legal proceeding against them as to which they could be indemnified.

Recent Accounting Standards or Updates Not Yet Effective

In November 2016, the Financial Accounting Standards Board (“FASB”) amended its guidance on the classification and presentation of restricted cash in the statement of cash flow. The amendment requires entities to include restricted cash and restricted cash equivalents in its cash and cash equivalents in the statement of cash flow. The amendment will be effective for us beginning in the first quarter of fiscal year 2019 with early adoption permitted. The amendment is required to be adopted retrospectively. We are evaluating the impact of adopting this amendment to our combined financial statements.

In October 2016, the FASB amended its guidance for tax accounting for intra-entity asset transfers. The amendment removes the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The amendment will be effective for us beginning in the first quarter of fiscal year 2019. Early adoption is permitted. The amendment is required to be adopted on a modified retrospective basis. We are evaluating the impact of adopting this amendment to our combined financial statements.

In August 2016, the FASB issued an amendment to its accounting guidance related to the classification of certain cash receipts and cash payments. The amendment was issued to reduce the diversity in practice in how certain transactions are classified in the Statement of Cash Flows. The amendment will be effective for us beginning in the first quarter of fiscal year 2019 with early adoption permitted. The amendment is required to be adopted retrospectively unless it is impracticable. We are evaluating the impact of adopting this amendment to our Statement of Cash Flows.

In June 2016, the FASB issued an amendment to its accounting guidance related to impairment of financial instruments. The amendment adds a new impairment model that is based on expected losses rather than incurred losses. The amendment will be effective for us beginning in the first quarter of fiscal year 2021 with early adoption permitted beginning in the first quarter of fiscal year 2020. We are evaluating the impact of adopting this amendment to our combined financial statements.

In March 2016, the FASB issued an amendment to its accounting guidance related to employee share-based payments. The amendment simplifies several aspects of the accounting for employee share-based payments including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendment will be effective for us beginning in the first quarter of fiscal year 2018 with early adoption permitted. We are evaluating the impact of adopting this amendment to our combined financial statements.

In February 2016, the FASB issued a new standard on accounting for leases. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. The new standard will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of earnings. The new standard is required to be adopted using a modified retrospective method to each prior reporting period presented with various optional practical expedients. The new standard will be effective for us beginning in the first quarter of fiscal year 2020 with early adoption permitted. We are evaluating the impact of adopting this new standard to our combined financial statements.

In January 2016, the FASB issued an amendment to its accounting guidance related to recognition and measurement of financial assets and financial liabilities. The amendment addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment will be effective for us beginning in the first quarter of fiscal year 2019. We are evaluating the impact of adopting this amendment to our combined financial statements.

In September 2015, the FASB issued a new accounting standard that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. The new standard requires that the cumulative impact of a measurement period adjustment including the impact on prior periods be recognized in the reporting period in which the adjustment is identified along with additional disclosures. The new standard will be effective for us beginning in the first quarter of fiscal year 2017. The new standard is required to be adopted prospectively with early adoption permitted for financial statements that have not yet been made available for issuance. The new standard is not expected to have a material impact to our combined financial statements.

In July 2015, the FASB issued an amendment to its accounting guidance related to inventory measurement. The amendment requires inventory measured using first-in, first-out (FIFO) or average cost to be subsequently measured at the lower of cost and net realizable value, thereby simplifying the current guidance that requires an entity to measure inventory at the lower of cost or market. The amendment will be effective for us beginning in the first quarter of fiscal year 2018 and is required to be adopted prospectively. Early adoption is permitted. The amendment is not expected to have a material impact to our combined financial statements.

In March 2015, the FASB issued an amendment to its accounting guidance related to presentation of debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The amendment will be effective for us beginning in the first quarter of fiscal year 2017. In August 2015, the FASB further clarified that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets. These amendments are not expected to have a material impact to our combined financial statements.

In February 2015, the FASB issued an amendment to its accounting guidance related to consolidation. The amendment modifies the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment will be effective for us beginning in the first quarter of fiscal year 2017. Early adoption is permitted. The amendment permits the use of either the retrospective or cumulative effect transition method. The amendment is not expected to have a material impact to our combined financial statements.

In June 2014, the FASB issued an amendment to its accounting guidance related to stock-based compensation. The amendment requires that a performance target that could be achieved after the requisite service period be treated as a performance condition that affects vesting, rather than a condition that affects the grant-date fair value. The amendment will be effective for us beginning in the first quarter of fiscal year 2017. Early adoption is permitted. The amendment can be applied on a prospective basis to all share-based payments granted or modified on or after the effective date. Entities will also be provided an option to apply the guidance on a modified retrospective basis to existing awards. The amendment is not expected to have a material impact to our combined financial statements.

In May 2014, the FASB issued a new revenue standard, which sets forth a single, comprehensive revenue recognition model for all contracts with customers to improve comparability. The new standard requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB amended the principal-versus-agent implementation guidance and illustrations in the new standard. In April 2016, the FASB amended the guidance on identifying performance obligations and the implementation guidance on licensing in the new standard. In May 2016, the FASB amended the guidance on collectability, noncash consideration, presentation of sales tax and transition in the new standard. The new standard will be effective for us beginning in the first quarter of fiscal year 2019, with early adoption permitted, but not before the first quarter of fiscal year 2018. The new standard can be applied either retrospectively to each prior reporting period presented ( i.e. , full retrospective adoption) or with the cumulative effect of initially applying the update recognized at the date of the initial application ( i.e. , modified retrospective adoption) along with additional disclosures. We are evaluating the impact of adopting this standard to our combined financial statements.

Quantitative and Qualitative Disclosures about Market Risks

We are exposed to four primary types of market risks: foreign currency exchange rate risk, credit and counterparty risk, commodity price risk, and equity price risk.

Foreign Currency Exchange Rate Risk

A significant portion of our customers are outside the United States and our products are generally priced in U.S. Dollars. A strong U.S. Dollar may result in pricing pressure for our customers that are outside the United States and that conduct their businesses in currencies other than the U.S. Dollar. Such pricing pressure has caused, and could continue to cause, some of our customers to ask for discounted prices, delay purchasing decisions, consider moving to in-sourcing supply of components or migrating to lower cost alternatives. In addition, because our business is global and some payments may be made in local currency, fluctuations in foreign currency exchange rates can impact our revenues and expenses and/or the profitability in U.S. Dollars of products and services that we provide in foreign markets.

Our foreign subsidiaries enter into internal and external transactions that create nonfunctional currency balance sheet positions at the foreign subsidiary level. Changes in the value of the non-functional currency balance sheet positions in relation to the functional currency will result in a transaction gain or loss recorded in the Combined Statements of Earnings.

Credit and Counterparty Risk

Varian uses a centralized approach to manage substantially all of its cash and to finance its operations. Consequently, debt and cash maintained at Varian are not included in our combined financial statements. Accordingly, our current credit risk exposures are insignificant. Going forward upon the completion of the separation, our cash and cash equivalents may be exposed to a concentration of credit risk and we may also be exposed to credit risk and interest rate risk to the extent that we enter into credit facilities.

We perform ongoing credit evaluations of our customers and as of September 30, 2016, one customer accounted for more than 10% of our accounts receivable. As of October 2, 2015, two customers accounted for more than 10% of our accounts receivable. We maintain strong credit controls in evaluating and granting customer credit, including performing ongoing evaluations of our customers’ financial condition and creditworthiness and often using letters of credit and requiring industrial customers to provide a down payment, and will continue to do so following the separation.

Commodity Price Risk

We are exposed to market risks related to volatility in the prices of raw materials used in our products. The prices of these raw materials fluctuate in response to changes in supply and demand fundamentals and our product margins and level of profitability tend to fluctuate with changes in these raw materials prices. We try to protect against such volatility through various business strategies. We did not have any commodity derivative instruments in place to manage our exposure to price changes as of September 30, 2016 or October 2, 2015.

Equity Price Risk

As of September 30, 2016 and October 2, 2015, equity method investments totaled $49.3 million and $49.6 million, respectively, which represented approximately 57% and 63%, respectively, of our total cash and investment portfolio and were primarily related to a 40% equity method investment in dpiX. We do not hold any marketable equity instruments. We review investments for impairment when events and circumstances indicate that declines in fair value of such asset below carrying value is other-than-temporary. Our analysis includes a review of recent operating results and trends, recent sales/acquisitions of the securities in which we have invested and other publicly available data.

MANAGEMENT

Executive Officers Following the Distribution

The following table sets forth information regarding individuals who are expected to serve as Varex’s executive officers, including their positions after the separation. Varex may name additional executive officers prior to the completion of the separation. While Varex’s executive officers are currently officers or employees of Varian, after the separation, none of these individuals will be employees or officers of Varian.


Name	Age		Position
Sunny S. Sanyal		52	President and Chief Executive Officer
Clarence R. Verhoef		60	Senior Vice President and Chief Financial Officer
Richard E. Colbeth		56	Senior Vice President and General Manager, X-ray Detectors
Kimberley E. Honeysett		45	Senior Vice President, General Counsel and Corporate Secretary
Mark S. Jonaitis		54	Senior Vice President and General Manager, X-ray Sources
Carl E. LaCasce		60	Senior Vice President, Sales and Customer Operations

Sunny S. Sanyal, 52, is expected to serve as President and Chief Executive Officer of Varex. He currently serves as Senior Vice President and President of Varian’s Imaging Components business. He joined Varian in February 2014. Prior to joining Varian, from August 2010 to January 2014 Mr. Sanyal was the Chief Executive Officer of T-System, a privately held company providing information technology solutions and services to hospitals and urgent care facilities. He also served as President of McKesson Provider Technologies, where he led the company to significant market expansion with its clinical software, medical imaging technology and services solutions. Sanyal has held executive positions at GE Healthcare, Accenture and IDX Systems. Mr. Sanyal received a Master of Business Administration from Harvard Business School, a Master of Science in industrial engineering from Louisiana State University, and a Bachelor of Engineering in electrical engineering from the University of Bombay.

Clarence R. Verhoef, 60, is expected to serve as Senior Vice President and Chief Financial Officer of Varex. He currently serves as Senior Vice President, Finance and Corporate Controller of Varian. Prior to May 2012, he served as Controller for Varian’s X-Ray Products business in Salt Lake City. Prior to joining Varian in 2006, he served in numerous financial roles, including Chief Financial Officer of Techniscan Medical Systems and Chief Financial Officer and Vice President of marketing for GE OEC Medical Systems. Mr. Verhoef holds a Bachelor’s degree in Finance from the University of Utah.

Richard E. Colbeth, Ph.D., 56, is expected to serve as Senior Vice President and General Manager, X-ray Detectors of Varex. He currently serves as Vice President and General Manager, Imaging Products of Varian. From 2008 to October 2014, he served as Vice President of Engineering, Imaging Products of Varian, and prior to that served in various research and development positions for Varian and its predecessor, Varian Associates, since joining the company in 1989. Mr. Colbeth holds a Ph.D. in electrical engineering from Columbia University, a Master of Science in electrical engineering from Yale University and a Bachelor of Science in electrical engineering from Lehigh University.

Kimberley E. Honeysett, 45, is expected to serve as Senior Vice President, General Counsel and Corporate Secretary of Varex. She currently serves as Vice President, Associate General Counsel and Assistant Corporate Secretary of Varian. From January 2014 to December 2015, she served as Assistant General Counsel and Assistant Corporate Secretary of Varian, and from January 2013 to December 2013, she served as Managing Corporate Counsel and Assistant Corporate Secretary of Varian. Prior to joining Varian in 2005 as Senior Corporate Counsel, she served as Group Director, Legal Affairs at Siebel Systems, Inc., an enterprise software company, and as an associate with the law firm Brobeck, Phleger & Harrison LLP. Ms. Honeysett holds a Juris Doctor from Cornell Law School and a Bachelor’s degree in Communications from the University of California, Los Angeles.

Mark S. Jonaitis, 54, is expected to serve as Senior Vice President and General Manager, X-ray Sources of Varex. He currently serves as Vice President and General Manager, X-Ray Tube Products and Global Manufacturing of Varian. From October 2012 to October 2014, he served as Varian’s Vice President and General Manager, X-Ray Tube Products and from 2000 to October 2012 as Varian’s Vice President of Operations, X-Ray Tube Products. Prior to that, he served in various product and engineering positions for Varian and its predecessor, Varian Associates, since joining the company in 1983. Mr. Jonaitis holds a Bachelor of Science in physics from the University of Utah.

Carl E. LaCasce, 60, is expected to serve as Senior Vice President, Sales and Customer Operations of Varex. He currently serves as Vice President, Global Sales and Marketing of Varian. From October 2012 to September 2014, he served as Vice President and General Manager, Imaging Products of Varian, and from 2008 to September 2012 served as Vice President, Operations, Imaging Products of Varian. Prior to that he served in that served in various sales and operations positions since joining Varian in 1993. Mr. LaCasce holds a Bachelor’s degree in Business Management from Elmhurst College.

DIRECTORS

Board of Directors Following the Distribution

The following table sets forth information as of December 8, 2016 regarding those persons who are expected to serve on Varex’s board of directors following the completion of the separation. Varex is in the process of identifying the other persons who are expected to serve on Varex’s board of directors following the completion of the separation and will include information concerning those persons in an amendment to this information statement.


Name	Age		Position
Ruediger Naumann-Etienne		70	Chairman of the Board
Jay K. Kunkel		57	Director
Erich R. Reinhardt		70	Director
Sunny S. Sanyal		52	Director
Dow R. Wilson		57	Director

At the time of the distribution, Varex’s board of directors will be divided into three classes, two of which are expected to be comprised of two directors and one of which is expected to be comprised of three directors. The directors designated as Class I directors will have terms expiring at the first annual meeting of stockholders following the distribution, which Varex expects to hold in 2018. The directors designated as Class II directors will have terms expiring at the following year’s annual meeting of stockholders, which Varex expects to hold in 2019, and the directors designated as Class III directors will have terms expiring at the following year’s annual meeting of stockholders, which Varex expects to hold in 2020. Commencing with the first annual meeting of stockholders following the distribution, which Varex expects to hold in 2018, directors for each class will be elected at the annual meeting of stockholders held in the year in which the term for that class expires and thereafter will serve for a term of three years. At any meeting of stockholders for the election of directors at which a quorum is present, the election will be determined by a majority of the votes cast by the stockholders entitled to vote in the election, with directors not receiving a majority of the votes cast required to tender their resignations for consideration by the board, except that in the case of a contested election, the election will be determined by a plurality of the votes cast by the stockholders entitled to vote in the election.

In accordance with Varex’s certificate of incorporation, following Varex’s 2019 annual meeting, the second annual meeting following the distribution, (i) commencing with the class of directors standing for election at the Company’s 2020 annual meeting, directors will stand for election for a two-year term; (ii) commencing with the class of directors standing for election at the Company’s 2021 annual meeting, directors will stand for election for a one-year term; and (iii) commencing with the Company’s 2022 annual meeting, and at each annual meeting thereafter, all directors will stand for election for a one-year term.

Ruediger Naumann-Etienne

Chairman

Age: 70

Principal occupation, business experience and directorships

• Owner and Managing Director, Intertec Group, an investment company specializing in the medical technology field (1989—present)

• Chairman of the Board of Directors, Cardiac Science Corporation, a provider of cardiology products (2006—2010)

• Vice-Chairman of the Board of Directors, Cardiac Science Corporation (2005—2006)

• Chairman of Quinton Cardiology Systems, a predecessor Cardiac Science Corporation (2000—2005)

• Chairman of the Board of Directors, OEC Medical Systems, a provider of interoperative imaging solutions, acquired by General Electric Company (1993—1999)


		• Other Current Public Company Board Memberships: Varian Medical Systems, Inc. and IRIDEX Corporation, a provider of light-based medical systems and delivery devices. • Public Company Board Memberships in Past Five Years: Bio-Rad Laboratories, Inc. and Encision Inc.

		Experience, qualifications, attributes or skills supporting directorship • Experience working in the medical device business for nearly three decades; • Experience working in senior business and finance executive roles with a leading electronics company for a decade; • Extensive experience with finance and mergers and acquisitions; • International experience, having lived and worked in Europe and Latin America, and gained fluency in four languages; and • Service as Chief Executive Director, Chairman or director, and a member of the audit, nominating and compensation committees, of a number of public medical device companies.

Jay K. Kunkel Age: 57		Principal occupation, business experience and directorships • Positions at Continental AG • President Asia, Member of the Management Board (2007—Present) • President Asia, Automotive Systems Division, Member of the Management Board (2005—2007) • Director, SRP International Group Ltd. (2004—2005) • Positions at PwC Financial Advisory Services • Head of Corporate Finance and M&A Advisory (2002—2003) • Managing Director and Regional Leader of Automotive & Manufacturing Practice (2000—2002) • Prior to joining PwC in 2000, held various positions at Visteon Automotive Systems, Mitsubishi Motor Sales of America and Chrysler Corporation Experience, qualifications, attributes or skills supporting directorship • Extensive experience in manufacturing operations and the industrial market; • International experience, including in key markets in Asia; • Deep knowledge and core skills in corporate development and mergers and acquisitions; and • Expertise in project management and restructuring operations.

Erich R. Reinhardt Age: 70		Principal occupation, business experience and directorships • Advisor to the Chief Executive Officer of Siemens AG, a global technology company (May 2008—March 2011) • President and Chief Executive Officer, Siemens Healthcare, formerly Siemens Medical Solutions, a supplier to the healthcare industry (1994—April 2008) • Member of Managing Board, Siemens AG (2001—2008) • Other Current Public Company Board Memberships: Varian Medical Systems, Inc. Experience, qualifications, attributes or skills supporting directorship • Extensive experience in medical device and healthcare industry; • Significant operational and international experience through service as a manager and executive in a leading international healthcare company, including as managing director of Siemens India, a Mumbai Stock Exchange listed company; and


		• Experience serving as chairman of the board of a medical technology company and on the board of directors of private healthcare companies, a hospital and a research institute in Germany.

Sunny S. Sanyal Age: 52		Principal occupation, business experience and directorships • Expected President and Chief Executive Officer, Varex Imaging Corporation • Senior Vice President and President, Imaging Components, Varian Medical Systems, Inc. (2014—Present) • Chief Executive Officer, T-System Inc., an information technology solutions and services provider (2010—2014) • Positions at McKesson Corporation, a healthcare services and information technology company • Chief Operating Officer, McKesson Provider Technologies (2006—2010) • Group President, Clinical Information Systems division (2004—2006) • Previous management positions with GE Healthcare, Accenture and IDX Systems Corporation Experience, qualifications, attributes or skills supporting directorship • Extensive experience in medical device and healthcare industry; • Key insight into Varex through his leadership position within Varian’s Imaging Components business; and • Significant public company operational experience.

Dow R. Wilson Age: 57		Principal occupation, business experience and directorships • Positions at Varian Medical Systems, Inc. • President and Chief Executive Officer (September 2012—Present) • Corporate Executive Vice President and Chief Operating Officer (October 2011—September 2012) • Corporate Executive Vice President and President, Oncology Systems (August 2005—September 2011) • Corporate Vice President and President, Oncology Systems (January 2005—August 2005) • Prior to joining Varian in January 2005, held various senior management positions within General Electric Company, a diversified industrial company, including serving as Vice President and General Manager of Global X-ray • Other Current Public Company Board Memberships: Varian Medical Systems, Inc. • Public Company Board Memberships in Past Five Years: Saba Software, an e-learning software provider • Presidential Appointment: Appointed to U.S. President’s Advisory Council on Doing Business in Africa in November 2014 Experience, qualifications, attributes or skills supporting directorship • Deep knowledge of Varex’s business, strategy and technology gained through serving as Varian’s President and Chief Executive Officer; • Significant knowledge of domestic and international medical and healthcare industries gained from serving in management positions at General Electric; • Critical insight into operational requirements of a company with worldwide reach, knowledge of corporate and business unit strategies, and operational expertise, each gained from executive management experience at two large, global organizations; and • Experience serving on the board of directors and as lead director and audit and nominating committees of another public company.

Director Independence

A majority of Varex’s board of directors will include directors who are “independent” as defined by the rules of NASDAQ and the Corporate Governance Guidelines to be adopted by the Varex board of directors. The criteria to be adopted by Varex’s board of directors to assist it in making determinations regarding the independence of its members, summarized below, are consistent with NASDAQ listing standards regarding director independence. To be considered independent, the board will have to determine that a director does not have a material relationship with Varex or its subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with Varex or its subsidiaries). In assessing independence, the Varex board of directors will consider all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with Varex or its subsidiaries, the Varex board of directors will consider the issue not just from the standpoint of the director, but also from that of the persons or organizations with which the director has an affiliation. A director will not be considered independent if:

•

the director is, or has been within the last three years, an employee of Varex or its parent or subsidiaries, or an immediate family member is, or has been within the last three years, an executive officer of Varex or its subsidiaries;

•

the director has accepted, or has an immediate family member who has accepted, any compensation from Varex or its parent or subsidiaries in excess of $120,000 during any period of twelve consecutive months within the last three years, other than compensation for board or board committee service, compensation paid to a family member who is an employee (other than an executive officer) of Varex, or benefits under a tax-qualified retirement plan or non-discretionary compensation;

•

the director is, or has an immediate family member who is, a partner in, or controlling stockholder or executive officer of, any organization to which Varex has made, or from which Varex has received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than investments arising solely from investments in Varex’s securities or payments under non-discretionary charitable contribution matching programs;

•

the director is, or has an immediate family member who is, employed as an executive officer of another entity where at any time during the past three years any of Varex’s executive officers have served on the compensation committee of such other entity; or

•

the director is, or has an immediate family member who is, a current partner of Varex’s outside auditor, or was a partner or employee of Varex’s outside auditor who worked on Varex’s audit at any time during any of the past three years.

Varex’s board of directors will assess on a regular basis, and at least annually, the independence of directors and, based on the recommendation of the Nominating and Corporate Governance Committee, will make a determination as to which members are independent. The terms “immediate family member” and “executive officer” above have the same meanings specified for such terms in the NASDAQ listing standards.

Committees of the Board of Directors

Effective upon the completion of the distribution, Varex’s board of directors will have the following standing committees: an Audit Committee, a Compensation and Management Development Committee and a Nominating and Corporate Governance Committee.

Audit Committee . The rules of the NASDAQ require the Audit Committee to have at least two members within 90 days after the date Varex’s common stock is first listed on NASDAQ and require the Audit Committee to have at least three members within one year after the date the Varex common stock is first listed on NASDAQ. Varex intends to comply with these requirements. The Varex board of directors is expected to determine that at least one member of the Audit Committee is an “audit committee financial expert” for purposes of the rules of

the SEC. In addition, Varex expects that the Varex board of directors will determine that each of the members of the Audit Committee will be independent, as defined by the rules of NASDAQ, Section 10A(m)(3) of the U.S. Securities Exchange Act of 1934, as amended (or the Exchange Act), and in accordance with Varex’s Corporate Governance Guidelines. The Audit Committee will appoint Varex’s independent registered public accounting firm and assist the Varex board of directors in fulfilling its oversight responsibilities by overseeing Varex’s accounting and financial reporting processes and audits of financial statements, and in particular will monitor (i) the integrity of Varex’s financial statements, (ii) its compliance with legal, ethical and regulatory requirements, (iii) the independent registered public accounting firm’s qualifications and independence, (iv) the performance of Varex’s internal audit function and of the independent registered public accounting firm and (v) the principal risk exposures facing Varex that are related to financial statements, legal, ethical, regulatory and other similar matters, as well as Varex’s related mitigation efforts. The Audit Committee will also review and approve Varex’s foreign exchange exposure management policy, and will prepare the Audit Committee Report to be included in Varex’s proxy statements. The Audit Committee will report to Varex’s board of directors the results of its monitoring and recommendations and provide any additional information and materials as the Audit Committee may determine is necessary to make the Varex board of directors aware of significant financial matters requiring the board’s attention.

Compensation and Management Development Committee . The Varex board of directors is expected to determine that each member of the Compensation and Management Development Committee will be independent, as defined by the rules of NASDAQ and in accordance with Varex’s Corporate Governance Guidelines. In addition, Varex expects that the members of the Compensation and Management Development Committee will qualify as “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act and as “outside directors” for purposes of Section 162(m) of the Code. The Compensation and Management Development Committee will assist the Varex board of directors in carrying out the board’s responsibilities relating to the compensation of Varex’s executive officers and directors. The Compensation and Management Development Committee will evaluate Varex’s compensation plans, policies and programs for executive officers and recommend the establishment of policies dealing with various compensation and employee benefit plans, and administer Varex’s stock and cash incentive plans. The Compensation and Management Development Committee will also provide advice to the Varex board of directors on management development matters that have major implications for the growth, development and depth of Varex’s management team, including reviewing succession plans. At least annually, the Compensation and Management Development Committee will review the risks associated with Varex’s compensation policies and report to the Varex board of directors whether such policies and practices create risks that are reasonably likely to have a material adverse effect on Varex. The Compensation and Management Development Committee will have the sole authority, under its charter, to select and retain independent compensation advisors.

Nominating and Corporate Governance Committee . The Varex board of directors is expected to determine that each of the members of the Nominating and Corporate Governance Committee will be independent, as defined by the rules of NASDAQ and in accordance with Varex’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee will assist the board of directors in developing and recommending to the Varex board of directors corporate governance principles, including Varex’s Corporate Governance Guidelines, Code of Conduct and policy regarding conflicts of interest and related person transactions, identifying, evaluating, and recommending to the board potential nominees to the board, including stockholder suggestions, and reviewing with the board annually the independence, skills and characteristics of all individual members and the skills and characteristics of the board as a whole in determining whether to recommend incumbent directors for re-election. The Nominating and Corporate Governance Committee will also evaluate and makes recommendations to the board concerning the size of the board, the appointment of directors to board committees, the qualifications of committee members and the selection of board committee chairs, and will oversee the annual review of director independence and evaluation of board performance.

The Varex board of directors is expected to adopt a written charter for each of the Audit Committee, the Compensation and Management Development Committee and the Nominating and Corporate Governance Committee. These charters will be posted on Varex’s website in connection with the distribution.

Compensation Committee Interlocks and Insider Participation

During Varex’s fiscal year ended October 2, 2015, Varex was not an independent company and did not have a compensation committee or any other committee serving a similar function. Decisions as to the compensation of those who will serve as Varex’s executive officers for that fiscal year were made by Varian, as described in the section of this information statement captioned “Executive Compensation.”

Corporate Governance

Stockholder Recommendations for Director Nominees

Varex’s amended and restated bylaws will contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Varex board of directors. Varex expects that the Varex board of directors will adopt a policy in connection with its Corporate Governance Guidelines concerning the evaluation of stockholder recommendations of board candidates by the Nominating and Corporate Governance Committee.

Corporate Governance Guidelines

The Varex board of directors is expected to adopt a set of Corporate Governance Guidelines in connection with the distribution to assist it in guiding Varex’s governance practices and to promote the functioning of the board and its committees. These Guidelines will address board composition, board functions and responsibilities, qualifications, leadership structure, committees and meetings. These practices will be regularly reevaluated by the Nominating and Corporate Governance Committee in light of changing circumstances to continue serving Varex’s best interests and the best interests of its stockholders.

Communicating with the Board

Stockholders and other interested parties may communicate with the Varex board of directors, the board’s Chairman or any other director or with the independent directors as a group or any other group of directors through the board’s Chairman by sending an email to [●]. Messages received will be forwarded to the appropriate director or directors.

Director Qualification Standards

Varex’s Corporate Governance Guidelines will provide that the Nominating and Corporate Governance Committee is responsible for reviewing with Varex’s board of directors the appropriate skills and characteristics required of board members in the context of the makeup of the board of directors and developing criteria for identifying and evaluating board candidates.

The process that this committee will use to identify a nominee to serve as a member of the board of directors will depend on the qualities being sought. From time to time, Varex may engage an executive search firm to assist the committee in identifying individuals qualified to be board members. The Nominating and Corporate Governance Committee considers the knowledge, experience, diversity and personal and professional integrity of potential directors, as well as their willingness to devote the time necessary to effectively carry out the duties and responsibilities of board membership. The Nominating and Corporate Governance Committee may reevaluate the relevant criteria for board membership from time to time in response to changing business factors or regulatory requirements. The board will be responsible for selecting candidates for election as directors based on the recommendation of the Nominating and Corporate Governance Committee.

Board Leadership Structure

The Varex board of directors is expected to separate the positions of chief executive officer and chairman of the board. [●], one of Varex’s independent directors, is expected to serve as Varex’s chairman of the board. The responsibilities of the chairman of the board include setting the agenda for each board meeting, in consultation with the chief executive officer; chairing the meetings of independent directors; and facilitating and conducting, with the Nominating and Corporate Governance Committee, the annual self-assessments by the board and each standing committee of the board, including periodic performance reviews of individual directors.

Separating the positions of chief executive officer and chairman of the board allows the chief executive officer to focus on Varex’s day-to-day business, while allowing the chairman of the board to lead the board in its fundamental role of providing advice to and independent oversight of management. The board believes that having an independent director serve as chairman of the board is the appropriate leadership structure for Varex at this time. However, in the future the board may wish to consider alternative structures.

Board’s Role in Risk Oversight

The Varex board of directors will execute its risk management responsibility directly and through its committees. The Audit Committee will have primary responsibility for overseeing Varex’s enterprise risk management process. The Audit Committee will receive updates and discuss individual and overall risk areas during its meetings, including Varex’s financial risk assessments, risk management policies and major financial risk exposures and the steps that management has taken to monitor and control such exposures. The Compensation and Management Development Committee will oversee risks associated with Varex’s compensation policies and practices with respect to both executive compensation and compensation generally. The Compensation and Management Development Committee will receive reports and discuss whether Varex’s compensation policies and practices create risks that are reasonably likely to have a material adverse effect on Varex.

The Varex board of directors will be kept abreast of its committees’ risk oversight and other activities via reports of the committee chairpersons to the full board during board meetings.

Code of Conduct

In connection with the distribution, Varex will adopt a Code of Conduct that requires all its business activities to be conducted in compliance with laws, regulations and ethical principles and values. All directors, officers and employees of Varex will be required to read, understand and abide by the requirements of the Code of Conduct.

The Code of Conduct will be accessible on Varex’s website. Any waiver of the Code of Conduct for directors or executive officers may be made only by the Audit Committee. Varex will disclose any amendment to, or waiver from, a provision of the Code of Conduct for the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on the company’s website within four business days following the date of the amendment or waiver. In addition, Varex will disclose any waiver of the Code of Conduct for the other executive officers and for directors on the website.

Procedures for Treatment of Complaints Regarding Accounting, Internal Accounting Controls and Auditing Matters

In accordance with the Sarbanes-Oxley Act of 2002, Varex expects that its Audit Committee will adopt procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters and to allow for the confidential, anonymous submission by employees and others of concerns regarding questionable accounting or auditing matters.

Procedures for Approval of Related Person Transactions

Varex’s board of directors is expected to adopt a written procedure relating to related person transactions. The procedure will cover transactions involving Varex in which any director, director nominee, executive officer or greater-than-five percent beneficial owner of Varex, or any of their respective immediate family members, has or had a direct or indirect interest, other than as a director or less-than-10 percent owner, of an entity involved in the transaction or is employed by, or is a general partner, principal, member or in a similar position of such entity. This procedure will be posted to the corporate governance section of Varex’s investor relations website ([●]) as of the distribution date.

Under this procedure, the general counsel must advise the Nominating and Corporate Governance Committee of any related person transaction of which he or she becomes aware. The Nominating and Corporate Governance Committee must then either approve or reject the transaction in accordance with the terms of the policy. In the course of making this determination, the Nominating and Corporate Governance Committee must be informed or have knowledge of: (i) the related person’s relationship to the Company and interest in the transaction; (ii) the material facts of the proposed transaction, including a description of the nature and potential aggregate value of the proposed transaction; (iii) the benefits, if any, to the Company of the proposed transaction; (iv) if applicable, the availability of other sources of comparable products or services; and (v) an assessment of whether the proposed transaction or situation is on terms that are comparable to the terms available to an unrelated third party or to employees generally.

The Nominating and Corporate Governance Committee may, however, determine that a related person does not have a direct or indirect material interest in certain categories of transactions, for example:

•

any transaction with another company for which a related person’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that company’s shares, if the amount involved does not exceed the greater of $1 million, or 2% of that company’s total annual revenue, and the related person is not involved in the decision-making process for such transaction;

•

any charitable contribution, grant or endowment by Varex to a charitable organization, foundation or university for which a related person’s only relationship is as an employee (other than an executive officer) or a director, if the amount involved does not exceed the lesser of $1 million, or 2% of the charitable organization’s total annual receipts, and the related person is not involved in the decision-making process for such transaction;

•

compensation to executive officers determined by the Compensation and Management Development Committee;

•

compensation to directors determined by the board of directors; and

•

transactions in which all security holders receive proportional benefits.

Transactions involving related persons that are not included in one of the categories that the Nominating and Corporate Governance Committee has excluded (such as the examples above) will be forwarded to Varex’s legal department to determine whether the related person could have a direct or indirect material interest in the transaction, and any such transaction will be forwarded to the Nominating and Corporate Governance Committee for review. The Nominating and Corporate Governance Committee will determine whether the related person has a material interest in a transaction and may approve, ratify, terminate or take other action with respect to the transaction in its discretion.

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EXECUTIVE COMPENSATION

Varex is an “emerging growth company,” as defined in the JOBS Act. As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, exemptions from certain narrative and tabular disclosure obligations regarding executive compensation in Varex’s proxy statements, including the requirement to include a Compensation Discussion and Analysis, scaled financial reporting, as well as exemptions from the requirement to hold a non-binding advisory vote on executive compensation and the requirement to obtain stockholder approval of any golden parachute payments not previously approved.

Summary Compensation Table

The information included in the Summary Compensation Table below reflects compensation earned from Varian during fiscal years 2016 and 2015 by individuals whom are expected to serve as Varex’s named executive officers (“NEOs”) upon the separation. They are Varex’s Chief Executive Officer and Varex’s other two most highly compensated executive officers, based on estimated fiscal year 2016 compensation from Varian. It is anticipated that, following the separation, Varex’s NEOs will have the titles shown below; however, such determination is subject to approval by the Varex board of directors.

Each of the individuals whom are expected to serve as Varex’s NEOs was employed by Varian prior to the separation; therefore, the information provided below reflects compensation earned at Varian and the design and objectives of the Varian executive compensation programs in place prior to the separation. All references in the following tables to equity awards are to equity awards granted by Varian in respect of Varian common stock.

The historical compensation shown below was determined by Varian. Future compensation levels at Varex will be determined based on the compensation policies, programs and procedures to be established by the Varex Compensation Committee. Accordingly, the amounts and forms of compensation reported below are not necessarily indicative of the compensation that Varex’s NEOs will receive following the separation, which could be higher or lower than the amounts shown below.


Name and Principal Position	Year		Salary ($)		Stock Awards ⁽¹⁾ ($)		Option Awards ⁽²⁾ ($)		Non-Equity Incentive Plan Compensation ⁽³⁾ ($)		All Other Compensation ⁽⁴⁾ ($)		Total ($)
Sunny S. Sanyal		2016		538,329		1,195,993		364,005		380,946		78,659		2,557,932
Chief Executive Officer		2015		483,625		866,652		433,324		185,182		110,803		2,079,586

Clarence R. Verhoef		2016		361,432		433,279		216,670		175,353		36,725		1,223,459
Chief Financial Officer		2015		326,049		333,302		166,667		113,924		31,192		971,134

Richard E. Colbeth		2016		331,808		133,361		66,669		101,462		24,534		657,836
Senior Vice President and General Manager, X-Ray Detectors		2015		290,495		146,665		73,342		77,195		22,019		609,716

(1)

This column represents the aggregate grant date fair value of restricted stock unit (“RSU”) and performance stock unit (“PSU”) awards made to each Varex NEO during fiscal years 2016 and 2015, computed in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation—Stock Compensation” (“ASC 718”). The fair value for RSU awards was determined using the closing price of Varian’s common stock on the grant date multiplied by the number of shares subject to the award. PSUs are valued using the Monte Carlo simulation model. The determination of the fair value of PSU awards on the date of grant is affected by Varian’s stock price, as well as the input of other subjective assumptions, including the expected term of the PSUs and the expected price volatilities of shares of Varian common stock and peer companies that are used to assess certain performance targets over the expected term of the award, and the expected dividend yield of shares of Varian common stock.

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The table below sets forth components of the fair value of the stock awards made in fiscal year 2016. The value of the PSU awards at grant date, assuming that the highest level of performance conditions will be achieved is also included. These amounts reflect our calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by Varex’s NEOs.


	Components of Stock Awards				PSU Fair Value at Highest Level
Name	RSU Fair Value		PSU Fair Value		PSU Fair Value at Highest Level
Sunny S. Sanyal	$	208,008	$	987,985	$	1,728,973
Clarence R. Verhoef	$	216,656	$	216,623	$	379,090
Richard E. Colbeth	$	133,361		—		—

(2)	This column represents the aggregate grant date fair value of stock option awards granted to each NEO during fiscal years 2016 and 2015, computed in accordance with ASC 718 based on a Black-Scholes option pricing model using the assumptions listed below.


	2016			2015
Expected term (in years)		4.13			4.13
Risk-free interest rate		1.1	%		1.3	%
Expected volatility		20.0	%		22.1	%
Expected dividend yield		—	%		—	%
Weighted average fair value at grant date	$	13.67		$	18.53

The amounts above reflect Varian’s calculation of the value of these awards, and do not necessarily correspond to the actual value that may ultimately be realized by Varex’s NEOs.

(3)

This column represents annual cash incentives paid under Varian’s Management Incentive Plan (the “MIP”). For Mr. Colbeth, this amount also includes incentives under the Employee Incentive Plan (“EIP”). Amounts include the incentive payments deferred under Varian’s Deferred Compensation Plan (the “Varian DCP”).

(4)	Set forth in the table below are the material components of the “All Other Compensation” column for fiscal year 2016.


Name	Company Contributions to 401(k) ($)		Company Supplemental Contributions Under the Deferred Compensation Plan ($) ^(A)		Company Match of Charitable Contributions ($)		Other ($) ^(B)
Sunny S. Sanyal	$	15,900	$	36,765	$	5,000	$	20,995
Clarence R. Verhoef	$	16,169	$	14,433		—	$	6,392
Richard E. Colbeth	$	16,295	$	8,185		—	$	300

(A)

Amounts represent an estimate of Varian’s Supplemental Contributions under the Varian DCP for 2016, which will be made in January 2017. The estimate is calculated based on the portion of the executive’s eligible cash compensation (determined by the sum of his calendar year 2016 base salary through December 31, 2016 and the actual fiscal year 2016 cash incentive payout under the MIP) that exceeded the compensation limit imposed by Section 401(a)(17) of the Internal Revenue Code ($265,000 for 2016).

(B)

For Mr. Sanyal and Mr. Verhoef, the amount consists of financial counseling and life insurance benefits. For Mr. Colbeth the amount consists of life insurance benefits.

Narrative Disclosure to Summary Compensation Table

Salary: During fiscal year 2016, none of Varex’s NEOs had a written employment agreement with Varian or its affiliates, but were and remain “at-will” employees. The salaries for Varex’s NEOs in effect as of the beginning of calendar year 2016 were as follows: Mr. Sanyal, $496,800; Mr. Verhoef, $330,194; and Mr. Colbeth, $295,891.

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Stock and Option Awards: In fiscal year 2016 the Varian Compensation Committee granted long-term equity compensation to Varex’s NEOs and other senior officers of Varian in the form of PSUs, stock options and RSUs. The PSUs were granted on November 30, 2015 and on February 12, 2016; the stock options and RSUs were granted on February 12, 2016.

Set forth below are the value of the PSUs (at target), stock options and RSUs awarded to Varex’s NEOs on the respective grant dates:


	Value of PSUs at Target		Value of PSUs at Target		Value of Stock Options		Value of RSUs		Total Combined Value of Equity Awards
	($)		($)		($)		($)		($)
	(Granted 11/30/15)		(Granted 2/12/2016)		(Granted 2/12/2016)		(Granted 2/12/2016)
Name
Sunny S. Sanyal	$	519,979	$	468,006	$	364,005	$	208,008	$	1,559,998
Clarence R. Verhoef	$	216,623		—	$	216,670	$	216,656	$	649,949
Richard E. Colbeth		—		—	$	66,669	$	133,361	$	200,030

The dollar value of the equity awards in the table above equals the grant value of the actual number of PSUs, stock options and RSUs, which were converted from approved grant values into shares or units using Varian’s stock price on the date of grant. The value of each PSU award was based on the probability of achieving the performance vesting conditions using a Monte Carlo simulation model. The value of each stock option was based on a Black-Scholes value using model inputs disclosed in footnote (2) above under the Summary Compensation Table. The value of each RSU award was equal to the closing price of Varian’s common stock on the date of grant. Additional information about equity awards granted in 2016 is provided below.

November 30, 2015 PSU Grant

The PSUs awarded on November 30, 2015 to Messrs. Sanyal and Verhoef consist of the right to receive shares of Varian common stock, based upon performance against pre-established goals during a three-year performance period from the beginning of fiscal year 2016 through the end of fiscal year 2018. The maximum that can be earned is 175% of the target PSUs. PSUs that are earned based on performance vest immediately at the end of the three-year performance period provided the recipient is employed by us throughout the vesting period. In the event of retirement, death or change in control, full or partial payouts are made per provisions in the plan document.

The performance measures used to determine if and how many shares of Varian’s common stock are received pursuant to the PSUs consists of (i) annual EPS growth relative to targets established by the Varian Compensation Committee at the beginning of the 2016, 2017 and 2018 fiscal years; and (ii) a modifier based on Varian’s relative TSR over the three-year performance period ranked against the Dow Jones U.S. Medical Equipment Index for the same period.

The Dow Jones U.S. Medical Equipment Index used for the TSR modifier currently consists of approximately 50 companies, including Varian. TSR is measured using a 30 calendar day stock price average at the beginning and end of the three-year performance period. The TSR rank modifier will adjust the shares calculated from the EPS results upward or downward by as much as 25% on a sliding scale based on Varian’s percentile rank in the index, with an increase in Varian shares for TSR rank above 55th percentile and a reduction in Varian shares for TSR rank below 55th percentile.

The Varian Compensation Committee believes that pairing EPS with TSR provides an external measure that complements EPS results, directly aligning the executive’s interests with those of Varian’s stockholders ( e.g. , stock price return).

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February 12, 2016 PSU Grant

At its meeting on February 12, 2016, the Varian Compensation Committee awarded a second grant of PSUs to Mr. Sanyal.

The performance measure used to determine if the PSUs will be eligible for payout consists of a pre-established threshold revenue goal of $7.5 billion which Varian must achieve within the period of January 2, 2016 through September 28, 2018. The plan defines revenue as Varian’s net sales determined in accordance with generally accepted accounting principles (GAAP) which is reflected in Varian’s financials as Total Revenues. Subject to the attainment of the revenue goal, the payout of the PSUs will be subject to the EPS and TSR goals previously established for the PSU grants made on November 30, 2015 (as described above).

February 12, 2016 RSU Grant

The RSUs granted to Varex’s NEOs vest and are settled in equal amounts of shares of Varian common stock on approximately the first, second and third anniversaries of the date of grant. A recipient must be employed by Varian throughout the vesting period for full vesting to occur, except in cases involving retirement, death or a change in control, where full or partial vesting are made depending on various circumstances.

February 12, 2016 Stock Option Grant

The stock options granted to Varex’s NEOs vest as to 33 1/3% twelve months from the grant date, and the remainder vest in equal monthly installments during the following 24-month period. A recipient must be employed by Varian throughout the vesting period for full vesting to occur, except in cases involving retirement, death or a change in control, where full or partial vesting are made depending on various circumstances.

Non-Equity Incentive Plan Compensation: The amounts in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table represent the actual awards earned by Varex’s NEOs under the MIP. For fiscal year 2016, the Varian Compensation Committee established a MIP bonus pool equal to 1.25% of Varian’s fiscal year 2016 Earnings Before Interest and Taxes (“EBIT”) and fixed the following financial performance goals: growth in EBIT (50% weight) and top line growth (30% weight) which is made up of gross orders growth in Oncology Systems and revenue growth in Imaging Components and Proton Therapy. The EBIT and Top Line growth measures account for 80% of the potential MIP amount. For each of the above performance measures, specific financial targets were set for the total company and the two largest business units, Oncology Systems and Imaging Components, with a weighting of the financial targets for each Varex NEO. In addition, 20% of the potential MIP amount was based on achievement of individual non-financial qualitative performance. The achievement and payout of the financial measures is determined by the Varian Compensation Committee. The Varian Compensation Committee also determined the achievement of the non-financial qualitative performance results for Messrs. Sanyal and Verhoef and Mr. Colbeth’s achievement was determined by Mr. Sanyal. Based upon the achievement of the financial and non-financial qualitative performance results, the actual payouts as a percentage of the target payout (or 100%) under the MIP were as follows:


Name	MIP Payout as a % of Target (Fiscal Year 2016)
Sunny S. Sanyal		102	%
Clarence R. Verhoef		100	%
Richard E. Colbeth		101	%

All Other Compensation, Including Perquisites: Varex’s NEOs have also been extended certain perquisites, as follows:

•

Company Supplemental Contributions representing retirement contributions which could not be contributed by Varian to the executives’ qualified 401(k) retirement accounts due to Internal Revenue Code limitations.

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•

For Messrs. Sanyal and Verhoef, reimbursement for financial planning, estate planning, tax planning, tax return preparation and financial counseling services (to a maximum of $6,500 per year for the NEOs). Varian also reimbursed certain individuals, including all executive officers and non-executive officers, for annual medical examinations (up to a maximum of $4,000 per year).

Varian does not permit its executives to use its fractionally owned aircraft for purely personal trips. However, Varian allows and includes in the executive’s compensation, as applicable, aircraft use attributable to accompanying spousal aircraft travel when it is deemed valuable and appropriate for business purposes. In fiscal year 2016, there was no spousal travel.

Outstanding Equity Awards at Fiscal Year End

The following table summarizes the outstanding equity awards held by Varex’s NEOs as of September 30, 2016. All share information relates to Varian common stock.


	Option Awards ⁽¹⁾⁽²⁾								Stock Award ⁽²⁾
Name	Option Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($) ⁽¹¹⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) ⁽¹¹⁾
Sunny S. Sanyal		02/21/2014		46,078		7,433	$	83.70		02/21/2021
		02/13/2015		12,342		11,043	$	92.65		02/13/2022
		02/12/2016		—		26,628	$	75.86		02/12/2023
												1,932	(3)	$	192,292		—			—
												3,118	(4)	$	310,335		4,465	(7)	$	440,401
												2,742	(5)	$	272,911		6,205	(8)	$	617,584
																	5,679	(9)	$	565,231

Total				58,420		45,104						7,792		$	775,538		16,349		$	1,623,216

Clarence R. Verhoef		11/09/2012		6,981		—	$	68.84		11/09/2019
		02/21/2014		6,301		1,017	$	83.70		02/21/2021
		02/13/2015		4,746		4,248	$	92.65		02/13/2022
		02/12/2016		—		15,850	$	75.86		02/12/2023
												1,347	(6)	$	134,067
												531	(3)	$	52,850
												1,200	(4)	$	119,436		1,717	(7)	$	129,101
												2,856	(5)	$	284,258		2,585	(8)	$	257,285

Total				18,028		21,115						5,934		$	590,611		4,302		$	386,386

Richard E. Colbeth		02/21/2014		3,860		623	$	83.70		02/21/2021
		02/13/2015		2,088		1,870	$	92.65		02/13/2022
		02/12/2016		—		4,877	$	75.86		02/12/2023
												651	(3)	$	64,794
												1,056	(4)	$	105,104
												1,758	(5)	$	174,973

Total				5,948		7,370						3,465		$	344,871


(1)	All options are granted at an exercise price equal to the fair market value ( i.e. , the closing price) of the underlying shares of our common stock on the date of grant. The following table sets forth the vesting dates for the outstanding unvested option awards:

	Grant Date	General Vesting Schedule (based on outstanding option awards)
	11/9/2012	33-1/3% vested on 11/9/2012; pro-rata monthly thereafter until fully vested on 11/11/2015.
	2/21/2014	33-1/3% vested on 2/21/2015; pro-rata monthly thereafter until fully vested on 2/21/2017.
	2/13/2015	33-1/3% vested on 2/13/2016; pro-rata monthly thereafter until fully vested on 2/13/2018.
	2/12/2016	33-1/3% vested on 2/12/2017; pro-rata monthly thereafter until fully vested on 2/12/2019.

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(2)	Vesting will occur only if the applicable Varex NEO is employed by us throughout the vesting period, except in cases involving retirement, death or change in control, where full or partial payments are made depending on various circumstances

(3)	Grant Date	Vesting Schedule (based on total RSU awards granted)
	2/21/2014	33 1/3% on 2/15/2015; 33 1/3% on 2/15/2016 and 33 1/3% on 2/15/2017

(4)	Grant Date	Vesting Schedule (based on outstanding RSU awards)
	2/13/2015	33 1/3% on 2/15/2016; 33 1/3% on 2/15/2017 and 33 1/3% on 2/15/2018

(5)	Grant Date	Vesting Schedule (based on outstanding RSU awards)
	2/12/2016	33 1/3% on 2/15/2017; 33 1/3% on 2/15/2018 and 33 1/3% on 2/15/2019

(6)	Grant Date	Vesting Schedule (based on outstanding RSU awards)
	11/20/2013	33 1/3% on 2/15/2014; 33 1/3% on 2/15/2015 and 33 1/3% on 2/15/2016

(7)	Grant Date	Vesting Schedule (based on outstanding PSU awards)
	11/14/2014	100% on 11/14/2017, subject to actual performance and continued service or retirement. The aggregate market value in the table is based on target performance since actual performance in fiscal year 2015 exceeded threshold performance.

(8)	Grant Date	Vesting Schedule (based on outstanding PSU awards)
	11/30/2015	100% on 11/30/2018, subject to actual performance and continued service or retirement. The aggregate market value in the table is based on target performance since actual performance in fiscal year 2016 exceeded threshold performance.

(9)	Grant Date	Vesting Schedule (based on outstanding PSU awards)
	2/12/2016	100% on 11/30/2018, subject to actual performance and continued service or retirement. The aggregate market value in the table is based on target performance since actual performance in fiscal year 2016 exceeded threshold performance.

(11)	Basedon the closing price Varian common stock as of September 30, 2016 ($99.53).

Varex Executive Compensation Arrangements

Generally

The Varex Compensation Committee has not yet been established and therefore has not established a specific set of objectives or principles for Varex’s compensation programs. Until the effective date of the separation and distribution, the Varian Compensation Committee and senior management will continue to make certain compensation decisions and take actions regarding the compensation of Varex’s NEOs. Following the separation and distribution, such decisions will be made by the Varex Compensation Committee and senior management.

It is expected that Varex’s initial executive compensation programs and practices will be similar to those in place at Varian immediately prior to the separation and distribution. However, after the separation and distribution, the Varex Compensation Committee and senior management will be able to evaluate its compensation and benefit programs and may make adjustments as necessary to meet prevailing business needs.

401(k) Plan

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Varian 401(k) plan account into Varex’s 401(k) plan or, alternatively, leave his or her account in Varian’s 401(k) plan. Varex’s named executive officers will be eligible to participate in Varex’s 401(k) plan on the same basis as its other employees.

Varex’s 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, pre-tax contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan. Each participant may defer eligible compensation subject to the statutory limit and participants that are 50 years or older can also make additional “catch-up” contributions above the statutory limit. Employees’ pre-tax and Roth contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in both their contributions and Varex’s matching contributions. For 2017, Varex intends to match 100% of each participant’s contributions up to 6% of such participant’s related eligible compensation.

Change in Control Agreements

Each of Varex’s NEOs is expected to enter into a Change in Control Agreement (the “CIC Agreement”). The following is a summary of the expected terms of each NEO’s CIC Agreement, which is qualified in its entirety by reference to the full text of the form of CIC Agreement that is filed as an exhibit to the registration statement of which this information statement forms a part.

Under the CIC Agreements, if within 18 months after a change in control of Varex, Varex terminates the NEO’s employment other than by reason of death, disability retirement or “cause”, or if the NEO voluntarily terminates for “good reason”, then the NEO will be entitled to: (i) a lump sum severance payment, (ii) a lump sum payment equal to a pro-rata portion of the NEO’s target bonus under Varex’s annual incentive plan, (iii) full vesting of all outstanding stock options and stock awards, and (iv) up to 18 months of Company paid COBRA premiums, provided, however, that if the payment of COBRA premiums violates applicable law, the NEO will instead receive a taxable lump sum payment equal to 18 months of COBRA premiums.

The amount of the lump sum severance payment in the case of each of Varex’s NEOs will be equal to a multiple of the sum of: (A) the NEO’s base salary and (B) the greater of (x) the NEO’s most recently established target annual bonus under Varex’s annual incentive plan and (y) the average annual bonus that was paid to the NEO in the three (3) fiscal years ending prior to the date of termination under the annual incentive plan or the Varian Management Incentive Plan. The expected severance multiple for Mr. Sanyal is 2.5 while the expected severance multiple for Messrs. Verhoef and Colbeth is 2.0 If the NEO has not completed at least three (3) full fiscal years of service with Varex prior to the NEO’s termination date, then the amount determined in (y) above, will be based on the average annual bonus for the number of full fiscal years that the NEO has completed.

As a condition to receiving such severance benefits, an NEO must execute a release of all of his rights and claims relating to his employment and comply with certain post-termination restrictions, including, among other things, continuing to comply with the terms his proprietary information and non-disclosure agreement, and for a period of 12 months, complying with certain non-solicitation and non-competition provisions that are set forth in the NEO’s CIC Agreement.

In addition, if within 18 months after a change in control, the NEO incurs a separation from service by reason of the NEO’s death or disability, the NEO or, if applicable, the NEO’s estate will be entitled to death or long-term disability benefits from Varex no less favorable than the most favorable benefits to which the NEO would have been entitled had the death or disability occurred at any time during the period commencing one year prior to the change in control under the plans of Varex or Varian.

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The CIC Agreements with Varex’s NEOs do not provide for tax gross-ups of payments subject to the “golden parachute” excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”). Each CIC Agreement instead contains a “better after-tax” provision, which provides that if any of the payments to the NEO constitutes a parachute payment under Section 280G of the Code, the payments will either be (i) reduced or (ii) provided in full to the NEO, whichever results in the NEO receiving the greater amount after taking into consideration the payment of all taxes, including the excise tax under Section 4999 of the Code.

Equity Incentive Plan

In connection with the separation and distribution, Varex plans to adopt an omnibus-style equity incentive plan (“Omnibus Plan”) under which various equity awards covering shares of Varex common stock, may be granted to the employees and consultants of Varex and its affiliates, and Varex’s nonemployee directors. The following is a summary of the expected terms of the Omnibus Plan, which is qualified in its entirety by reference to the full text of the Omnibus Plan that is filed as an exhibit to the registration statement of which this information statement forms a part. Any outstanding Varian equity awards that convert into Varex equity awards upon the separation and distribution will be issued pursuant to the Omnibus Plan and will reduce the number of shares authorized for issuance under the Omnibus Plan.

Purpose

The Omnibus Plan is intended to increase incentives and to encourage share ownership on the part of (1) employees of Varex and its affiliates, (2) consultants who provide significant services to Varex and its affiliates, and (3) nonemployee directors of Varex. The Omnibus Plan is also intended to further the growth and profitability of Varex. Additionally, the Omnibus Plan is intended to permit the grant of stock awards that qualify as performance-based compensation under Section 162(m) of the Code, subject to compliance with the requirements of Section 162(m) of the Code.

Types of Stock Awards

The Omnibus Plan provides for the granting of stock options, SARs, restricted stock, restricted stock units (“RSUs”), performance units, performance shares and deferred stock units (“DSUs”) (collectively, “stock awards”) to eligible Omnibus Plan participants. The Omnibus Plan also provides for the grant of non-qualified stock options and DSUs to Varex’s nonemployee directors.

Share Reserve

The maximum number of shares that may be issued pursuant to stock awards granted under the Omnibus Plan has yet to be determined. Shares issued under the Omnibus Plan may be authorized but unissued shares, treasury shares or reacquired shares, including shares repurchased by Varex on the open market. If a stock award terminates, expires, or lapses for any reason, any shares subject to such award (plus the number of additional shares, if any, that counted against the share pool using the share counting rule in effect at the time the stock award was granted) again will be available to be the subject of an award. In addition, shares issued pursuant to stock awards assumed or issued in substitution of other awards in connection with the acquisition by Varex of an unrelated entity will not reduce the maximum number of shares issuable under the Omnibus Plan. If any shares subject to a stock award are not delivered to a participant because the stock award is exercised through a reduction of shares subject to the stock award ( i.e ., “net exercised”), the number of shares that are not delivered to the participant will not remain available for issuance under the Omnibus Plan. Also, any shares reacquired by Varex to satisfy tax withholding obligations or as consideration for the exercise of an option will not again become available for issuance under the Omnibus Plan. In addition, the number of shares with respect to which a SAR is exercised will not again become available for issuance under the Omnibus Plan.

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In addition, the Omnibus Plan does not contain an evergreen provision, pursuant to which the share pool would be automatically increased each year based on a specified formula.

Administration of the Omnibus Plan

The Varex Compensation Committee will administer the Omnibus Plan. The members of the Varex Compensation Committee must qualify as “nonemployee directors” under Rule 16b-3 under the Exchange Act, as “independent directors” under NASDAQ Listing Rule 5605(a)(2) and as “outside directors” under Section 162(m) of the Code.

Subject to the terms of the Omnibus Plan, the Varex Compensation Committee has the sole discretion to determine the employees and consultants who will be granted stock awards, the size and types of these stock awards, and the terms and conditions of these stock awards. Subject to applicable law and certain other limitations, the Varex Compensation Committee may delegate all or any part of its authority and powers under the Omnibus Plan to a committee of one or more directors and/or to officers appointed by the Varex Compensation Committee. Varex’s board of directors will determine and administer options and DSUs granted to nonemployee directors.

No Repricing, Underpriced Options or Reload Options

The Omnibus Plan expressly prohibits the re-pricing of stock options and SARs (except for proportional adjustments associated with stock dividends, mergers, consolidations, split-ups, share combinations or other change in Varex’s corporate structure affecting shares of common stock), without stockholder consent. Furthermore, the Omnibus Plan does not permit the granting of discounted stock options or SARs, or the “re-loading” of stock options, which is the automatic grant of a new stock option upon exercise of an existing stock option.

Eligibility to Receive Stock Award Grants

Employees and consultants of Varex and its affiliates and Varex’s nonemployee directors are all eligible to participate in the Omnibus Plan.

Stock Options

The Varex Compensation Committee may grant non-qualified stock options to purchase shares of Varex’s common stock, incentive stock options (which are entitled to favorable tax treatment), or a combination thereof. Incentive stock options may only be granted to employees of Varex or its subsidiaries. The Omnibus Plan will provide for a maximum limit on how many shares may be granted to one participant during each fiscal year with respect to options.

The Varex Compensation Committee sets the exercise price for each option, which cannot be less than 100% of the fair market value ( i.e., the closing price) of the underlying shares of Varex’s common stock on the date of grant. In addition, the exercise price of an incentive stock option must be at least 110% of fair market value on the date of grant if the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of Varex or any of its subsidiaries. Nevertheless, substitute options may be granted at less than fair market value to employees or consultants who receive options in connection with a corporate reorganization. Also, the aggregate fair market value of the shares (determined on the date of grant) covered by incentive stock options that first become exercisable by any participant during any calendar year may not exceed $100,000.

The exercise price of each option must be paid in full at the time of exercise. The Varex Compensation Committee may permit payment through the tender of shares of Varex’s common stock that are already owned

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by the participant, or by any other means that the Varex Compensation Committee determines to be consistent with the Omnibus Plan’s purpose. Any taxes required to be withheld must be paid by the participant at the time of exercise.

Options become exercisable at the times and on the terms established by the Varex Compensation Committee. Options expire at the times established by the Varex Compensation Committee, which generally will not be more than seven years after the date of grant. If the participant terminates services prior to an option’s normal expiration date, the period of exercisability may be shorter depending on the reason for the termination. The Varex Compensation Committee may extend the maximum term of any option granted under the Omnibus Plan, subject to the seven-year or earlier limits set forth in the Omnibus Plan.

Stock Appreciation Rights

The Varex Compensation Committee will determine the terms and conditions of each SAR. SARs may be granted in conjunction with an option, or may be granted on an independent basis. The Omnibus Plan will provide for a maximum limit on how many shares may be granted to one participant during each fiscal year with respect to SARs. Upon exercise of a SAR, the participant will receive payment from Varex in an amount determined by multiplying: (i) the difference between the fair market value of a share on the date of exercise over the grant price (fair market value of a share on the date of grant), by (ii) the number of shares with respect to which the SAR is exercised. SARs may be paid in cash or shares of Varex’s common stock, as determined by the Varex Compensation Committee. SARs are exercisable at the times and on the terms established by the Varex Compensation Committee.

Restricted Stock and RSUs

Restricted stock awards are grants of shares of Varex’s common stock that are subject to various restrictions, including restrictions on transferability and forfeiture provisions and such shares will vest and the restrictions on such shares will lapse in accordance with terms and conditions established by the Varex Compensation Committee. Each RSU is a bookkeeping entry representing an amount equal to the fair market value of one share of Varex’s common stock. The Omnibus Plan will provide for a maximum limit on how many shares may be granted to one participant during each fiscal year with respect to restricted stock and RSUs.

In determining whether restricted stock or RSUs should be granted, and/or the vesting schedule for such a stock award, the Varex Compensation Committee may impose whatever conditions to vesting as it determines to be appropriate. For example, the Varex Compensation Committee may determine to grant restricted stock or RSUs only if performance goals established by the Varex Compensation Committee are satisfied. Any performance goals may be applied on a Company-wide or an individual business unit basis, as determined by the Varex Compensation Committee. Please refer to the discussion below under “—Performance Goals” for more information.

Performance Units and Performance shares

Performance units and performance shares are stock awards that will result in a payment to a participant only if performance goals that the Varex Compensation Committee establishes are satisfied. The initial value of each Performance Unit will not exceed and the initial value of each performance share will equal the fair market value (on the date of grant) of a share of Varex’s common stock. The Varex Compensation Committee will determine the applicable performance goals, which may be applied on a Company-wide or an individual business unit basis, as deemed appropriate in light of the participant’s specific responsibilities. Please refer to the discussion below under “Performance Goals” for more information.

In addition to the performance requirements discussed above, performance units and performance shares are subject to additional limits set forth in the Omnibus Plan. The Omnibus Plan will provide for a maximum limit

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on how many shares may be granted to one participant during each fiscal year with respect to performance units or performance shares.

Performance Goals

The Varex Compensation Committee in its discretion may make performance goals applicable to a participant with respect to a stock award. Performance goals may be measured over any fiscal period not to exceed three consecutive fiscal years, as determined by the Varex Compensation Committee. Currently, at the Varex Compensation Committee’s discretion, one or more of the following performance goals may apply: EBIT, earnings before interest, taxes, depreciation and amortization (“EBITDA”), earnings per share, net income, operating cash flow, return on assets, return on equity, return on sales, revenue, stockholder return, orders or net orders, expenses, cost of goods sold, profit/loss or profit margin, working capital, operating income, cash flow, market share, return on equity, economic value add, stock price of Varex’s stock, price/earnings ratio, debt or debt-to-equity ratio, accounts receivable, cash, write-offs, assets, liquidity, operations, intellectual property ( e.g. , patents), product development, regulatory activities, manufacturing, production or inventory, mergers, acquisitions or divestitures, financings, days sales outstanding, backlog, deferred revenue and employee headcount.

Nonemployee Director Compensation Limit

The Omnibus Plan will provide for a limit on the total value of equity and cash compensation that may be paid to each of Varex’s non-employee directors during each fiscal year under the Omnibus Plan or otherwise.

Nonemployee Director Options

Under the Omnibus Plan, Varex’s board of directors will determine the number of shares subject to stock options to be issued to each nonemployee director. Nonemployee director options may only be non-qualified options. The exercise price of each nonemployee director option will be 100% of the fair market value ( i.e. , the closing price) of the underlying shares of Varex’s common stock on the date of grant. Nevertheless, substitute options may be granted at less than fair market value to nonemployee directors who receive options in connection with a corporate reorganization. Each option is immediately exercisable on the date of grant. All options granted to nonemployee directors generally will have a term of seven years from the date of grant. If a director terminates service on Varex’s board of directors (including a voluntary resignation) prior to an option’s normal expiration date, the period of exercisability of the option may be shorter, depending upon the reason for the termination.

In addition, the Omnibus Plan allows Varex’s board of directors to adopt procedures to permit nonemployee directors to forego all or part of their cash compensation in exchange for options or shares of Varex’s common stock. Under the current procedures, nonemployee directors may elect to receive such compensation as full-value shares of Varex’s common stock, at a value equal to the fair market value of Varex’s common stock on the date that the foregone cash compensation otherwise would have been paid.

Nonemployee Director DSUs

Under the Omnibus Plan, Varex’s board of directors will determine the number of DSUs to be granted to each nonemployee director. DSUs will vest over a period of not less than one year from the date of grant, unless otherwise provided in the grant agreement as determined by Varex’s board of directors, and vesting may be pro rata during the vesting period. Unless otherwise provided in the grant agreement as determined by Varex’s board of directors, payment of DSUs will be made in shares of Varex’s common stock, with one share of Varex’s common stock being issued for each DSU. Payment may be made in a lump sum, in installments and may be made on a deferred basis.

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Nontransferability of Stock Awards

In general, stock awards granted under the Omnibus Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution, and any stock awards may be exercised only by the participant during the participant’s lifetime. Notwithstanding the above, the Varex Compensation Committee (or Varex’s board of directors, in the case of stock awards granted to nonemployee directors) may, in its discretion, permit stock awards to be transferred to an individual or entity other than Varex subject to any restrictions as the Varex Compensation Committee or Varex’s board of directors may impose.

Dividend Equivalents

Recipients of stock awards may, if the Varex Compensation Committee (or Varex’s board of directors, in the case of stock awards granted to nonemployee directors) so determines, be entitled to receive cash or stock dividends, or cash payments in amounts equivalent to cash or stock dividends declared with respect to shares of Varex’s common stock, and the Varex Compensation Committee or Varex’s board of directors may provide that these amounts will be deemed to have been reinvested in additional shares of common stock or otherwise reinvested.

Recoupment Policy

All stock awards granted under the Omnibus Plan will be subject to recoupment in accordance with any clawback policy that Varex is required to adopt pursuant to the listing standards of any national securities exchange or association on which Varex’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In the event that Varex has not adopted such required policy and notwithstanding anything to the contrary set forth in the Omnibus Plan or any stock award agreement, in the event of a restatement of incorrect financial results, Varex’s board of directors will review the conduct of executive officers in relation to the restatement. If Varex’s board of directors determines that an executive officer has engaged in misconduct or other violations of Varex’s code of ethics in connection with the restatement, Varex’s board of directors would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the Omnibus Plan that is greater than would have been paid or awarded if calculated based on the restated financial results, to the extent not prohibited by governing law. Such action by Varex’s board of directors would be in addition to any other actions Varex’s board of directors or Varex may take under Varex’s policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities.

Corporate Transaction

Except as set forth in a stock award agreement, upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of shares of Varex’s common stock or other securities of Varex; (c) a sale of all or substantially all the business, stock or assets of Varex; (d) a dissolution of Varex; or (e) any event in which Varex does not survive (or does not survive as a public company in respect of its shares of common stock), then any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all stock awards outstanding under the 2005 Stock Plans or may substitute similar stock awards for stock awards outstanding under the 2005 Stock Plans (including but not limited to, stock awards to acquire the same consideration paid to the stockholders of Varex pursuant to the transaction), and any reacquisition or repurchase rights held by Varex in respect of shares issued pursuant to stock awards may be assigned by Varex to the surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) in connection with such transaction. Except as set forth in a stock award agreement, if the Varex Compensation Committee does not provide for the assumption, continuation or substitution of stock awards, each stock award will fully vest and

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terminate upon the related event, provided that holders of options or SARs be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise their outstanding vested options and SARs before the termination of such awards; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder.

Notwithstanding the foregoing, except as set forth in a stock award agreement, in the event that a stock award would otherwise terminate upon the effective time of any transaction described above, the Varex Compensation Committee may provide for a payment in such form as may be determined by the Varex Compensation Committee, equal in value to the excess, if any, of (A) the value of the property the participant would have received upon the exercise or vesting of the stock award immediately prior to the effective time of the transaction, over (B) any exercise price payable by such holder in connection with such exercise, and provided further, that at the discretion of the Varex Compensation Committee, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of shares in connection with the transaction; provided, however, that any payout in connection with a terminated stock award will comply with Section 409A of the Code to the extent necessary to avoid taxation thereunder.

Amendment, Termination and Duration of the Omnibus Plan

Varex’s board of directors generally may amend or terminate the Omnibus Plan at any time and for any reason; provided, however, that any amendment will be subject to the approval of the stockholders to the extent required by applicable law or regulation and the amendment or termination of the Omnibus Plan will not alter or impair any rights or obligations under any stock award without the participant’s consent. Unless otherwise amended or terminated by Varex’s board of directors, the Omnibus Plan will remain in effect for ten years from the date Varex’s board of directors approve the Omnibus Plan.

Employee Stock Purchase Plan

In connection with the separation and distribution, Varex plans to adopt an employee stock purchase plan (“ESPP”) under which options to purchase Varex common stock that are intended to qualify as options issued under an “employee stock purchase plan” as that term is defined in Section 423(b) of the Code may be granted to employees of Varex and its affiliates. The following is a summary of the expected terms of the ESPP, which is qualified in its entirety by reference to the full text of the ESPP that is filed as an exhibit to the registration statement of which this information statement forms a part.

Purpose

The purpose of the ESPP is to provide a means by which employees of Varex and those subsidiaries of Varex, which with the consent of Varex’s board of directors have adopted the ESPP, may be given an opportunity to purchase Varex’s common stock through payroll deductions.

Administration of the ESPP

The Varex Compensation Committee is expected to administer the ESPP. The Varex Compensation Committee will have the full authority to interpret and determine the provisions of the ESPP to determine eligibility and to otherwise oversee its operations.

Authorized Shares

The maximum number of shares that may be issued pursuant to options granted under the ESPP has yet to be determined. In the event of any reorganization, recapitalization, stock split, reverse stock split, stock dividend, combination of shares, merger, consolidation, offering of rights or other similar change in Varex’s capital structure, Varex’s board of directors will make appropriate adjustments, if any, in the number, kind and purchase

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price of the shares available for purchase under the ESPP, the maximum number of shares subject to the ESPP and the purchase limit per participant described below.

Eligibility

Most employees of Varex and its participating subsidiaries are eligible to participate in the ESPP. However, an employee is not eligible if he or she owns stock and/or holds outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of Varex or of any subsidiary of Varex. Also, an employee is not eligible if he or she normally is not scheduled to work at least five months every calendar year or at least 20 hours per week. Directors who are not employees are not eligible to participate in the ESPP. To the extent permissible under Section 423 of the Code, the Varex Compensation Committee, in its sole discretion, may also exclude “highly compensated employees” (within the meaning of Section 414(q) of the Code) or other categories of employees from the ESPP.

Offering Periods

The ESPP is implemented by offerings of options to all eligible employees, pursuant to which eligible employees who enroll in an offering will be granted an option to purchase shares of Varex common stock. To the extent permissible under Section 423 of the Code, the Varex Compensation Committee will have the authority to determine the terms of each period for which an option will be in effect (the “offering period”), including the time or times when, and the number of shares for which options will be granted. The provisions of separate offering periods need not be identical. Each offering period will have one or more purchase periods that end on a designated purchase date. The maximum length for an offering period, however, will be no longer than twenty-seven (27) months.

Participation, Purchase Periods and Purchase of Shares

Throughout each purchase period, eligible employees have the right to make contributions to the ESPP through payroll deductions generally ranging from 1% to 10% of their regular wages. At the end of the purchase period, a participant’s accumulated payroll deductions are used to purchase Varex’s common stock at 85% of the lower of its then fair market value or the fair market value at the start of the purchase period. The employee immediately becomes the vested owner of the shares purchased, but acquires the rights of a stockholder only upon issuance of the shares. No employee will have a right to purchase more than $25,000 of Varex’s common stock under the ESPP in any calendar year (based on the fair market value at the time the right is granted). In addition, the ESPP will provide for a maximum limit on how many shares of Varex’s common stock will be purchasable by any participant in any purchase period. A participant may withdraw from the ESPP at such times as the Varex Compensation Committee permits and automatically ceases to be a participant when no longer an eligible employee.

Corporate Transaction

Upon the occurrence of (a) a merger, combination, consolidation, reorganization or other corporate transaction; (b) an exchange of shares of Common Stock or other securities of Varex; (c) a sale of all or substantially all the business, stock or assets of Varex; (d) a dissolution of Varex; or (e) any event in which Varex does not survive (or does not survive as a public company in respect of its shares of Common Stock), then (i) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding options or may substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the transaction) for outstanding options, or (ii) if any surviving or acquiring corporation (or the surviving or acquiring corporation’s parent company) does not assume or continue such options or does not substitute similar rights for such options, then the participants’ accumulated contributions will be used to purchase shares of Varex common stock within ten business days prior to the transaction through the exercise of outstanding options on such actual date as determined by the Varex

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Compensation Committee in its discretion, and all such outstanding options will terminate immediately after such purchase.

Amendment and Termination of ESPP

Unless otherwise amended or terminated by Varex’s board of directors, the ESPP will remain in effect for ten years from the date Varex’s board of directors approve the ESPP. If the ESPP is terminated, Varex’s board of directors, in its discretion, may elect to terminate all outstanding options either immediately or upon completion of the purchase of shares on the next purchase date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates).

Management Incentive Plan

In connection with the separation and distribution, Varex plans to adopt a management incentive plan (“MIP”) under which cash bonuses may be awarded to eligible Varex employees. The following is a summary of the expected terms of the MIP, which is qualified in its entirety by reference to the full text of the MIP that is filed as an exhibit to the registration statement of which this information statement forms a part.

Purpose

The MIP is intended to increase stockholder value and the success of Varex by motivating key executives of Varex and its affiliates (1) to perform to the best of their abilities, and (2) to achieve Varex’s objectives. The MIP’s goals are to be achieved by providing such executives with incentive awards based on the achievement of goals relating to the performance of Varex and its business units. The MIP is intended to permit the grant of awards that qualify as “performance-based compensation” under Section 162(m) of the Code, subject to compliance with the requirements of Section 162(m) of the Code.

Administration of the Management Incentive Plan

The Varex Compensation Committee will administer the MIP. The members of the Varex Compensation Committee must qualify as “outside directors” under Section 162(m) of the Code. Subject to the terms of the MIP, the Varex Compensation Committee has the sole discretion to determine the key employees who will be granted awards, and the amounts, terms and conditions of each award. the Varex Compensation Committee may delegate its authority to grant and administer awards to one or more officers or directors appointed by the Varex Compensation Committee, but only with respect to awards that are not intended to qualify as performance-based compensation under Section 162(m) of the Code.

Eligibility to Receive Awards

The Varex Compensation Committee in its discretion will determine eligibility for the MIP. In selecting participants for the MIP, the Varex Compensation Committee will choose key employees of Varex and its affiliates who are likely to have a significant impact on Varex’s performance.

Awards and Performance Goals

Under the MIP, the Varex Compensation Committee will establish (1) the performance goals that must be achieved in order for the participant to actually be paid an award and (2) a formula or payout matrix for calculating a participant’s award, depending upon how actual performance compares to the pre-established performance goals. A participant’s award will increase or decrease as actual performance increases or decreases.

The Varex Compensation Committee will also determine the periods for measuring actual performance—the performance period—which may last as long as three fiscal years.

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The Varex Compensation Committee may set performance periods and performance goals that differ from participant to participant. For example, the Varex Compensation Committee may choose performance goals based on either company-wide or business unit results, as deemed appropriate in light of the participant’s specific responsibilities. For purposes of qualifying awards as performance-based compensation under Section 162(m) of the Code, the Varex Compensation Committee will specify performance goals from the following list: EBIT, EBITDA, earnings per share, net income, operating cash flow, return on assets, return on equity, return on sales, revenue, stockholder return, orders or net orders, expenses, cost of goods sold, profit/loss or profit margin, working capital, operating income, cash flow, market share, return on equity, economic value add, stock price of Varex’s stock, price/earnings ratio, debt or debt-to-equity ratio, accounts receivable, cash, write-off, assets, liquidity, operations, intellectual property ( e.g ., patents), product development, regulatory activities, manufacturing, production or inventory, mergers, acquisitions or divestitures, financings, days sales outstanding, backlog, deferred revenue, and employee headcount.

For any performance period, no participant may receive an award of more than $3,000,000. Also, the total of all awards for any performance period cannot exceed 8% of Varex’s EBIT before incentive compensation for Varex’s most recently completed fiscal year. Awards that exceed this overall limit will be pro-rated so that the total does not exceed the limit.

Determination of Actual Awards

After the end of each performance period, a determination is made as to the extent to which the performance goals applicable to each participant were achieved or exceeded. The actual award (if any) for each participant is determined by applying the formula or payout matrix to the level of actual performance that was achieved. However, the Varex Compensation Committee retains discretion to eliminate or reduce the actual award payable to any participant below that which otherwise would be payable under the applicable formula. Awards under the MIP generally are payable in cash or shares of Varex’s common stock no later than the 15th day of the third month following the end of the performance period during which the award was earned.

Recoupment Policy

All stock awards granted under the MIP will be subject to recoupment in accordance with any clawback policy that Varex is required to adopt pursuant to the listing standards of any national securities exchange or association on which Varex’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In the event that Varex has not adopted such required policy and notwithstanding anything to the contrary set forth in the MIP or otherwise, in the event of a restatement of incorrect financial results, Varex’s board of directors will review the conduct of executive officers in relation to the restatement. If Varex’s board of directors determines that an executive officer has engaged in misconduct or other violations of Varex’s code of ethics in connection with the restatement, Varex’s board of directors would, in its discretion, take appropriate action to remedy the misconduct, including, without limitation, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive under the MIP that is greater than would have been paid or awarded if calculated based on the restated financial results, to the extent not prohibited by governing law. Such action by Varex’s board of directors would be in addition to any other actions Varex’s board of directors or Varex may take under Varex’s policies, as modified from time to time, or any actions imposed by law enforcement, regulators or other authorities.

Amendment and Termination of MIP

Varex’s board of directors, in its sole discretion, may amend or terminate the MIP, or any part of the MIP, at any time and for any reason. The amendment, suspension or termination of the MIP will not, without the consent of the participant, alter or impair any rights or obligations under any target award granted to such participant.

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401(k) Plan

In connection with the separation and distribution, Varex will adopt a 401(k) plan for its employees. Upon completion of the separation and distribution, Varex’s 401(k) plan will become effective, and each participant in Varian’s 401(k) plan who becomes or remains an employee of Varex will be permitted to rollover his or her Varian 401(k) plan account into Varex’s 401(k) plan or, alternatively, leave his or her account in Varian’s 401(k) plan. Varex’s named executive officers will be eligible to participate in Varex’s 401(k) plan on the same basis as its other employees.

Non-Qualified Deferred Compensation

Varex Imaging Corporation 2016 Deferred Compensation Plan

In connection with the separation and distribution, Varex will adopt the Varex Imaging Corporation 2016 Deferred Compensation Plan (the “Varex DCP”). The Varex DCP is designed to allow a select group of management and highly compensated employees, including its executive officers, to defer receipt of a specified percentage of their base salaries (up to 50%) and its nonemployee directors to defer receipt of their director fees (up to 100%). Further, Varex may make discretionary contributions on behalf of participants in the Varex DCP. Deferred amounts will be unfunded and unsecured obligations and will be subject to the claims of Varex’s creditors. The payment of Varex DCP benefits will be funded by its general assets, which may be held in a rabbi trust for this purpose.

Amounts deferred by a participant and any employer contributions will be credited to an unfunded bookkeeping account maintained on behalf of each participant. These amounts will be periodically adjusted for earnings and/or losses at a rate that is equal to the various hypothetical investment funds (also referred to as measurement funds) selected by the plan administrator and elected by the participant. Participants may reallocate previously invested money among each of the available measurement funds on a daily basis.

Under the Varex DCP, a participant will be permitted to 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 up to 10 years following termination of employment. Deferrals also may be paid out prior to termination of employment in the event of a financial hardship or if the participant makes a short-term payout election.

The Varex DCP will become effective beginning with deferral elections made by eligible participants during the open enrollment period commencing November 1, 2016. In addition, upon completion of the separation and distribution, all deferrals made under the Varian DCP by those employees and nonemployee directors of Varian that become employees or nonemployee directors of Varex immediately after the separation and distribution will be assumed by Varex under the Varex DCP. Deferrals under the Varian DCP made by persons who are not transferring to Varex will remain an obligation of the Varian Plan.

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Varex Imaging Corporation Frozen Deferred Compensation Plan

Effective upon the separation and distribution, Varex will adopt the Varex Imaging Corporation Frozen Deferred Compensation Plan (the “Varex Frozen DCP”). Upon completion of the separation and distribution, all deferrals made by continuing employees under the Varian Medical Systems, Inc. Frozen Deferred Compensation Plan (the “Varian Frozen DCP”) will be assumed by Varex under the Varex Frozen DCP. Deferrals under the Varian Frozen DCP made by persons who are not continuing employees will not be assumed under the Varex Frozen DCP and will remain an obligation of the Varian Frozen DCP. No new deferrals will be permitted under the Varex Frozen DCP. In addition, no employer contributions will be credited on behalf of any participant in the Varex Frozen DCP, other than those assumed from the Varian Frozen DCP.

Director and Officer Indemnification Agreements

Prior to the completion of the separation and distribution, Varex will enter into an indemnification agreement with each of Varex’s directors and executive officers. These agreements, among other things, require Varex to indemnify Varex’s directors and officers for any and all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such directors or officers or on his or her behalf in connection with any action or proceeding arising out of their services as one of Varex’s directors or officers, or any of Varex’s subsidiaries or any other company or enterprise to which the person provides services at Varex’s request provided that such person follows the procedures for determining entitlement to indemnification and advancement of expenses set forth in the indemnification agreement. Varex believes that the amended and restated bylaw indemnification provisions and these indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

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DIRECTOR COMPENSATION

Treatment of Director Compensation in the Distribution

Prior to the distribution, Varex will establish a deferred compensation plan for employees and non-employee directors (the “Varex Deferred Compensation Plan”). Each Varex non-employee director who served on Varian’s board of directors immediately prior to the distribution and held a deferred compensation balance under Varian’s 2005 Deferred Compensation Plan will be credited, as of the distribution, with such deferred compensation balance under the Varex Deferred Compensation Plan and will cease participation in the Varian Deferred Compensation Plan. The Varex director’s deferred compensation balance that is transferred to the Varex Deferred Compensation Plan will be subject to substantially the same terms and conditions as such amounts were subject to under Varian’s Deferred Compensation Plan (except that references to Varian will instead refer to Varex). The equity awards held by the Varex non-employee directors who served on the Varian board of directors immediately prior to the distribution will be treated as described below under the heading “The Separation and Distribution—Treatment of Equity-Based Compensation.”

Director Compensation Following the Distribution

Varex expects to adopt a non-employee director compensation program at the time of the distribution, which will provide for compensation for service to the board of directors on the terms set forth below.

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Cash Compensation

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Annual Retainer

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The annual cash retainer for board service will be $65,000.

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Non-employee directors will be eligible for additional annual cash retainers for special roles as follows: for service as the non-employee chair of the board, $40,000; for service on the Audit Committee, $25,000 for the chair and $15,000 for other members; for service on the Compensation & Management Development Committee, $16,000 for the chair and $8,000 for other members; and for service on the Nominating & Corporate Governance Committee, $12,000 for the chair and $7,000 for other members.

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Annual cash retainers will be payable in equal quarterly installments in arrears, and will be prorated for any partial year of service.

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Meeting Fees

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There will be no fees for attending board meetings for the first ten meetings in a one-year period. For each meeting in excess of ten meetings in a year, meeting fees for attending board meetings will be $2,500.

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The committee chair and member retainers assume a certain number of meetings per year, up to which, there will be no fees for attending committee meetings. For each committee meeting in excess of the assumed number of meetings in a year, meeting fees for attending committee meetings will be $1,500. The assumed number of meetings per year is 12 meetings for the Audit Committee, six meetings for the Compensation & Management Development Committee, and four meetings for the Nominating & Corporate Governance Committee. Varex believes that this provides flexibility in compensation for committee assignments that are expected to require more or fewer meetings and preparation time.

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Equity Compensation

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Deferred Stock Unit Awards

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On or about the annual meeting of Varex’s stockholders, non-employee directors will receive an annual award of deferred stock units with a grant date fair value of $160,000, and the non-employee chair of the board will receive an additional annual award of deferred stock units with a grant date fair value of $60,000.

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The deferred stock unit awards will vest subject to the applicable director’s continued service until the next annual meeting of Varex’s stockholders, or an earlier termination of service due to death, disability, retirement of a change in control of Varex. The deferred stock units will generally be settled for shares of Varex common stock on the earlier of the applicable director’s termination of service and the third anniversary of the date of grant.

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A director who joins the board following the annual meeting of Varex’s stockholders will receive, on or about the time he or she joins the board, either a full annual deferred stock unit award, if he or she joins the board within six months of the annual meeting of Varex’s stockholders, or an award with a grant date fair value of $80,000, if he or she joins the board thereafter.

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Stock Ownership Guidelines

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Varex will adopt stock ownership guidelines under which each non-employee director is expected to own shares valued at five times the annual board service retainer fees. Shares underlying deferred stock unit awards held by the non-employee directors (whether or not vested) will be counted toward satisfaction of the guidelines.

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Ownership levels must be achieved within five years from the date upon which an individual becomes a non-employee director.

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RELATIONSHIPS WITH VARIAN FOLLOWING SEPARATION AND DISTRIBUTION

Agreements with Varian

Following the separation and distribution, Varex and Varian will operate separately, each as an independent public company. Varex will enter into a separation and distribution agreement with Varian, which is referred to in this information statement as the “separation agreement” or the “separation and distribution agreement.” In connection with the separation, Varex will enter into various other agreements to effect the separation and provide a framework for its relationship with Varian after the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property matters agreement, a trademark license agreement and one or more supply/distribution agreements. These agreements will provide for the allocation between Varex and Varian of Varian’s assets, employees, liabilities and obligations (including its employee benefits, environmental, intellectual property and tax-related assets and liabilities) attributable to periods prior to, at and after Varex’s separation from Varian and will govern certain relationships between Varex and Varian after the separation. The agreements listed above have been or will be filed as exhibits to the registration statement on Form 10 of which this information statement is a part.

The summaries of each of the agreements listed above are qualified in their entireties by reference to the full text of the applicable agreements, which are (or will be, when filed) incorporated by reference into this information statement. When used in this section, “distribution date” refers to the date on which Varian distributes Varex common stock to the holders of Varian common stock.

The Separation and Distribution Agreement

Transfer of Assets and Assumption of Liabilities

The separation agreement will identify the assets to be transferred, the liabilities to be assumed and the contracts to be assigned to each of Varex and Varian as part of the separation of Varian into two companies, and it will provide for when and how these transfers, assumptions and assignments will occur. In particular, the separation agreement will provide, among other things, that subject to the terms and conditions contained therein:

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certain assets related to the Varex business, which are referred to as “Varex Assets,” will be transferred to Varex including, among others:

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equity interests in certain Varian subsidiaries that hold assets related to the Varex business, including Claymount Investments B.V. and MeVis Medical Solutions AG;

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certain R&D, manufacturing and other facilities;

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certain contracts (or portions thereof) to the extent related to the Varex business;

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rights and assets expressly allocated to Varex pursuant to the terms of the separation agreement or certain other agreements entered into in connection with the separation; and

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other assets that are included in the Varex pro forma balance sheet;

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certain liabilities related to the Varex business or the Varex Assets, which are referred to as the “Varex Liabilities,” will be retained by or transferred to Varex; and

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all of the assets and liabilities (whether accrued, contingent or otherwise) other than the Varex Assets and the Varex Liabilities (such assets and liabilities referred to as the “Varian Assets” and the “Varian Liabilities,” respectively) will be retained by or transferred to Varian.

Except as expressly set forth in the separation agreement or any ancillary agreement, neither Varex nor Varian expects to make any representation or warranty as to the assets, business or liabilities transferred or assumed as part of the separation, as to any approvals or notifications required in connection with the transfers, as to the value of or the freedom from any security interests of any of the assets transferred, as to the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other asset of either

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Varex or Varian or as to the legal sufficiency of any assignment, document or instrument delivered to convey title to any asset or thing of value to be transferred in connection with the separation. All assets will be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of all security interests, and that any necessary approvals or notifications are not obtained or made or that any requirements of laws or judgments are not complied with.

Information in this information statement with respect to the assets and liabilities of the parties following the distribution is presented based on the allocation of such assets and liabilities pursuant to the separation agreement and the ancillary agreements, unless the context otherwise requires. The separation agreement will provide that, in the event that the transfer or assignment of certain assets and liabilities to Varex or Varian, as applicable, does not occur prior to the separation, then until such assets or liabilities are able to be transferred or assigned, Varex or Varian, as applicable, will hold such assets on behalf and for the benefit of the other party and will pay, perform and discharge such liabilities in the ordinary course of business, provided that the other party will advance or reimburse Varex or Varian, as applicable, for any commercially reasonable payments made in connection with the maintenance of such assets or the performance and discharge of such liabilities.

Financing

The separation agreement will govern certain obligations of Varex and Varian with respect to Varex’s entrance into financing arrangements prior to or concurrently with the separation and distribution, including that Varex and/or its subsidiaries will enter into financing arrangements to borrow a principal amount of at least $[●] and make a cash transfer to Varian of $200.0 million prior to the distribution. The separation agreement will provide that Varex and Varian will take all necessary actions to assure the full release and discharge of Varian (and its subsidiaries following the distribution) from all obligations pursuant to such financing arrangements as of no later than the distribution. Varex and/or its subsidiaries will be responsible for all costs and expenses incurred in connection with such financing arrangements.

Cash Transfer from Varex

The separation agreement will provide that, in connection with the transfer of assets and assumption of liabilities described above, and prior to the distribution, Varex will make a cash transfer of $200.0 million to Varian.

The Distribution

The separation agreement will also govern the rights and obligations of the parties regarding the distribution. On the distribution date, Varian will distribute to its stockholders that hold Varian common stock as of the record date for the distribution all of the issued and outstanding shares of Varex’s common stock on a pro rata basis. Varian stockholders will receive cash in lieu of any fractional shares of Varex common stock.

Cash Transfer Adjustment

Conditions to the Distribution

The separation agreement will provide that the distribution is subject to satisfaction (or waiver by Varian) of certain conditions. These conditions are described under “The Separation and Distribution—Conditions to the

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Distribution.” Varian has the sole and absolute discretion to determine (and change) the terms of, and to determine whether to proceed with, the distribution and, to the extent it determines to so proceed, to determine the record date for the distribution, the distribution date and the distribution ratio.

Termination of Arrangements and Agreements between Varian and Varex

The separation agreement will provide that all agreements, arrangements, commitments or understandings as to which there are no third parties and that are between Varex, on the one hand, and Varian, on the other hand, as of the distribution, will be terminated as of the distribution, except for the separation agreement and the ancillary transaction agreements, certain shared contracts and other arrangements specified in the separation agreement. The separation agreement will also provide that at or prior to the distribution date, all bank and brokerage accounts owned by Varex will be de-linked from the Varian accounts.

Releases

The separation agreement provides that Varex and its affiliates will release and discharge Varian and its affiliates from all liabilities assumed by Varex as part of the separation, from all acts and events occurring or failing to occur, and all conditions existing, on or before the distribution date relating to Varex’s business, and from all liabilities existing or arising in connection with the implementation of the separation, except as expressly set forth in the separation agreement. Varian and its affiliates will release and discharge Varex and its affiliates from all liabilities retained by Varian and its affiliates as part of the separation and from all liabilities existing or arising in connection with the implementation of the separation, except as expressly set forth in the separation agreement.

These releases will not extend to obligations or liabilities under any agreements between the parties that remain in effect following the separation, which agreements include, but are not limited to, the separation and distribution agreement, the transition services agreements, the tax matters agreement, the employee matters agreement, and certain other agreements, including the transfer documents executed in connection with the separation.

Indemnification

In the separation agreement, Varex will agree to indemnify, defend and hold harmless Varian, each of its affiliates and each of their respective directors, officers and employees, from and against all liabilities relating to, arising out of or resulting from:

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any Varex Liabilities;

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the failure of Varex or any other person to pay, perform or otherwise promptly discharge any Varex Liabilities, in accordance with their respective terms, whether prior to or after the effective time of the distribution;

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20% of certain shared historical liabilities described in the section entitled “Business—Environmental Matters”;

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any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding by Varian for the benefit of Varex, unless to the extent related to a Varian Liability;

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any breach by Varex of the separation agreement or any of the ancillary transaction agreements; and

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any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the registration statement of which this information statement forms a part, this information statement (as amended or supplemented), other than any such statements or omissions directly relating to information regarding Varian, provided to Varex by Varian, for inclusion therein.

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Varian will agree to indemnify, defend and hold harmless Varex, each of its affiliates and each of its respective directors, officers and employees from and against all liabilities relating to, arising out of or resulting from:

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the Varian Liabilities;

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the failure of Varian or any of its subsidiaries or any other person, other than Varex, to pay, perform or otherwise promptly discharge any of the Varian Liabilities, in accordance with their respective terms, whether prior to or after the effective time of the distribution;

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80% of certain shared historical liabilities described in the section entitled “Business—Environmental Matters”;

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any guarantee, indemnification obligation, surety bond or other credit support agreement, arrangement, commitment or understanding by Varex for the benefit of Varian, unless to the extent related to a Varex Liability;

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any breach by Varian or any of its subsidiaries, other than Varex of the separation agreement or any of the ancillary transaction agreements; and

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any untrue statement or alleged untrue statement or omission or alleged omission of a material fact directly relating to information regarding Varian, provided to Varex by Varian, for inclusion in the registration statement of which this information statement forms a part, or in this information statement (as amended or supplemented).

The separation and distribution agreement will also establish procedures with respect to claims subject to indemnification and related matters.

Indemnification with respect to taxes will be governed by the tax matters agreement.

Insurance

The separation agreement will provide for the allocation between the parties of rights and obligations under existing insurance policies with respect to occurrences prior to the distribution and sets forth procedures for the administration of insured claims and addresses certain other insurance matters.

Further Assurances

In addition to the actions specifically provided for in the separation agreement, each of Varex and Varian will agree in the separation agreement to use commercially reasonable efforts, prior to, on and after the distribution date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by the separation agreement and the ancillary agreements.

Dispute Resolution

The separation agreement contains provisions that govern, except as otherwise provided in any ancillary agreement, the resolution of disputes, controversies or claims that may arise between Varex and Varian related to the separation or distribution. These provisions contemplate that efforts will be made to resolve disputes, controversies and claims by elevation of the matter to executives of Varex and Varian. If such efforts are not successful, either Varex or Varian may submit the dispute, controversy or claim to binding arbitration, subject to the provisions of the separation agreement.

Expenses

Except as expressly set forth in the separation and distribution agreement or in any ancillary agreement, Varian will be responsible for payment of all out-of-pocket fees, costs and expenses incurred in connection with

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the separation and distribution prior to the effective time of the distribution, including costs and expenses relating to legal and tax counsel, financial advisors and accounting advisory work related to the separation and distribution. Except as expressly set forth in the separation agreement or in any ancillary agreement, or as otherwise agreed in writing by Varian and Varex, all such fees, costs and expenses incurred in connection with the separation and distribution after the effective time of the distribution will be paid by the party incurring such fee, cost or expense.

Other Matters

Other matters governed by the separation agreement include access to financial and other information, confidentiality, access to and provision of witnesses and records and treatment of outstanding guarantees. The separation agreement will also include a non-compete provision.

Termination

The separation agreement will provide that it may be terminated, and the separation and distribution may be abandoned, at any time prior to the effective time of the distribution in the sole discretion of Varian without the approval of any person, including Varex’s or Varian’s stockholders. In the event of a termination of the separation agreement, no party, nor any of its directors or officers, will have any liability of any kind to the other party or any other person. After the effective time of the distribution, the separation agreement may not be terminated except by an agreement in writing signed by both Varian and Varex.

Transition Services Agreement

Prior to the distribution, Varex and Varian will enter into a transition services agreement, pursuant to which Varian and its subsidiaries and Varex and its subsidiaries will provide to each other various services on an interim, transitional basis. The services to be provided are currently expected to include information technology, accounts payable, payroll, legal and other financial functions and administrative services. The agreed-upon charges for such services are generally intended to allow the servicing party to recover all costs and expenses of providing such services.

The transition services agreement will terminate on the expiration of the term of the last service provided under it, which will generally be up to 24 months following the distribution date. The recipient for a particular service generally can terminate that service prior to the scheduled expiration date upon a minimum of 30 days’ notice. Services under the transition services agreement are expected to last anywhere between 60 days and 24 months, depending on the service provided. Due to interdependencies between services, certain services may be terminated early only if other services are likewise terminated.

Subject to certain exceptions, the liability of each of Varian and Varex under the transition services agreement for the services it and its subsidiaries provides will generally be limited to gross negligence, willful misconduct and fraud. The transition services agreement also provides that the provider of a service shall not be liable to the recipient of such service for any indirect, exemplary, incidental, consequential, remote, speculative, punitive or similar damages.

Tax Matters Agreement

In connection with the separation, Varian and Varex will enter into a tax matters agreement that will govern the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes, entitlement to refunds, allocation of tax attributes, preparation of tax returns, certain tax elections, control of tax contests, cooperation, and certain other tax matters.

Under the tax matters agreement, Varian generally will be responsible for (and will be entitled to all related refunds of) all U.S. federal, state and foreign income taxes imposed on Varian and its subsidiaries (including

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Varex and its subsidiaries) with respect to taxable periods (or portions thereof) that end on or prior to the distribution date, except that Varex will be responsible for such taxes to the extent they (i) are imposed on Varex or any of its subsidiaries on a separate return basis or (ii) result from any breach of any representation or covenant made by Varex in the tax matters agreement or other separation-related agreements. Varex generally will be responsible for (and will be entitled to all related refunds of) all U.S. federal, state and foreign income taxes imposed on Varex and its subsidiaries with respect to taxable periods (or portions thereof) that begin after the distribution date, and all U.S. federal, state and foreign income taxes imposed on Varex and its subsidiaries with respect to taxable periods (or portions thereof) that end on or prior to the distribution date that are imposed on Varex or any of its subsidiaries on a separate return basis, except that Varian will be responsible for such taxes to the extent they result from any breach by Varian of any of its representations or covenants in the tax matters agreement or other separation-related agreements.

The tax matters agreement will provide special rules that allocate tax liabilities in the event either (i) the distribution together with certain related transactions, or (ii) any internal separation transaction that is intended to so qualify, fails to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and/or 355 of the Code (each, a “Separation Taxable Event”). Under the tax matters agreement, Varian and Varex generally will be responsible for any taxes and related amounts imposed on either of the parties as a result of a Separation Taxable Event to the extent that such Separation Taxable Event is attributable to a breach of the relevant representations or covenants made by that party in the tax matters agreement or an acquisition of such party’s equity securities or assets.

In addition, the tax matters agreement will impose certain restrictions on Varex and its subsidiaries during the two-year period following the distribution that are intended to prevent a Separation Taxable Event. Specifically, during such period, except in specific circumstances, Varex and its subsidiaries are generally prohibited from: (i) ceasing to conduct certain businesses, (ii) entering into certain transactions or series of transactions pursuant to which all or a portion of the shares of Varex common stock would be acquired or all or a portion of certain assets of Varex and its subsidiaries would be acquired, (iii) liquidating, merging or consolidating with any other person, (iv) issuing equity securities beyond certain thresholds, (v) repurchasing Varex shares other than in certain open-market transactions, or (vi) taking or failing to take any other action that would cause a Separation Taxable Event.

Under the tax matters agreement, Varian generally will have the right to control any audits or other tax proceedings with respect to any Varian consolidated federal income tax return and any combined state or foreign income tax returns for taxable periods (or portions thereof) that end on or prior to the distribution date, provided that Varex will have specified participation rights with respect to any such audit or tax proceeding with respect to a Separation Taxable Event that could result in additional taxes for which Varex is liable under the tax matters agreement.

Employee Matters Agreement

Prior to the distribution, Varex and Varian will enter into an employee matters agreement to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefits arrangements and other related matters in connection with the separation.

The employee matters agreement will provide that, unless otherwise specified, Varian will be responsible for liabilities associated with employees who will be employed by Varian following the distribution, and former Varian employees whose liabilities are not allocated to Varex (collectively, the “Varian allocated employees”), and Varex will be responsible for liabilities associated with employees who will be employed by Varex following the distribution, former Varian employees whose last employment was with the Imaging Components businesses and certain specified former employees (collectively, the “Varex allocated employees”).

Varex allocated employees will be eligible to participate in Varex benefit plans in accordance with the terms and conditions of the Varex plans as in effect from time to time. Varex has generally agreed to establish welfare

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benefit arrangements that are of the same type as those provided by Varian to Varex allocated employees immediately prior to the distribution and a 401(k) retirement plan, although the terms of particular arrangements may vary from those provided by Varian. Generally and subject to certain exceptions, Varex will credit each Varex allocated employee with his or her service with Varian prior to the distribution for all purposes under the Varex benefit plans to the same extent such service was recognized by Varian for similar purposes and so long as such crediting does not result in a duplication of benefits.

The employee matters agreement will also include provisions relating to cooperation between the two companies on matters relating to employees and employee benefits and other administrative provisions.

Retirement and Deferred Compensation Programs

Varex will establish tax-qualified defined benefit and defined contribution retirement plans as well as non-qualified deferred compensation plans for Varex allocated employees. In connection with the distribution, assets, liabilities and account balances (as applicable) of Varex, allocated employees will be transferred to Varex or Varex plans, as applicable, and Varian or Varian plans will retain assets, liabilities and account balances of Varian allocated employees.

Welfare Plans

Generally, under Varian health and welfare plans, after the distribution, Varian will retain liability for claims made by Varian allocated employees, and Varex will assume liability for claims made by Varex allocated employees, whenever such claims were incurred.

Equity Compensation Awards

The employee matters agreement will provide for the conversion, as of the distribution, of all outstanding awards granted under Varian’s equity compensation programs into adjusted awards relating to shares of Varian or Varex common stock as described in “The Separation and Distribution—Treatment of Equity-Based Compensation.”

Intellectual Property Matters Agreement

Prior to the distribution, Varex and Varian will enter into an intellectual property matters agreement pursuant to which each party, as licensor, will grant to the other party, as licensee, a non-exclusive, perpetual, royalty-free, fully paid-up, worldwide, generally non-sublicensable and generally non-assignable license, under certain intellectual property rights of licensor, solely to exploit products and services in licensee’s field. For this purpose, Varian’s field is oncology therapy and radiation therapy, and Varex’s field is medical, dental, veterinary, scientific, security and industrial applications other than oncology therapy and radiation therapy. The licenses are generally designed to permit each party, after the separation, to continue to use any intellectual property rights used in the conduct of its business prior to the separation, in its respective field.

Subject to the license grants, each party retains all rights to its intellectual property (as allocated by the separation and distribution agreement), including with respect to prosecution, maintenance, enforcement and defense. The licenses are granted on an “as-is” basis, without representations, warranties or support obligations. Each party as licensee agrees to indemnify the other party and its affiliates against any liabilities in connection with third party claims arising out of any breach, gross negligence or willful misconduct of licensee or licensee’s use of the intellectual property licensed to it under the agreement.

The agreement can be terminated as to any item of licensor’s intellectual property (a) by licensee, at any time, and (b) by licensor, for licensee’s material breach with respect to such item or in the event of licensee’s bankruptcy.

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Trademark License Agreement

Prior to the distribution, Varex and Varian will enter into a trademark license agreement pursuant to which Varian will grant to Varex a non-exclusive, worldwide, royalty-free, limited license to use certain Varian marks after the distribution date in connection with the sale of certain products and services that were sold in the Varex business prior to the distribution date, such as products engraved during manufacturing with Varian marks or registered products bearing Varian marks. The term of license is between three and eight years, depending on applicable class of products. The license is subject to early termination on a product-by-product basis where the license is no longer required and to extension on a product-by-product basis where circumstances require Varex to continue selling products bearing Varian’s marks for additional periods of time.

Subject to the license grants, Varian retains all rights to its marks, including with respect to prosecution, maintenance, enforcement and defense. The licenses are granted on an “as-is” basis, without representations, warranties or support obligations, and the parties have customary rights and obligations with respect to the quality of the licensed products and usage of the licensed marks. Each party indemnifies the other party and its affiliates against any liabilities in connection with third party claims arising out of any breach, gross negligence or willful misconduct of such party, and Varex indemnifies Varian and its affiliates against any liabilities in connection with third party claims arising out of Varex’s use of the licensed marks or exploitation of the licensed products.

The agreement can be terminated by Varex at any time and by Varian for Varex’s material breach or in the event of Varex’s bankruptcy.

Supply/Distribution Agreements

Varex and Varian expect to enter into certain supply/distribution agreements pursuant to which each of Varex and Varian will provide the other with products and services for internal manufacturing use, incorporation and bundling in OEM products and services, resale to customers and use in the provision of managed services to customers.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Before the distribution, all of the outstanding shares of Varex’s common stock will be owned beneficially and of record by Varian. Following the distribution, Varex expects to have outstanding an aggregate of approximately [●] million shares of common stock based upon approximately [●] million shares of Varian common stock outstanding on [●], 2017, excluding treasury shares and assuming no exercise of Varian options, and applying the distribution ratio.

Security Ownership of Certain Beneficial Owners

The following table reports the number of shares of Varex common stock beneficially owned, immediately following the completion of the distribution calculated as of [●], 2017, based upon the distribution of one share of Varex’s common stock for every [●] shares of Varian common stock, of each person who is known by Varex who will beneficially own more than five percent of Varex’s common stock.


Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class

Share Ownership of Executive Officers and Directors

The following table sets forth information, immediately following the completion of the distribution calculated as of [●], 2017, based upon the distribution of one share of Varex’s common stock for every [●] shares of Varian common stock, regarding (i) each expected director, director nominee and NEO of Varex and (ii) all of Varex’s expected directors and executive officers as a group. The address of each director, director nominee and executive officer shown in the table below is c/o Varex Imaging Corporation, Attention: Secretary, [●].

Name of

Beneficial Owner

Shares Beneficially
Owned

Exercisable Stock
Options

Percent of
Class

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THE SEPARATION AND DISTRIBUTION

Background

On May 23, 2016, Varian announced its intent to separate its Imaging Components business from the remainder of its businesses through a pro rata distribution of the common stock of a new entity, which has since been named Varex Imaging Corporation. Varex was incorporated in Delaware on July 18, 2016 for the purpose of holding the assets and liabilities associated with the Imaging Components business.

On [●], 2017, the Varian board of directors approved the distribution of the issued and outstanding shares of Varex common stock on the basis of one share of Varex common stock for every [●] shares of Varian common stock held as of the close of business on the record date of [●], 2017.

At [●] Eastern Time, on [●], 2017, the distribution date, each Varian stockholder will receive one share of Varex common stock for every [●] shares of Varian common stock held at the close of business on the record date for the distribution, as described below. Varian stockholders will receive cash in lieu of any fractional shares of Varex common stock that they would have received after application of this ratio. You will not be required to make any payment, surrender or exchange your shares of Varian common stock or take any other action to receive your shares of Varex’s common stock in the distribution. The distribution of Varex’s common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see this section under “—Conditions to the Distribution.”

Reasons for the Separation

The Varian board of directors determined that the separation of Varian’s Imaging Components business from its oncology systems and other businesses would be in the best interests of Varian and its stockholders and approved the separation. A wide variety of factors were considered by the Varian board of directors in evaluating the separation. Among other things, the Varian board of directors considered the following potential benefits of the separation:

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Enhanced strategic and management focus —The separation will allow Varex and Varian to more effectively pursue their distinct operating priorities and strategies and enable the management of each company to more quickly and efficiently make decisions and concentrate efforts on the unique needs of each business and pursue distinct opportunities for long-term growth and profitability. For example, while Varex’s management will be enabled to focus exclusively on its Imaging Components business, the management of Varian will be able to grow its business of manufacturing medical devices and software for radiotherapy, radiosurgery, proton therapy and brachytherapy. The separate management teams of Varex and Varian will also be able to focus on executing the companies’ differing strategic plans without diverting attention from the other business and will be able to do so in a more effective manner.

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More efficient allocation of capital —The separation will permit each company to concentrate its financial resources solely on its own operations without having to compete with each other for investment capital. This will provide each company with greater flexibility to invest capital in its businesses in a time and manner appropriate for its distinct strategy and business needs and facilitate a more efficient allocation of capital.

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Direct access to capital markets —The separation will create an independent equity structure that will afford Varex direct access to the capital markets and facilitate Varex’s ability to capitalize on its unique growth opportunities and effect future acquisitions utilizing its capital stock.

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Alignment of incentives with performance objectives —The separation will facilitate incentive compensation arrangements for employees more directly tied to the performance of the relevant company’s business, and may enhance employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives.

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Distinct investment identity —The separation will allow investors to separately understand and value Varian and Varex based on their distinct businesses and investment identities. Varex’s Imaging Components business differs from Varian’s other businesses in several respects, such as the market for products, manufacturing processes and R&D capabilities. The separation will enable investors to evaluate the merits, performance and future prospects of each company’s respective business and to invest in each company separately based on their distinct characteristics.

Neither Varex nor Varian can assure you that, following the separation, any of the benefits described above or otherwise will be realized to the extent anticipated or at all.

The Varian board of directors also considered a number of potentially negative factors in evaluating the separation, including:

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Loss of joint purchasing power and increased costs —As a current part of Varian, the Imaging Components business benefits from Varian’s size and purchasing power in procuring certain goods and services. After the separation, as a separate, independent entity, Varex may be unable to obtain these goods, services and technologies at prices or on terms as favorable as those Varian obtained prior to the separation. Varex may also incur costs for certain functions previously performed by Varian, such as accounting, tax, legal, human resources, information technology and other general administrative functions, that are higher than the amounts reflected in Varex’s historical financial statements, which could cause Varex’s profitability to decrease.

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Disruptions to the business as a result of the separation —The actions required to separate Varex’s and Varian’s respective businesses could disrupt Varian and/or Varex’s operations.

•

Increased significance of certain costs and liabilities —Certain costs and liabilities that were otherwise less significant to Varian as a whole will be more significant for Varex as a stand-alone company.

•

One -time costs of the separation —Varex will incur costs in connection with the transition to being a stand-alone public company that may include accounting, tax, legal and other professional services costs, recruiting and relocation costs associated with hiring or reassigning Varex personnel, costs related to establishing a new brand identity in the marketplace and costs to separate information systems.

•

Inability to realize anticipated benefits of the separation —Varex may not achieve the anticipated benefits of the separation for a variety of reasons, including, among others: (i) the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing Varex’s business; (ii) following the separation, Varex may be more susceptible to market fluctuations and other adverse events than if it were still a part of Varian; and (iii) following the separation, Varex’s business will be less diversified than Varian’s business prior to the separation.

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Limitations placed upon Varex as a result of the tax matters agreement —To preserve the tax-free treatment of the separation and the distribution to Varian for U.S. federal income tax purposes, under

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the tax matters agreement that Varex will enter into with Varian, Varex will be restricted from taking actions that may cause the separation and distribution to be taxable to Varian for U.S. federal income tax purposes. These restrictions may limit for a period of time Varex’s ability to pursue certain strategic transactions and equity issuances or engage in other transactions that might increase the value of its business.

Formation of a New Company Prior to Varex’s Distribution

Varex was formed in Delaware on July 18, 2016, for the purpose of holding Varian’s Imaging Components business. As part of the plan to separate the Imaging Components business from the remainder of its businesses, pursuant to the separation agreement, Varian plans to transfer the equity interests of certain entities that operate the Imaging Components business and the assets and liabilities of the Imaging Components business to Varex prior to the distribution.

When and How You Will Receive the Distribution

Varian expects to distribute Varex common stock on [●], 2017, the distribution date, to all holders of outstanding shares of Varian common stock as of the close of business on [●], 2017, the record date for the distribution. Computershare, which currently serves as the transfer agent and registrar for Varian’s common stock, will serve as the settlement and distribution agent in connection with the distribution and the transfer agent and registrar for Varex common stock.

If you own shares of Varian common stock as of the close of business on the record date for the distribution, Varex’s common stock that you are entitled to receive in the distribution will be issued electronically, as of the distribution date, to you in direct registration form or to your bank or brokerage firm on your behalf. If you are a registered holder, Computershare will then mail you a direct registration account statement that reflects your shares of Varex common stock. If you hold your shares through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares. Direct registration form refers to a method of recording share ownership when no physical share certificates are issued to stockholders, as is the case in this distribution. If you sell shares of Varian common stock in the “regular-way” market up to and including the distribution date, you will be selling your right to receive shares of Varex common stock in the distribution.

Commencing on or shortly after the distribution date, if you hold physical share certificates that represent your shares of Varian common stock and you are the registered holder of the shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of Varex’s common stock that have been registered in book-entry form in your name.

Most Varian stockholders hold their shares of common stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the shares in “street name” and ownership would be

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recorded on the bank or brokerage firm’s books. If you hold your shares of Varian common stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the Varex common stock that you are entitled to receive in the distribution. If you have any questions concerning the mechanics of having shares held in “street name,” please contact your bank or brokerage firm.

Transferability of Shares You Receive

Shares of Varex common stock distributed to holders in connection with the distribution will be transferable without registration under the Securities Act, except for shares received by persons who may be deemed to be Varex affiliates. Persons who may be deemed to be Varex affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with Varex, which may include certain Varex executive officers, directors or principal stockholders. Securities held by Varex affiliates will be subject to resale restrictions under the Securities Act. Varex affiliates will be permitted to sell shares of Varex common stock only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.

Number of Shares of Varex Common Stock You Will Receive

For every [●] shares of Varian common stock that you own at the close of business on [●], 2017, the record date for the distribution, you will receive one share of Varex common stock on the distribution date.

Varian will not distribute any fractional shares of Varex common stock to its stockholders. Instead, if you are a registered holder, Computershare will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate cash proceeds (net of discounts and commissions) of the sales pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the distribution. Computershare, in its sole discretion, without any influence by Varian or Varex, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Any broker-dealer used by Computershare will not be an affiliate of either Varian or Varex. Neither Varex nor Varian will be able to guarantee any minimum sale price in connection with the sale of these shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares.

If you hold physical certificates for shares of Varian common stock and are the registered holder, you will receive a check from the distribution agent in an amount equal to your pro rata share of the aggregate net cash proceeds of the sales. Varex estimates that it will take approximately two weeks from the distribution date for the distribution agent to complete the distributions of the aggregate net cash proceeds. If you hold your shares of Varian common stock through a bank or brokerage firm, your bank or brokerage firm will receive, on your behalf, your pro rata share of the aggregate net cash proceeds of the sales and will electronically credit your account for your share of such proceeds.

Treatment of Equity-Based Compensation

Varian and Varex are in the process of determining how equity based compensation will be treated as a result of the distribution, and will describe the manner in which equity based compensation will be treated in a subsequent amendment to this information statement.

Results of the Distribution

After its separation from Varian, Varex will be an independent, publicly traded company. The actual number of shares to be distributed will be determined at the close of business on [●], 2017, the record date for the distribution, and will reflect any exercise of Varian options between the date the Varian board of directors

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declares the distribution and the record date for the distribution. The distribution will not affect the number of outstanding shares of Varian common stock or any rights of Varian stockholders. Varian will not distribute any fractional shares of Varex common stock.

Varex will enter into a separation agreement and other related agreements with Varian before the distribution to effect the separation and distribution and provide a framework for Varex’s relationship with Varian after the separation. These agreements will provide for the allocation between Varian and Varex of Varian’s assets, liabilities and obligations (including its employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after Varex’s separation from Varian and will govern certain relationships between Varian and Varex after the separation. For a more detailed description of these agreements, see “Relationships with Varian Following Separation and Distribution.”

Market for Varex Common Stock

There is currently no public trading market for Varex’s common stock. Varex intends to apply to list its common stock on NASDAQ under the symbol “VREX.” Varex has not and will not set the initial price of its common stock. The initial price will be established by the public markets.

Varex cannot predict the price at which its common stock will trade after the distribution. In fact, the combined trading prices of one share of Varian common stock and [●] shares of Varex common stock after the distribution may not equal the “regular-way” trading price of a share of Varian common stock immediately prior to the distribution. The price at which Varex common stock trades may fluctuate significantly, particularly until an orderly public market develops. Trading prices for Varex common stock will be determined in the public markets and may be influenced by many factors. See the section entitled “Risk Factors—Risks Related to Varex’s Common Stock.”

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the record date for the distribution and continuing up to the distribution date, Varian expects that there will be two markets in Varian common stock: a “regular-way” market and an “ex-distribution” market. Varian common stock that trades on the “regular-way” market will trade with an entitlement to Varex common stock distributed pursuant to the distribution. Varian common stock that trade on the “ex-distribution” market will trade without an entitlement to Varex common stock distributed pursuant to the distribution. Therefore, if you sell shares of Varian common stock in the “regular-way” market up to and including the distribution date, you will be selling your right to receive Varex common stock in the distribution. If you own shares of Varian common stock at the close of business on the record date and sell those shares on the “ex-distribution” market up to and including the distribution date, you will receive the shares of Varex common stock that you are entitled to receive pursuant to your ownership as of the record date of the shares of Varian common stock.

Furthermore, beginning on or shortly before the record date for the distribution and continuing up to the distribution date, Varex expects that there will be a “when-issued” market in its common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for Varex common stock that will be distributed to holders of Varian common stock on the distribution date. If you owned shares of Varian common stock at the close of business on the record date for the distribution, you would be entitled to Varex common stock distributed pursuant to the distribution. You may trade this entitlement to shares of Varex common stock, without the shares of Varian common stock you own, on the “when-issued” market. On the first trading day following the distribution date, “when-issued” trading with respect to Varex common stock will end, and “regular-way” trading will begin.

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“Ex-distribution” and “when-issued” trades are generally settled shortly after the distribution date, but if Varian determines not to proceed with the distribution following the initiation of “ex-distribution” and “when-issued” trading markets, trades in “ex-distribution” and “when-issued” trading markets will be cancelled and, therefore, will not be settled.

Conditions to the Distribution

Varex has announced that the distribution will be effective at [●], on [●], 2017, which is the distribution date, provided that the following conditions will have been satisfied (or waived by Varian in its sole discretion):

•

the transfer of assets and liabilities to Varex in accordance with the separation agreement will have been completed;

•

an independent appraisal firm acceptable to Varian shall have delivered one or more opinions to the Varian board of directors confirming the solvency and financial viability of Varian before the consummation of the distribution and each of Varian and Varex after consummation of the distribution, and such opinions shall have been acceptable to Varian in form and substance in Varian’s sole discretion and such opinions shall not have been withdrawn or rescinded;

•

the SEC will have declared effective the registration statement of which this information statement forms a part, no stop order suspending the effectiveness of the registration statement will be in effect, no proceedings for such purpose will be pending before or threatened by the SEC and this information statement will have been mailed to Varian stockholders;

•

Varian will have received $200.0 million of proceeds from the cash transfer by Varex, and Varian will be satisfied in its sole and absolute discretion that, as of the effective time of the distribution, it shall have no further liability whatsoever under the financing arrangements described in the section entitled “Description of Material Indebtedness”;

•

the transaction agreements relating to the separation and distribution will have been duly executed and delivered by the parties;

•

the shares of Varex common stock to be distributed will have been authorized for listing on NASDAQ, subject to official notice of distribution; and

•

no event or development will have occurred or exist that, in the judgment of Varian’s board of directors, in its sole discretion, makes it inadvisable to effect the separation, the distribution or the other related transactions.

Varian cannot assure you that any or all of these conditions will be met and will have sole discretion to waive any of the conditions to the distribution. The satisfaction of the foregoing conditions does not create any obligations on

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Varian’s part to effect the separation and distribution, and Varian’s board of directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the separation and distribution, including by accelerating or delaying the timing of the consummation of all or part of the separation and distribution, at any time prior to the effective time of the distribution. To the extent that the Varian board of directors determines that any modifications by Varian materially change the material terms of the distribution, Varian will notify Varian stockholders in a manner reasonably calculated to inform them about the modification as may be required by law.

Regulatory Approval

Apart from the registration under United States federal securities laws of Varex common stock to be distributed in the distribution and related stock exchange listing requirements, Varex does not believe that any other material governmental or regulatory filings or approvals will be necessary to consummate the distribution.

No Appraisal Rights

Under the DGCL, Varian stockholders will not have appraisal rights in connection with the distribution.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of material U.S. federal income tax consequences of the distribution of Varex common stock to “U.S. holders” (as defined below) of Varian common stock. This summary is based on the Code, U.S. Treasury regulations promulgated thereunder, rulings and other administrative pronouncements issued by the IRS, and judicial decisions, all as in effect on the date of this information statement, and all of which are subject to differing interpretation and change at any time, possibly with retroactive effect. This discussion applies only to U.S. holders of shares of Varian common stock who hold such shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion is based upon the assumption that the distribution, together with certain related transactions, will be consummated in accordance with the separation agreement and the other separation-related agreements and as described in this information statement. This discussion is for general information only and is not tax advice. It does not discuss all aspects of U.S. federal income taxation that may be relevant to particular holders in light of their particular circumstances or to holders subject to special rules under the Code (including, for example, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, partners in partnerships (or entities or arrangements treated as partnership for U.S. federal income tax purposes) that hold shares of Varian common stock, pass-through entities (or investors therein), traders in securities who elect to apply a mark-to-market method of accounting, stockholders who hold their shares of Varian common stock as part of a “hedge,” “straddle,” “conversion,” “synthetic security,” “integrated investment” or “constructive sale transaction,” individuals who received shares of Varian or Varex common stock upon the exercise of employee stock options or otherwise as compensation, stockholders who are liable for the alternative minimum tax or any holders who actually or constructively own 5% or more of Varian common stock). This discussion also does not address any tax consequences arising under the unearned Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, nor does it address any tax considerations under state, local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax.

If a partnership, including for this purpose any entity or arrangement that is treated as a partnership for U.S. federal income tax purposes, holds shares of Varian common stock, the tax treatment of a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Holders of Varian common stock that are partnerships and partners in such partnerships should consult their own tax advisors about the U.S. federal income tax consequences of the distribution.

For purposes of this discussion, a “U.S. holder” is any beneficial owner of Varian common stock that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or a resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust, (A) if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions or (B) that has a valid election in place under applicable Treasury Regulations to be treated as a United States person.

THE FOLLOWING DISCUSSION IS A SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. ALL HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM, INCLUDING THE APPLICATION AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

Varian has not sought and does not intend to seek a ruling from the IRS with respect to the treatment of the distribution and certain related transactions for U.S. federal income tax purposes, and there can be no assurance that the IRS will not assert that the distribution and/or certain related transactions are taxable. It is a condition to the distribution that Varian receive an opinion of counsel satisfactory to the Varian board of directors regarding the qualification of the distribution, together with certain related transactions, as a transaction that is generally

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tax-free under Sections 355 and 368(a)(1)(D) of the Code. The opinion of counsel will be based upon and rely on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of Varian and Varex (including those relating to the past and future conduct of Varian and Varex). If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if Varian or Varex breach any of their respective covenants relating to the separation, the opinion of counsel may be invalid and the conclusions reached therein could be jeopardized. An opinion of counsel is not binding on the IRS or any court.

Notwithstanding receipt by Varian of the opinion of counsel, the IRS could assert that the distribution and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, Varian, Varex and Varian stockholders could be subject to significant U.S. federal income tax liability. See “—Material U.S. Federal Income Tax Consequences if the Distribution is Taxable” below.

Material U.S. Federal Income Tax Consequences if the Distribution, Together with Certain Related Transactions, Qualifies as a Transaction that is Generally Tax-Free Under Sections 355 and 368(a)(1)(D) of the Code

Assuming the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free, for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Code, the U.S. federal income tax consequences of the distribution generally are as follows:

•

no gain or loss will be recognized by, and no amount will be includable in the income of Varian as a result of the distribution, other than gain or income arising in connection with certain internal restructurings undertaken in connection with the distribution and with respect to any “excess loss account” or “intercompany transaction” required to be taken into account by Varian under U.S. Treasury regulations relating to consolidated federal income tax returns;

•

no gain or loss will be recognized by (and no amount will be included in the income of) U.S. holders of Varian common stock, upon the receipt of Varex common stock in the distribution, except with respect to any cash received in lieu of fractional shares of Varex common stock (as described below);

•

the aggregate tax basis of the Varian common stock and the Varex common stock received in the distribution (including any fractional share interest in Varex common stock for which cash is received) in the hands of each U.S. holder of Varian common stock immediately after the distribution will equal the aggregate basis of Varian common stock held by the U.S. holder immediately before the distribution, allocated between the shares of Varian common stock and Varex common stock (including any fractional share interest in Varex common stock for which cash is received) in proportion to the relative fair market value of each on the distribution date; and

•

the holding period of the Varex common stock received by each U.S. holder of Varian common stock in the distribution (including any fractional share interest in Varex common stock for which cash is received) will generally include the holding period at the time of the distribution for the Varian common stock with respect to which the distribution is made.

A U.S. holder who receives cash in lieu of a fractional share of Varex common stock in the distribution will be treated as having sold such fractional share for cash, and will recognize capital gain or loss in an amount equal to the difference between the amount of cash received and such U.S. holder’s adjusted tax basis in such fractional share. Such gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period for its Varian common stock exceeds one year at the time of distribution.

If a U.S. holder of Varian common stock holds different blocks of Varian common stock (generally shares of Varian common stock acquired on different dates or at different prices), such holder should consult its tax advisor regarding the determination of the basis and holding period of shares of Varex common stock received in the distribution in respect of particular blocks of Varian common stock.

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Material U.S. Federal Income Tax Consequences if the Distribution is Taxable

As discussed above, Varian has not sought and does not intend to seek a ruling from the IRS with respect to the treatment of the distribution and certain related transactions for U.S. federal income tax purposes. Notwithstanding receipt by Varian of an opinion of counsel, the IRS could assert that the distribution does not qualify for tax-free treatment for U.S. federal income tax purposes. If the IRS were successful in taking this position, the consequences described above would not apply, and Varian, Varex and Varian stockholders could be subject to significant U.S. federal income tax liability. In addition, certain events that may or may not be within the control of Varian or Varex could cause the distribution and certain related transactions to not qualify for tax-free treatment for U.S. federal income tax purposes. Depending on the circumstances, Varex may be required to indemnify Varian for taxes (and certain related losses) resulting from the distribution and certain related transactions not qualifying as tax-free for U.S. federal income tax purposes.

If the distribution fails to qualify as a tax-free transaction for U.S. federal income tax purposes, in general, Varian would recognize taxable gain as if it had sold the Varex common stock in a taxable sale for its fair market value (unless Varian and Varex jointly make an election under Section 336(e) of the Code with respect to the distribution, in which case, in general, (i) the Varian group would recognize taxable gain as if Varex had sold all of its assets in a taxable sale in exchange for an amount equal to the fair market value of the Varex common stock and the assumption of all Varex’s liabilities and (ii) Varex would obtain a related step up in the basis of its assets) and Varian stockholders who receive shares of Varex common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

Even if the distribution were to otherwise qualify as tax-free under Sections 355 and 368(a)(1)(D) of the Code, it may result in taxable gain to Varian under Section 355(e) of the Code if the distribution were later deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, shares representing a fifty percent or greater interest (by vote or value) in Varian or Varex. For this purpose, any acquisitions of Varian or Varex shares within the period beginning two years before the distribution and ending two years after the distribution are presumed to be part of such a plan, although Varian or Varex may be able to rebut that presumption.

In connection with the distribution, Varex and Varian will enter into a tax matters agreement pursuant to which Varex will be responsible for certain liabilities and obligations following the distribution. In general, under the terms of the tax matters agreement, if the distribution, together with certain related transactions, were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code (including as a result of Section 355(e) of the Code) and if such failure were the result of actions taken after the distribution by Varian or Varex, the party responsible for such failure will be responsible for all taxes imposed on Varian or Varex to the extent such taxes result from such actions. However, if such failure was the result of any acquisition of Varex shares or assets, or of any of Varex’s representations, statements or undertakings being incorrect, incomplete or breached, Varex generally will be responsible for all taxes imposed as a result of such acquisition or breach. For a discussion of the tax matters agreement, see “Relationships with Varian Following Separation and Distribution—Tax Matters Agreement.” The indemnification obligations of Varex to Varian under the tax matters agreement are not expected to be limited in amount or subject to any cap. If Varex is required to pay any taxes or indemnify Varian and its subsidiaries and their respective officers and directors under the circumstances set forth in the tax matters agreement, Varex may be subject to substantial liabilities.

Backup Withholding and Information Reporting

Payments of cash to U.S. holders of Varian common shares in lieu of fractional shares of Varex common stock may be subject to information reporting and backup withholding (currently, at a rate of 28%), unless such U.S. holder delivers a properly completed IRS Form W-9 certifying such U.S. holder’s correct taxpayer identification number and certain other information, or otherwise establishes an exemption from backup

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withholding. Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

THE FOREGOING DISCUSSION IS A SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION UNDER CURRENT LAW AND IS FOR GENERAL INFORMATION ONLY. ALL HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION TO THEM, INCLUDING THE APPLICATION AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

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DESCRIPTION OF MATERIAL INDEBTEDNESS

Credit Facility

Varex anticipates that credit agreement relating to these facilities will contain various customary covenants that will limit, among other things, the incurrence of indebtedness by Varex and its subsidiaries, the grant or incurrence of liens by Varex and its subsidiaries, the entry into sale and leaseback transactions by Varex and its subsidiaries, and the entry into certain fundamental change transactions by Varex and its subsidiaries. It will also contain certain customary financial covenants and customary events of default.

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DESCRIPTION OF VAREX’S CAPITAL STOCK

Varex’s certificate of incorporation and bylaws will be amended and restated prior to the completion of the distribution. The following is a summary of the material terms of Varex’s capital stock that will be contained in the amended and restated certificate of incorporation and bylaws. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of the certificate of incorporation or the bylaws to be in effect at the time of the distribution, which you must read for complete information on Varex’s capital stock as of the time of the distribution. The certificate of incorporation and bylaws, each in a form expected to be in effect at the time of the distribution, will be included as exhibits to Varex’s registration statement on Form 10, of which this information statement forms a part. The summaries and descriptions below do not purport to be complete statements of the Delaware General Corporation Law.

General

Varex’s authorized capital stock consists of [●] shares of common stock, par value $0.01 per share, and [●] shares of preferred stock, par value $0.01 per share, all of which shares of preferred stock are undesignated. Varex’s board of directors may establish the rights and preferences of the preferred stock from time to time. Immediately following the distribution, Varex expects that approximately [●] shares of its common stock will be issued and outstanding, based on approximately [●] million shares of Varian common stock issued and outstanding on [●], 2017, and that no shares of preferred stock will be issued and outstanding.

Common Stock

Under the terms of Varex’s amended and restated certificate of incorporation, each holder of Varex common stock will be entitled to one vote for each share on all matters to be voted upon by the common stockholders, and there will be no cumulative voting rights. Subject to any preferential rights of any outstanding preferred stock, holders of Varex common stock will be entitled to receive ratably the dividends, if any, as may be declared from time to time by Varex’s board of directors out of funds legally available for that purpose. If there is a liquidation, dissolution or winding up of Varex, holders of its common stock would be entitled to ratable distribution of its assets remaining after the payment in full of liabilities and any preferential rights of any then-outstanding preferred stock.

Holders of Varex common stock will have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. After the distribution, all outstanding shares of Varex common stock will be fully paid and non-assessable. The rights, preferences and privileges of the holders of Varex common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that Varex may designate and issue in the future.

Preferred Stock

Under the terms of Varex’s amended and restated certificate of incorporation, its board of directors will be authorized, subject to limitations prescribed by the DGCL and by Varex’s amended and restated certificate of incorporation, to issue up to [●] shares of preferred stock in one or more series without further action by the holders of its common stock. Varex’s board of directors will have the discretion, subject to limitations prescribed by the DGCL and by Varex’s amended and restated certificate of incorporation, to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

Anti-Takeover Effects of Various Provisions of Delaware Law and Varex’s Certificate of Incorporation and Bylaws

Provisions of the DGCL and Varex’s amended and restated certificate of incorporation and bylaws could make it more difficult to acquire Varex by means of a tender offer, a proxy contest or otherwise, or to remove

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incumbent officers and directors. These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids that Varex’s board of directors may consider inadequate and to encourage persons seeking to acquire control of Varex to first negotiate with Varex’s board of directors. Varex believes that the benefits of increased protection of its ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure it outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Delaware Anti -Takeover Statute . Varex will be subject to Section 203 of the DGCL, an anti-takeover statute. In general, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless (i) prior to such time, the board of directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the board of directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15% or more of a corporation’s voting stock. The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by Varex’s board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by Varex’s stockholders.

Classified Board . Varex’s amended and restated certificate of incorporation and bylaws will provide that its board of directors will be divided into three classes. At the time of the distribution, Varex’s board of directors will be divided into three classes, two of which are expected to be comprised of two directors and one of which is expected to be comprised of three directors. The directors designated as Class I directors will have terms expiring at the first annual meeting of stockholders following the distribution, which Varex expects to hold in 2018. The directors designated as Class II directors will have terms expiring at the following year’s annual meeting of stockholders, which Varex expects to hold in 2019, and the directors designated as Class III directors will have terms expiring at the following year’s annual meeting of stockholders, which Varex expects to hold in 2020. Commencing with the first annual meeting of stockholders following the distribution, which Varex expects to hold in 2018, directors for each class will be elected at the annual meeting of stockholders held in the year in which the term for that class expires and thereafter will serve for a term of three years. At any meeting of stockholders for the election of directors at which a quorum is present, the election will be determined by a majority of the votes cast by the stockholders entitled to vote in the election, with directors not receiving a majority of the votes cast required to tender their resignations for consideration by the board, except that in the case of a contested election, the election will be determined by a plurality of the votes cast by the stockholders entitled to vote in the election. Under the classified board provisions, it would take at least two elections of directors for any individual or group to gain control of Varex’s board of directors. Accordingly, these provisions could discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to gain control of Varex.

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class of directors standing for election at the Company’s 2021 annual meeting, directors will stand for election for a one-year term; and (iii) commencing with the Company’s 2022 annual meeting, and at each annual meeting thereafter, all directors will stand for election for a one-year term.

Removal of Directors . For so long as the Varex board of directors is classified, Varex’s amended and restated certificate of incorporation will provide that its stockholders may remove its directors only for cause, by an affirmative vote of holders of at least a majority of Varex’s voting stock then-outstanding. Following the 2022 annual meeting, Varex’s stockholders may remove its directors with or without cause by an affirmative vote of at least a majority of Varex’s voting stock then-outstanding.

Amendments to Certificate of Incorporation . Varex’s amended and restated certificate of incorporation will provide that the affirmative vote of the holders of at least 66 2/3% of its voting stock then-outstanding is required to amend certain provisions relating to the term and removal of its directors, the filling of its board vacancies, the calling of special meetings of stockholders, stockholder action by written consent, the elimination of liability of directors to the extent permitted by Delaware law and indemnification of directors and officers. The provisions of the amended and restated certificate of incorporation relating to the 66 2/3% voting threshold will be of no force and effect effective as of the completion of the 2021 annual meeting of stockholders and the amended and restated certificate of incorporation may thereafter be amended by the affirmative vote of the holders of at least a majority of the outstanding voting stock then-outstanding.

Amendments to Bylaws . Varex’s amended and restated bylaws will provide that they may be amended by Varex’s board of directors or by the affirmative vote of holders of a majority of Varex’s voting stock then-outstanding.

Size of Board and Vacancies . Varex’s amended and restated bylaws will provide that the number of directors on its board of directors will be fixed exclusively by its board of directors, except that the minimum number of directors will be three. Any vacancies created in its board of directors resulting from any increase in the authorized number of directors or the death, resignation, retirement, disqualification, removal from office or other cause will be filled by a majority of the board of directors then in office, even if less than a quorum is present, or by a sole remaining director. Any director appointed to fill a vacancy on Varex’s board of directors will be appointed for a term expiring at the next election of the class for which such director has been appointed, and until his or her successor has been elected and qualified.

Special Stockholder Meetings . Varex’s amended and restated certificate of incorporation will provide that only the board of directors, pursuant to a resolution adopted by the majority of the whole board, or the chairman of the board of directors may call special meetings of Varex stockholders. The majority of the board of directors must concur with the calling of the meeting by the chairman. Stockholders may not call special stockholder meetings.

Stockholder Action by Written Consent . Varex’s amended and restated certificate of incorporation will expressly eliminate the right of its stockholders to act by written consent effective as of the distribution. Stockholder action must take place at the annual or a special meeting of Varex stockholders.

Requirements for Advance Notification of Stockholder Nominations and Proposals . Varex’s certificate of incorporation will mandate that stockholder nominations for the election of directors will be given in accordance with the bylaws. The amended and restated bylaws will establish advance notice procedures with respect to stockholder proposals and nomination of candidates for election as directors as well as minimum qualification requirements for stockholders making the proposals or nominations. Additionally, the bylaws will require that candidates for election as director disclose their qualifications and make certain representations.

No Cumulative Voting . The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors unless the company’s certificate of incorporation provides otherwise. Varex’s amended and restated certificate of incorporation will not provide for cumulative voting.

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Undesignated Preferred Stock . The authority that Varex’s board of directors will possess to issue preferred stock could potentially be used to discourage attempts by third parties to obtain control of Varex’s company through a merger, tender offer, proxy contest or otherwise by making such attempts more difficult or more costly. Varex’s board of directors may be able to issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock.

Limitations on Liability, Indemnification of Officers and Directors and Insurance

The DGCL authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors, and Varex’s amended and restated certificate of incorporation will include such an exculpation provision. Varex’s amended and restated certificate of incorporation and bylaws will include provisions that indemnify, to the fullest extent allowable under the DGCL, the personal liability of directors or officers for monetary damages for actions taken as a director or officer of Varex, or for serving at Varex’s request as a director or officer or another position at another corporation or enterprise, as the case may be. Varex’s amended and restated certificate of incorporation and bylaws will also provide that Varex must indemnify and advance reasonable expenses to its directors and officers, subject to its receipt of an undertaking from the indemnified party as may be required under the DGCL. Varex’s amended and restated certificate of incorporation will expressly authorize Varex to carry directors’ and officers’ insurance to protect Varex, its directors, officers and certain employees for some liabilities.

The limitation of liability and indemnification provisions that will be in Varex’s amended and restated certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against Varex’s directors and officers, even though such an action, if successful, might otherwise benefit Varex and its stockholders. However, these provisions will not limit or eliminate Varex’s rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s duty of care. The provisions will not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, Varex pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. There is currently no pending material litigation or proceeding against any Varex directors, officers or employees for which indemnification is sought.

Exclusive Forum

Varex’s amended and restated certificate of incorporation will provide that unless the board of directors otherwise determines, the state courts located within the State of Delaware or, if no state court located in the State of Delaware has jurisdiction, the federal court for the District of Delaware, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Varex, any action asserting a claim of breach of a fiduciary duty owed by any director or officer of Varex to Varex or Varex’s stockholders, any action asserting a claim against Varex or any director or officer of Varex arising pursuant to any provision of the DGCL or Varex’s amended and restated certificate of incorporation or bylaws, or any action asserting a claim against Varex or any director or officer of Varex governed by the internal affairs doctrine.

Authorized but Unissued Shares

Varex’s authorized but unissued shares of common stock and preferred stock will be available for future issuance without your approval. Varex may use additional shares for a variety of purposes, including future public offerings to raise additional capital, to fund acquisitions and as employee compensation. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of Varex by means of a proxy contest, tender offer, merger or otherwise.

Listing

Varex intends to apply to list its shares of common stock on NASDAQ under the symbol “VREX.”

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Sale of Unregistered Securities

On July 18, 2016, Varex issued 100 shares of its common stock to Varian pursuant to Section 4(2) of the Securities Act. Varex did not register the issuance of the issued shares under the Securities Act because such issuance did not constitute a public offering.

Transfer Agent and Registrar

After the distribution, the transfer agent and registrar for Varex’s common stock will be Computershare Trust Company, N.A. If you hold your shares through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares. Contact them with any questions relating to the distribution. For registered holders, with questions relating to the transfer or mechanics of the stock distribution, you should contact Computershare:

Toll free, by phone:

(800) 756-8200

By regular mail:

Computershare

P.O. BOX 30170

College Station, TX 77842

By overnight mail:

Computershare

211 Quality Circle Suite 210

College Station, TX 77845

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WHERE YOU CAN FIND MORE INFORMATION

Varex has filed a registration statement on Form 10 with the SEC with respect to the shares of Varex common stock being distributed as contemplated by this information statement. This information statement is a part of, and does not contain all of the information set forth in, the registration statement and the exhibits and schedules to the registration statement. For further information with respect to Varex and its common stock, please refer to the registration statement, including its exhibits and schedules. Statements made in this information statement relating to any contract or other document are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document. You may review a copy of the registration statement, including its exhibits and schedules, at the SEC’s public reference room, located at 100 F Street, NE, Washington, D.C. 20549, by calling the SEC at 1-800-SEC-0330, as well as on the Internet website maintained by the SEC at www.sec.gov. Information contained on any website referenced in this information statement is not incorporated by reference in this information statement.

As a result of the distribution, Varex will become subject to the information and reporting requirements of the Exchange Act and, in accordance with the Exchange Act, will file periodic reports, proxy statements and other information with the SEC.

Varex intends to furnish holders of its common stock with annual reports containing consolidated financial statements prepared in accordance with U.S. GAAP and audited and reported on, with an opinion expressed, by an independent registered public accounting firm.

You should rely only on the information contained in this information statement or to which this information statement has referred you. Varex has not authorized any person to provide you with different information or to make any representation not contained in this information statement.

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INDEX TO FINANCIAL STATEMENTS


Audited Annual Combined Financial Statements:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			F-2
COMBINED STATEMENTS OF EARNINGS			F-3
COMBINED STATEMENTS OF COMPREHENSIVE EARNINGS			F-4
COMBINED BALANCE SHEETS			F-5
COMBINED STATEMENTS OF CASH FLOWS			F-6
COMBINED STATEMENTS OF EQUITY			F-7
NOTES TO COMBINED FINANCIAL STATEMENTS			F-8
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS			F-35

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Management of Varian Medical Systems, Inc.:

In our opinion, the accompanying combined balance sheets and the related combined statements of earnings, comprehensive earnings, equity and cash flows present fairly, in all material respects, the financial position of the Imaging Components business of Varian Medical Systems, Inc. (“Varex Imaging Corporation”) as of September 30, 2016 and October 2, 2015, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Salt Lake City, Utah

December 7, 2016

F-2

VAREX IMAGING CORPORATION

COMBINED STATEMENTS OF EARNINGS

(In millions)


	Fiscal Years
	2016			2015			2014
Revenues	$	620.1		$	632.3		$	685.2
Cost of revenues		371.7			381.7			406.6

Gross margin		248.4			250.6			278.6

Operating expenses:
Research and development		53.5			50.4			40.0
Selling, general and administrative		85.8			72.7			62.6

Total operating expenses		139.3			123.1			102.6

Operating earnings		109.1			127.5			176.0

Interest income		0.3			0.5			0.3
Interest expense		(1.9	)		(1.2	)		(0.9	)
Other income (expense), net		(2.5	)		0.8			(1.2	)

Interest and other income (expense), net		(4.1	)		0.1			(1.8	)

Earnings before taxes		105.0			127.6			174.2
Taxes on earnings		36.0			46.8			64.1

Net earnings		69.0			80.8			110.1
Less: Net earnings attributable to noncontrolling interests		0.5			0.8			—

Net earnings attributable to Varex	$	68.5		$	80.0		$	110.1

See the accompanying notes to the combined financial statements.

F-3

VAREX IMAGING CORPORATION

COMBINED STATEMENTS OF COMPREHENSIVE EARNINGS

(In millions)


	Fiscal Years
	2016			2015			2014
Net earnings	$	69.0		$	80.8		$	110.1
Other comprehensive earnings (loss), net of tax:
Available-for-sale securities:
Change in unrealized loss, net of tax benefit of $0.1 in 2016 and 2015		(0.3	)		(0.1	)		—
Reclassification adjustments, net of tax expense of ($0.2) in 2016		0.4			—			—

Other comprehensive earnings (loss), net of tax		0.1			(0.1	)		—

Comprehensive earnings		69.1			80.7			110.1
Less: Comprehensive earnings attributable to noncontrolling interests		0.5			0.8			—

Comprehensive earnings attributable to Varex	$	68.6		$	79.9		$	110.1

See the accompanying notes to the combined financial statements.

F-4

VAREX IMAGING CORPORATION

COMBINED BALANCE SHEETS

(In millions)


	September 30, 2016		October 2, 2015
Assets
Current assets:
Cash and cash equivalents	$	36.5	$	20.6
Accounts receivable, net of allowance for doubtful accounts of $0.2 and $0.1 at September 30, 2016 and October 2, 2015, respectively		122.2		117.8
Inventories		197.4		174.9
Prepaid expenses and other current assets		3.8		2.8

Total current assets		359.9		316.1
Property, plant and equipment, net		108.9		96.2
Goodwill		74.7		74.7
Investments in privately held companies		49.3		49.6
Deferred tax assets		5.5		10.5
Other assets		24.1		36.5

Total assets	$	622.4	$	583.6

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable	$	41.9	$	49.7
Accrued liabilities		23.9		19.6
Deferred revenues		12.0		9.3

Total current liabilities		77.8		78.6
Other long-term liabilities		8.3		9.4

Total liabilities		86.1		88.0

Commitments and contingencies (Note 7)
Redeemable noncontrolling interests		10.3		—
Equity:
Net parent investment		526.0		484.7
Accumulated other comprehensive loss		—		(0.1	)

Total Varex equity		526.0		484.6
Noncontrolling interests		—		11.0

Total equity		526.0		495.6

Total liabilities, redeemable noncontrolling interests and equity	$	622.4	$	583.6

See the accompanying notes to the combined financial statements.

F-5

VAREX IMAGING CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

(In millions)


	Fiscal Years
	2016			2015			2014
Cash flows from operating activities:
Net earnings	$	69.0		$	80.8		$	110.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Share-based compensation expense		9.5			9.6			8.0
Tax effect of (windfalls) shortfalls from share-based compensation		0.1			(1.7	)		(1.2	)
Depreciation		9.8			9.6			8.7
Amortization of intangible assets		5.5			2.7			1.4
Deferred taxes		4.2			(0.8	)		(1.5	)
Loss (income) from equity method investments		1.6			(0.3	)		0.8
Other, net		0.7			0.4			0.5
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(4.6	)		19.3			(9.0	)
Inventories		(23.5	)		(25.9	)		(4.3	)
Prepaid expenses and other assets		(0.9	)		0.3			(0.6	)
Accounts payable		(1.9	)		(4.3	)		4.4
Accrued liabilities and other long-term liabilities		2.8			(7.2	)		1.7
Deferred revenues		1.9			2.7			(0.4	)

Net cash provided by operating activities		74.2			85.2			118.6

Cash flows from investing activities:
Purchases of property, plant and equipment		(28.9	)		(34.3	)		(23.2	)
Sale of available-for-sale securities		8.6			—			—
Acquisitions of businesses, net of cash acquired		(1.2	)		(67.9	)		(5.4	)
Other		(0.1	)		0.1			—

Net cash used in investing activities		(21.6	)		(102.1	)		(28.6	)

Cash flows from financing activities:
Net transfers (to) from parent		(36.7	)		35.8			(90.4	)
Tax effect of (windfalls) shortfalls from share-based compensation		(0.1	)		1.7			1.2
Other		—			(0.8	)		(0.7	)

Net cash (used in) provided by financing activities		(36.8	)		36.7			(89.9	)

Effects of exchange rate changes on cash and cash equivalents		0.1			0.3			—

Net increase in cash and cash equivalents		15.9			20.1			0.1
Cash and cash equivalents at beginning of period		20.6			0.5			0.4

Cash and cash equivalents at end of period	$	36.5		$	20.6		$	0.5

See the accompanying notes to the combined financial statements.

F-6

VAREX IMAGING CORPORATION

COMBINED STATEMENTS OF EQUITY

(In millions)


	Net Parent Investment			Accumulated Other Comprehensive Loss			Total Varex Equity			Noncontrolling Interests			Total Equity
Balances at September 27, 2013	$	331.6		$	—		$	331.6		$	—		$	331.6
Net earnings		110.1			—			110.1			—			110.1
Net transfers to parent		(82.4	)		—			(82.4	)		—			(82.4	)

Balances at September 26, 2014		359.3			—			359.3			—			359.3
Net earnings		80.0			—			80.0			0.8			80.8
Net transfers from parent		45.4			—			45.4			—			45.4
Other comprehensive loss		—			(0.1	)		(0.1	)		—			(0.1	)
Acquisition of MeVis Medical Solutions AG		—			—			—			10.2			10.2

Balances at October 2, 2015		484.7			(0.1	)		484.6			11.0			495.6
Net earnings		68.5			—			68.5			—			68.5
Net transfers to parent		(27.2	)		0.1			(27.1	)		—			(27.1	)
Reclassification of noncontrolling interests in MeVis Medical Solutions AG to redeemable noncontrolling interests		—			—			—			(10.4	)		(10.4	)
Other		—			—			—			(0.6	)		(0.6	)

Balances at September 30, 2016	$	526.0		$	—		$	526.0		$	—		$	526.0

See the accompanying notes to the combined financial statements.

F-7

NOTES TO COMBINED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

On May 23, 2016, Varian Medical Systems, Inc. (“Varian”) announced its intent to separate its Imaging Components business from the remainder of its businesses. The Imaging Components business will be held by a new company named Varex Imaging Corporation (the “Company,” “Varex,” or “Varex Imaging”). Varex does not operate as a separate, stand-alone entity and is primarily comprised of certain Varian owned legal entities for which Varex is the sole business. Historically, Varex operated as a part of Varian, and Varex’s results of operations have been reported in Varian’s consolidated financial statements.

The separation is subject to a number of conditions, including, but not limited to, final approval of the Varian board of directors, receipt of one or more opinions with respect to certain U.S. federal income tax matters relating to the separation and distribution and the effectiveness of the registration statement on Form 10 that will register the common stock of Varex to be distributed to Varian stockholders. Immediately following the distribution, Varian will no longer have an ownership interest in Varex. Varex and Varian will enter into certain agreements relating to the separation of the companies and governing various post-separation relationships between the companies.

Varex designs, manufactures, sells and services a broad range of X-ray imaging components including X-ray tubes, flat panel digital image detectors and accessories, high voltage connectors, high-energy inspection accelerators, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers and buckys, for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, radio therapy and computer-aided detection. The Company sells its products to imaging system original equipment manufacturer (“OEM”) customers for incorporation into new medical diagnostic, radiation therapy, dental, veterinary and industrial imaging systems, to independent service companies, distributors and directly to end-users for replacement purposes.

The Company also designs, manufacturers, sells and services industrial products, which include Linatron ^® X-ray accelerators, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection systems. The Company conducts an active research and development program to focus on new technology and applications in both the medical and industrial X-ray imaging markets.

Basis of Presentation and Principles of Combination

The accompanying combined financial statements have been prepared on a stand-alone basis and are derived from Varian’s consolidated financial statements and records. The combined financial statements reflect the Company’s financial position, results of operations, comprehensive earnings and cash flows as it operated as part of Varian prior to the distribution, in conformity with generally accepted accounting principles in the United States (“GAAP”).

The combined financial statements include the accounts of the Company and certain other assets and liabilities that have been historically held at the Varian corporate level, but are specifically identifiable and attributable to the Company. The combined financial statements include allocation of certain Varian corporate expenses including costs of information technology, human resources, accounting, legal, facilities, insurance, treasury and other corporate and infrastructure services. In addition, allocated costs include research and development expenses from Varian’s scientific research facility. These costs have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, headcount or other systematic measures that reflect utilization of services provided to or benefits received by the Company. The Company considers the expense allocation methodology and results to be reasonable for all periods presented.

F-8

The combined financial position, results of operations, comprehensive earnings and cash flows of the Company may not be indicative of its results had it been a separate stand-alone entity during the periods presented, nor are the results stated herein indicative of what the Company’s financial position, results of operations, comprehensive earnings and cash flows may be in the future.

The Company is dependent upon Varian for its working capital and financing requirements as Varian uses a centralized approach to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the net parent investment account. Cash and cash equivalents held by Varian were not allocated to the Company. Cash and cash equivalents included in the Combined Balance Sheets primarily reflects cash and cash equivalents from acquired entities that are specifically attributable to the Company. Varian’s debt has not been allocated to the Company for any of the periods presented since the Company is not the legal obligor of the debt. Varian’s debt was utilized for corporate activities that benefited all businesses and therefore interest expense relating to Varian’s corporate borrowings has been allocated to the Company. Interest expense and interest income have been allocated based on the Company’s total assets as a percentage of total assets of Varian.

Net parent investment, which includes retained earnings, represents Varian’s interest in the recorded net assets of the Company. All transactions between the Company and Varian have been included in the accompanying combined financial statements. All intercompany transactions are considered to be effectively settled for cash and are reflected as a component of financing activities as net transfers from (to) Varian in the Combined Statements of Cash Flows at the time the transactions are recorded.

Net parent investment in the Combined Balance Sheets and Statements of Equity represents Varian’s historical investment in the Company, the net effect of transactions with and allocations from Varian and the Company’s accumulated earnings.

See Note 6, “Related Party Transactions” for further information regarding the Company’s relationships with Varian and other related party transactions.

Segment Reporting

Subsequent to the filing of the preliminary registration statement on Form 10 on August 11, 2016, the Company re-aligned its reportable operating segments into: (i) Medical and (ii) Industrial. The Company reclassified the segment data for the prior years to conform to the current year presentation. See Note 11, “Segment Information” for further information on the Company’s segments.

Fiscal Year

The fiscal years of the Company as reported are the 52- or 53-week period ending on the Friday nearest September 30. Fiscal year 2016 was the 52-week period that ended on September 30, 2016. Fiscal year 2015 was the 53-week period that ended on October 2, 2015 and fiscal year 2014 was the 52-week period that ended on September 26, 2014.

Variable Interest Entities

For entities in which the Company has variable interests, the Company focuses on identifying which entity has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. If the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity will be included in the Company’s combined financial statement. For fiscal years 2016, 2015 and 2014, Varex did not consolidate any variable interest entities, because the Company was not the primary beneficiary.

F-9

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses, including allocations from Varian, during the reporting periods. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers currency on hand, demand deposits, time deposits, and all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Fair Value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. There is a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Concentration of Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. Cash and cash equivalents held with financial institutions may exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions. The Company has not experienced any losses on its deposits of cash and cash equivalents. The Company performs ongoing credit evaluations of its customers and, except for government tenders, group purchases and orders with a letter of credit, requires its industrial customers to often provide a down payment. The Company maintains an allowance for doubtful accounts based upon the expected collectability of all accounts receivable. As of September 30, 2016, Toshiba Medical Systems (“Toshiba”) represented more than 10% of the Company’s accounts receivable. As of October 2, 2015, Carestream Health Inc. (“Carestream”) and Toshiba represented more than 10% of the Company’s accounts receivable. The Company obtains some of the components in its products from a limited group of suppliers or from a single-source supplier. The Company has not experienced any significant disruptions to its operations due to supplier concentration.

Inventories

Inventories are valued at the lower of cost or market (realizable value). Excess and obsolete inventories are determined primarily based on future demand forecasts and write-downs of excess and obsolete inventories are recorded as a component of cost of revenues. Cost is computed using standard cost (which approximates actual cost) on a first-in-first-out basis.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation. Major improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation and amortization are computed

F-10

using the straight-line method over the estimated useful lives of the assets. Land is not subject to depreciation, but land improvements are depreciated over fifteen years. Land leasehold rights and leasehold improvements are amortized over the lesser of their estimated useful lives or remaining lease terms. Buildings are depreciated over twenty years. Machinery and equipment are depreciated over their estimated useful lives, which range from three to seven years. Assets subject to lease are amortized over the lesser of their estimated useful lives or remaining lease terms. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are removed from the accounts.

Investments

The Company accounts for its equity investments in privately held companies under the equity method of accounting as the Company holds at least a 20% ownership interest or has the ability to exercise significant influence in these investments. The Company monitors these equity investments for impairment and makes appropriate reductions in carrying values if the Company determines that impairment charges are required based primarily on the financial condition and near-term prospects of these companies.

Available-for-sale investments were recorded on the Combined Balance Sheets at fair value. Unrealized gains and losses on these investments are included as a separate component of accumulated other comprehensive loss, net of tax, on the Combined Balance Sheets. The Company classifies its available-for-sale securities as short-term or long-term based on the nature of the investment, its maturity date and its availability for use in current operations. The Company monitors its available-for-sale securities for possible other-than-temporary impairment when business events or changes in circumstances indicate that the carrying value of the investment may not be recoverable.

Goodwill and Intangible Assets

Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. Purchased intangible assets are carried at cost, net of accumulated amortization. Intangible assets with finite lives are amortized over their estimated useful lives of primarily two to seven years using the straight-line method.

Impairment of Long-lived Assets, Intangible Assets and Goodwill

The Company reviews long-lived assets and identifiable intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company assesses these assets for impairment based on their estimated undiscounted future cash flows. If the carrying value of the assets exceeds the estimated future undiscounted cash flows, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. The Company did not recognize any impairment charges for long-lived assets and identifiable intangible assets in fiscal years 2016, 2015 and 2014.

The Company evaluates goodwill for impairment at least annually or whenever an event occurs or circumstances changes that would more likely than not reduce the fair value of a reporting unit below its carrying amount. If the Company determines that a quantitative analysis is necessary, the impairment test for goodwill is a two-step process. Step one consists of a comparison of the fair value of a reporting unit against its carrying amount, including the goodwill allocated to each reporting unit. The Company determines the fair value of its reporting units based on a combination of income and market approaches. The income approach is based on the present value of estimated future cash flows of the reporting units and the market approach is based on a market multiple calculated for each reporting unit based on market data of other companies engaged in similar business. If the carrying amount of the reporting unit is in excess of its fair value, step two requires the comparison of the

F-11

implied fair value of the reporting unit’s goodwill against the carrying amount of the reporting unit’s goodwill. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

In fiscal years 2016, 2015 and 2014, the Company performed the annual goodwill impairment testing for its two previous reporting units (i) X-ray Products and (ii) Industrial, and found no impairment. For both reporting units, based upon the most recent annual goodwill analysis performed by the Company as of the first day of the fourth quarter of fiscal year 2016 (using balances as of the end of the third quarter of fiscal year 2016), either step one of the impairment test was not completed based on evaluation of qualitative factors or, if step one was completed, the fair value was substantially in excess of carrying value.

Loss Contingencies

Product Warranty

The Company warrants most of its products for a specific period of time, usually 12 months from delivery or acceptance, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty. The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience as to product failures adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required.

Revenue Recognition

The Company’s revenues are derived primarily from the sale of hardware and software products, and services. The Company recognizes its revenues net of any value added or sales tax and net of sales discounts.

The Company sells a high proportion of its X-ray products to a limited number of OEM customers. X-ray tubes, flat panel detectors and image processing tools and security and inspection products are generally sold on a stand-alone basis. However, the Company occasionally sells its flat panel detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron ^® X-ray accelerators together with its imaging processing software and image detection products to OEM customers that incorporate them into their inspection systems. Service contracts are often sold with certain security and inspection products and computer-aided detection products. Revenues related to service contracts usually starts after the expiration of the warranty period for non-software products or upon delivery of software products.

F-12

For a multiple element arrangement that includes software and non-software deliverables which includes service contracts, the Company first allocates revenues among the software and non-software deliverables on a relative selling price basis. The amounts allocated to the non-software products and software are accounted for as follows:

Non-software Products

Non-software products include hardware products, software components that function together with the hardware components to deliver the product’s essential functionality, as well as service contracts. Except as described below under “Service,” the Company recognizes revenues for non-software products when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

For multiple element revenue arrangements that involve non-software products, a delivered non-software element is considered as a separate unit of accounting when it has stand-alone value and there is no customer-negotiated refund or return rights for the delivered element. The allocation of revenue to all deliverables based on their relative selling prices is determined at the inception of the arrangement. The selling price for each deliverable is determined using vendor-specific objective evidence (“VSOE”) of selling price, if it exists; otherwise, third-party evidence of selling price (“TPE”) is used. If neither VSOE nor TPE of selling price exists for a deliverable the Company uses the deliverable’s estimated selling prices (“ESP”).

If the Company is not able to establish VSOE or TPE of selling prices for its non-software products. ESPs are used as the basis of the selling prices. The Company estimates selling prices following an established process that considers market conditions, including the product offerings and pricing strategies of competitors, as well as internal factors such as historical pricing practices and margin objectives. The establishment of product and service ESPs is controlled and reviewed by the appropriate level of management in all of the Company’s businesses.

The Company recognizes revenues upon the transfer of risk of loss, which is either at the time of shipment or delivery, depending upon the terms of the contract, provided that all other revenue recognition criteria have been met.

Software Products

The Company recognizes revenues for software products in accordance with the software revenue recognition guidance. The Company recognizes license revenues when all of the following criteria have been met: persuasive evidence of an arrangement exists, the vendor’s fee is fixed or determinable, collection of the related receivable is probable and delivery of the product has occurred.

Revenues earned on software arrangements involving multiple elements are allocated to each element based on VSOE of fair value, which is based on the price charged when the same element is sold separately. In instances when evidence of VSOE of fair value of all undelivered elements exists, but evidence does not exist for one or more delivered elements, revenues are recognized using the residual method. Under the residual method, the fair value of the undelivered elements is deferred and the remaining portion of the arrangement fee is recognized as revenue. Revenue allocated to maintenance and support is recognized ratably over the maintenance term (typically one year).

For those software products that are not sold stand-alone or for which VSOE cannot be established or maintained, all software revenue under the contract will be deferred until the software product(s) that lack VSOE are all delivered. If the only undelivered software element that lacks VSOE is maintenance and support, then the software revenue would be recognized ratably over the term of the maintenance and support arrangement.

The Company recognizes revenues upon the transfer of risk of loss, which is either at the time of shipment or delivery, depending upon the shipping terms of the contract, provided that all other criteria for revenue recognition have been met.

F-13

Service

Service revenues include revenues from hardware and software service contracts, bundled support arrangements, paid services and trainings, and parts that are sold by the service department. Revenues allocated to service contracts are recognized ratably over the period of performance of the related contracts. Revenues related to services performed on a time-and-materials basis are recognized when they are earned and billable.

Deferred Revenues

Deferred revenue primarily represents (i) the amount billed, billable or received applicable to non-software products for which parts and services under the warranty contracts have not been delivered, (ii) the amount billed, billable or received applicable to software products for which the Company’s obligations under the maintenance contracts have not been fulfilled, and (iii) the amount billed, billable or received for service contracts for which the services have not been rendered. Except for government tenders, group purchases and orders with letters of credit, the Company typically requires its security and inspection customers to provide a down payment prior to transfer of risk of loss of ordered products. These payments are also included in deferred revenue on the Combined Balance Sheet.

Share-Based Compensation Expense

The Company’s employees have historically participated in Varian’s equity-based incentive plans. Share-based compensation expense has been allocated to the Company based on the awards and terms previously granted to its employees as well as an allocation of Varian’s corporate and shared functional employee expenses. Until consummation of the distribution, the Company’s employees will continue to participate in Varian’s equity-incentive plans and the Company will continue to record share-based compensation expense based on the share-based payment awards granted to the Company’s employees.

The Company values stock options granted and the option component of the shares of common stock purchased under the Varian Employee Stock Purchase Plan using the Black-Scholes option-pricing model. Share-based compensation expense for restricted stock units is measured using the fair value of Varian’s stock on the date of grant and is amortized over the award’s respective service period. Varian uses the Monte Carlo simulation model to estimate the fair value of performance units on the date of grant with assumptions that includes the historical volatility of shares of Varian common stock, as well as the shares of common stock of peer companies. Both the Black-Scholes option-pricing model and the Monte Carlo simulation model require the input of certain assumptions and changes in the assumptions can materially affect the fair value estimates of share-based payment awards.

The Company measures and recognizes expense for all share-based payment awards based on their fair values. Share-based compensation expense recognized in the Combined Statements of Earnings includes compensation expense for the share-based payment awards based on the grant date fair value estimated in accordance with the guidance on share-based compensation. Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest. The Company attributes the value of share-based compensation to expense using the straight-line method. The Company considers only the direct tax impacts of share-based compensation awards when calculating the amount of tax windfalls or shortfalls.

Shipping and Handling Costs

Shipping and handling costs are included as a component of cost of revenues.

Research and Development

Research and development costs have been expensed as incurred. These costs primarily include employees’ compensation, consulting fees, material costs and research grants.

F-14

Software Development Costs

Costs for the development of new software products and substantial enhancements to existing software products are expensed as incurred until technological feasibility has been established, at which time any additional costs would be capitalized. No costs associated with the development of software have been capitalized as the Company believes its current software development process is essentially completed concurrent with the establishment of technological feasibility.

Taxes on Earnings

Taxes on earnings, as presented, are calculated on a separate return basis. Under this method, the Company computes taxes on earnings as if it were a separate taxpayer filing its own income tax returns. The Company’s operations have historically been included in Varian’s U.S. federal and state income tax returns and non-U.S. jurisdiction tax returns. Varian’s global tax structure has been developed based on its entire portfolio of businesses. Accordingly, the tax results as presented are not necessarily reflective of the results that we would have generated on a stand-alone basis. It is possible that the Company will make different tax accounting elections and assertions, such as the amount of earnings that will be permanently reinvested outside the United States following the Company’s separation from Varian.

Income tax expense is based on reported income or loss before income taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. In accordance with the amended accounting guidance issued in November 2015 relating to the balance sheet classification of deferred taxes, the Company classifies all of its deferred tax assets and liabilities as noncurrent in the Combined Balance Sheets. Valuation allowances are recognized to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for taxes on earnings.

The Company accounts for uncertainty in income taxes following a two-step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates that it is more likely than not that, based on the technical merits, the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

Foreign Currency Translation

The Company uses the U.S. Dollar as the functional currency of its foreign operations. Gains and losses from remeasurement of foreign currency balances into U.S. Dollars are included in the Combined Statements of Earnings. The aggregate net gains (losses) resulting from foreign currency transactions and remeasurement of foreign currency balances into U.S. Dollars were not material for fiscal years 2016, 2015 and 2014.

Recent Accounting Standards or Updates Not Yet Effective

In November 2016, the Financial Accounting Standards Board (“FASB”) amended its guidance on the classification and presentation of restricted cash in the statement of cash flow. The amendment requires entities to include restricted cash and restricted cash equivalents in its cash and cash equivalents in the statement of cash flow. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2019 with early adoption permitted. The amendment is required to be adopted retrospectively. The Company is evaluating the impact of adopting this amendment to its combined financial statements.

F-15

effects of intra-entity transfers of assets other than inventory. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2019. Early adoption is permitted. The amendment is required to be adopted on a modified retrospective basis. The Company is evaluating the impact of adopting this amendment to its combined financial statements.

In August 2016, the FASB issued an amendment to its accounting guidance related to the classification of certain cash receipts and cash payments. The amendment was issued to reduce the diversity in practice in how certain transactions are classified in the Statement of Cash Flows. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2019 with early adoption permitted. The Company is evaluating the impact of adopting this amendment to its Statement of Cash Flows.

In June 2016, the FASB issued an amendment to its accounting guidance related to impairment of financial instruments. The amendment adds a new impairment model that is based on expected losses rather than incurred losses. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2021 with early adoption permitted beginning in the first quarter of fiscal year 2020. The Company is evaluating the impact of adopting this amendment to its combined financial statements.

In March 2016, the FASB issued an amendment to its accounting guidance related to employee share-based payments. The amendment simplifies several aspects of the accounting for employee share-based payments including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2018 with early adoption permitted. The Company is evaluating the impact of adopting this amendment to its combined financial statements.

In February 2016, the FASB issued a new standard on accounting for leases. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. The new standard will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of earnings. The new standard is required to be adopted using a modified retrospective method to each prior reporting period presented with various optional practical expedients. The new standard will be effective for the Company beginning in its first quarter of fiscal year 2020 with early adoption permitted. The Company is evaluating the impact of adopting this new standard to its combined financial statements.

In January 2016, the FASB issued an amendment to its accounting guidance related to recognition and measurement of financial assets and financial liabilities. The amendment addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2019. The Company is evaluating the impact of adopting this amendment to its combined financial statements.

In September 2015, the FASB issued a new accounting standard that eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. The new standard requires that the cumulative impact of a measurement period adjustment including the impact on prior periods be recognized in the reporting period in which the adjustment is identified along with additional disclosures. The new standard will be effective for the Company beginning in its first quarter of fiscal year 2017. The new standard is required to be adopted prospectively with early adoption permitted for financial statements that have not yet been made available for issuance. The new standard is not expected to have a material impact to the Company’s combined financial statements.

In July 2015, the FASB issued an amendment to its accounting guidance related to inventory measurement. The amendment requires inventory measured using first-in, first-out (FIFO) or average cost to be subsequently measured at the lower of cost and net realizable value, thereby simplifying the current guidance that requires an entity to measure inventory at the lower of cost or market. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2018 and is required to be adopted prospectively. Early adoption is

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permitted. The amendment is not expected to have a material impact to the Company’s combined financial statements.

In March 2015, the FASB issued an amendment to its accounting guidance related to presentation of debt issuance costs. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The amendment will be effective for the Company beginning in the first quarter of fiscal year 2017. In August 2015, the FASB further clarified that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets. These amendments are not expected to have a material impact to the Company’s combined financial statements.

In February 2015, the FASB issued an amendment to its accounting guidance related to consolidation. The amendment modifies the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2017. Early adoption is permitted. The amendment permits the use of either the retrospective or cumulative effect transition method. The amendment is not expected to have a material impact to the Company’s combined financial statements.

In June 2014, the FASB issued an amendment to its accounting guidance related to stock-based compensation. The amendment requires that a performance target that could be achieved after the requisite service period be treated as a performance condition that affects vesting, rather than a condition that affects the grant-date fair value. The amendment will be effective for the Company beginning in its first quarter of fiscal year 2017. Early adoption is permitted. The amendment can be applied on a prospective basis to all share-based payments granted or modified on or after the effective date. Entities will also be provided an option to apply the guidance on a modified retrospective basis to existing awards. The amendment is not expected to have a material impact to the Company’s combined financial statements.

In May 2014, the FASB issued a new revenue standard, which sets forth a single, comprehensive revenue recognition model for all contracts with customers to improve comparability. The new standard requires revenue recognition to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB amended the principal-versus-agent implementation guidance and illustrations in the new standard. In April 2016, the FASB amended the guidance on identifying performance obligations and the implementation guidance on licensing in the new standard. In May 2016, the FASB amended the guidance on collectability, noncash consideration, presentation of sales tax and transition in the new standard. The new standard will be effective for the Company beginning in its first quarter of fiscal year 2019, with early adoption permitted, but not before the first quarter of fiscal year 2018. The new standard can be applied either retrospectively to each prior reporting period presented ( i.e. , full retrospective adoption) or with the cumulative effect of initially applying the update recognized at the date of the initial application ( i.e. , modified retrospective adoption) along with additional disclosures. The Company is evaluating the impact of adopting this standard to its combined financial statements.

2. BUSINESS COMBINATIONS

Business Combinations in Fiscal Year 2015

Claymount

In August 2015, the Company acquired Claymount Investments B.V. (“Claymount”), a Netherlands-based supplier of components and subsystems for X-ray imaging equipment manufacturers. The acquisition of Claymount enhanced the Company’s ability to support continuing transitions from analog to digital X-ray

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imaging and was integrated into the Company’s previous X-ray Products reporting unit. Total purchase price of the acquisition of $58.0 million was paid in cash. The following table summarizes the purchase price allocation:


(In millions)	Fair Value
Net tangible assets ⁽¹⁾	$	11.3
Finite-lived intangible assets		16.2
Goodwill		30.5

Net assets acquired	$	58.0

(1)	Includes $1.9 million in cash and cash equivalents, $5.4 million in accounts receivable, $7.0 million in inventory and $4.4 million in accounts payable.

MeVis

In April 2015, the Company completed the acquisition of 73.5% of the then outstanding shares of MeVis Medical Solutions AG (“MeVis”), a public company based in Bremen, Germany that provides image processing software and services for cancer screening, for cash consideration of $25.5 million. The acquisition of MeVis was integrated into the Company’s previous X-ray Products reporting unit. The following table summarizes the purchase price allocation:


(In millions)	Fair Value
Net tangible assets ⁽¹⁾	$	21.7
Finite-lived intangible assets		5.8
Goodwill		8.2

Fair value of net assets		35.7
Less: Noncontrolling interests ⁽²⁾		10.2

Net assets acquired	$	25.5

(1)	Includes $13.9 million in cash and cash equivalents and $9.1 million in available-for-sale investments.

(2)	Fair value was determined using the market price of the shares of MeVis as of the acquisition date.

Finite-lived Intangible Assets

The following table presents details of the intangible assets acquired for the business combinations completed during fiscal year 2015 as of their respective acquisition dates:


	Claymount				MeVis
(In millions, except years)	Amount		Weighted Average Estimated Useful Life (In Years)		Amount		Weighted Average Estimated Useful Life (In Years)
Acquired existing technology	$	6.1		6	$	3.3		5
Customer contracts		5.2		7		2.5		6
Patents, licenses and other		4.9		5		—		—

Total	$	16.2		6	$	5.8		5

Business Combination in Fiscal Year 2014

Transpire

In July 2014, Varian closed the acquisition of certain assets and liabilities of Transpire, Inc. (“Transpire”), a privately held developer of software solutions for accurately and rapidly predicting the macroscopic behavior of

radiation. The portion of the acquired business that integrates the Company’s high-energy X-ray technology into systems for cargo screening, industrial inspection and non-destructive testing was integrated into the Company’s Industrial reporting unit. The acquisition was accounted for as a business combination by Varian. The total purchase price of the acquisition was $19.3 million of which $2.7 million of purchased intangible assets with a weighted average useful life of six years and goodwill of approximately $2.8 million were attributable to the Company.

Other information

All acquisitions listed above were accounted for as business combinations. Total transaction costs related to the Company’s acquisitions incurred during fiscal year 2015 were $2.5 million and not material during fiscal years 2016 and 2014. These transaction costs were expensed as incurred in selling, general and administrative expenses in the Combined Statements of Earnings. There were no measurement period adjustments to the purchase price allocation for the acquisitions completed in fiscal years 2015 and 2014.

The goodwill generated from the Company’s acquisitions is primarily attributable to expected synergies. The goodwill is not deductible for income tax purposes for the MeVis and Claymount acquisitions. The goodwill is deductible for income tax purposes for the acquisition of Transpire. The Combined Financial Statements include the operating results of each acquisition from the date of acquisition. Pro forma results of operations for the acquisitions completed during the fiscal years presented have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to the Company’s financial results.

3. OTHER FINANCIAL INFORMATION

The following table summarizes the Company’s inventories:


(In millions)	September 30, 2016		October 2, 2015
Raw materials and parts	$	150.0	$	121.1
Work-in-process		7.2		20.5
Finished goods		40.2		33.3

Total inventories	$	197.4	$	174.9

The following table summarizes the Company’s property, plant and equipment, net:


(In millions)	September 30, 2016			October 2, 2015
Land and land improvements	$	2.9		$	2.9
Buildings and leasehold improvements		103.3			53.9
Machinery and equipment		121.0			104.2
Construction in progress		18.3			55.0

		245.5			216.0
Accumulated depreciation and amortization		(136.6	)		(119.8	)

Property, plant, and equipment, net	$	108.9		$	96.2

Additions to property, plant, and equipment, net include $3.1 million, $9.0 million, and $1.4 million in accounts payable and accrued liabilities for fiscal years 2016, 2015 and 2014, respectively.

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The following table summarizes the Company’s long-term available-for-sale securities as of October 2, 2015:


(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Corporate debt securities	$	8.6	$	0.1	$	(0.3	)	$	8.4
Non-U.S. government security		0.7		—		—			0.7

Total available-for-sale-securities	$	9.3	$	0.1	$	(0.3	)	$	9.1

The Company had no available-for-sale securities as of September 30, 2016. At October 2, 2015, available-for-sale securities were recorded in other assets on the Combined Balance Sheets.

The following table summarizes the Company’s other assets:


(In millions)	September 30, 2016		October 2, 2015
Intangible assets	$	20.7	$	24.0
Available-for-sale securities		—		9.1
Other		3.4		3.4

Total other assets	$	24.1	$	36.5

The following table summarizes the Company’s accrued liabilities:


(In millions)	September 30, 2016		October 2, 2015
Accrued compensation and benefits	$	13.6	$	10.6
Product warranty		6.9		6.1
Income taxes payable		0.2		1.2
Other		3.2		1.7

Total accrued liabilities	$	23.9	$	19.6

The following table summarizes the Company’s other long-term liabilities:


(In millions)	September 30, 2016		October 2, 2015
Long-term income tax payable	$	4.9	$	5.0
Deferred tax liabilities		3.0		3.8
Other		0.4		0.6

Total other long-term liabilities	$	8.3	$	9.4

The following table summarizes the Company’s other income (expense), net:


	Fiscal Years
(In millions)	2016			2015		2014
Income (loss) from equity method investments	$	(1.6	)	$	0.3	$	(0.8	)
Other		(0.9	)		0.5		(0.4	)

Total other income (expense), net	$	(2.5	)	$	0.8	$	(1.2	)

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4. FAIR VALUE

Assets/Liabilities Measured at Fair Value on a Recurring Basis

In the tables below, the Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.


(In millions)	Fair Value Measurement Using
Type of Instruments	Significant Other Observable Inputs (Level 2)
Assets at October 2, 2015:
Available-for-sale securities:
Corporate debt securities	$	8.4
Non-U.S. government security		0.7

Total assets measured at fair value	$	9.1

As of September 30, 2016, the Company did not have any assets or liabilities measured at fair value on a recurring basis. As of October 2, 2015, the Company’s available-for-sale securities were included in other assets on the Combined Balance Sheets.

The fair value of the Company’s Level 2 corporate debt securities and non-U.S. government security are priced using quoted market prices for similar instruments or non-binding market prices that are corroborated by observable market data.

The fair values of certain of the Company’s financial instruments, including bank deposits included in cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts due to their short maturities.

There were no transfers of assets or liabilities between fair value measurement levels during fiscal year 2015. Transfers between fair value measurement levels are recognized at the end of the reporting period.

5. GOODWILL AND INTANGIBLE ASSETS

The following table reflects the activity of goodwill by reportable operating segment:


(In millions)	Medical		Industrial		Total
Balance at September 26, 2014	$	17.0	$	19.0	$	36.0
Business combinations		38.7		—		38.7

Balance at October 2, 2015	$	55.7	$	19.0	$	74.7

In the fourth quarter of fiscal year 2016, the Company realigned its segments and goodwill was re-allocated to the Medical and Industrial reporting units based on their relative fair values. There were no impairment charges recognized as a result of the change in reporting units and no additional activity in the goodwill balance between October 2, 2015 and September 30, 2016.

The addition to goodwill in fiscal year 2015 was based on the purchase price allocations of the acquisitions completed during that year.

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The following table reflects the gross carrying amount and accumulated amortization of the Company’s finite-lived intangible assets included in other assets in the Combined Balance Sheets:


(In millions)	September 30, 2016			October 2, 2015
Acquired existing technology	$	19.5		$	18.4
Patents, licenses and other		9.8			9.3
Customer contracts and supplier relationship		9.4			8.8
Accumulated amortization		(18.0	)		(12.5	)

Net carrying amount	$	20.7		$	24.0

Amortization expense for intangible assets was $5.5 million, $2.7 million, and $1.4 million for fiscal years 2016, 2015 and 2014, respectively.

As of September 30, 2016, the estimated future amortization expense of intangible assets with finite lives is as follows:


(In millions)
Fiscal years:
2017	$	5.1
2018		4.4
2019		4.0
2020		3.6
2021		2.6
Thereafter		1.0

Total	$	20.7

6. RELATED PARTY TRANSACTIONS

Intercompany Transactions

During fiscal years 2016, 2015 and 2014, the Company recorded sales to Varian of $22.5 million, $21.1 million, and $25.0 million, respectively.

During fiscal years 2016, 2015 and 2014, the Company recorded purchases of products from Varian of $0.9 million, $2.8 million, and $3.1 million, respectively.

Allocated Costs

The combined financial statements include allocations of corporate expenses from Varian to the Company. These allocated expenses include costs of information technology, human resources, accounting, legal, facilities, insurance, treasury and other corporate and infrastructure services. In addition, allocated costs include research and development expenses from Varian’s scientific research facility. These costs have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro-rata basis of revenue, headcount or other systematic measures that reflect utilization of services provided to or benefits received by the Company. In addition, interest expense relating to Varian’s corporate borrowings and interest income have been allocated based on total assets of the Company as a percentage of total assets of Varian. The Company considers the expense allocation methodology and results to be reasonable for all periods presented.

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Allocated costs included in the accompanying Combined Statements of Earnings are as follows:


	Fiscal Years
(In millions)	2016		2015		2014
Selling, general and administrative	$	37.7	$	38.0	$	32.2
Research and development		1.2		1.4		1.5

In addition, allocated interest expense, net of interest income was $1.6 million, $0.7 million, and $0.6 million for fiscal years 2016, 2015 and 2014, respectively.

Net Parent Investment

Parent company investment in the Combined Balance Sheets and Statements of Equity represents Varian’s historical investment in the Company, the net effect of transactions with and allocations from Varian and the Company’s accumulated earnings.

Net transfers from (to) parent and share-based compensation expense in the Combined Statements of Cash Flows represents net transfers from (to) parent per the Combined Statements of Equity.

Equity Method Investment

The Company has a 40% ownership interest in dpiX Holding, a two-member consortium that has a 100% ownership interest in dpiX LLC (“dpiX”), a supplier of amorphous silicon based thin film transistor arrays (“flat panels”) for the imaging components’ digital image detectors. In accordance with the dpiX Holding agreement, net profits or losses are allocated to the members, in accordance with their ownership interests.

The equity investment in dpiX Holding is accounted for under the equity method of accounting. When the Company recognizes its share of net profits or losses of dpiX Holding, profits or losses in inventory purchased from dpiX are eliminated until realized by the Company. The Company recorded a loss on the equity investment in dpiX Holding of $1.5 million in fiscal year 2016, income on the equity investment in dpiX Holding of $0.1 million in fiscal year 2015, and a loss on the equity investment in dpiX Holding of $0.8 million in fiscal year 2014. Income and loss on the equity investment in dpiX Holding is included in other income (expense), net in the Combined Statements of Earnings. The carrying value of the equity investment in dpiX Holding, which was included in investments in privately held companies on the Combined Balance Sheets, was $47.2 million at September 30, 2016 and $47.3 million at October 2, 2015.

During fiscal years 2016, 2015, and 2014, the Company purchased glass transistor arrays from dpiX totaling $23.4 million, $21.3 million, and $20.9 million, respectively. These purchases of glass transistor arrays are included as a component of inventories on the Combined Balance Sheets or cost of revenues—product in the Combined Statements of Earnings for these fiscal years.

As of September 30, 2016 and October 2, 2015, the Company had accounts payable to dpiX totaling $4.2 million and $3.3 million, respectively.

In October 2013, the Company entered into an amended agreement with dpiX and other parties that, among other things, provides the Company with the right to 50% of dpiX’s total manufacturing capacity produced after January 1, 2014. The amended agreement requires the Company to pay for 50% of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year. As of September 30, 2016, the Company estimated it has fixed cost commitments of $4.5 million related to this amended agreement through December 31, 2016. The fixed cost commitment for future periods will be determined and approved by the dpiX board of directors at the beginning of each calendar year. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

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The Company has determined that dpiX is a variable interest entity because at-risk equity holders, as a group, lack the characteristics of a controlling financial interest. Majority votes are required to direct the manufacturing activities, legal operations and other activities that most significantly affect dpiX’s economic performance. The Company does not have majority voting rights and no power to direct the activities of dpiX and therefore is not the primary beneficiary of dpiX. The Company’s exposure to loss as a result of its involvement with dpiX is limited to the carrying value of the Company’s investment and fixed cost commitments.

Summarized financial information for dpiX is as follows:


(In millions)	September 30, 2016		October 2, 2015
Current assets	$	40.1	$	38.6
Noncurrent assets		102.1		103.3
Current liabilities		17.1		16.3


	Fiscal Years
(In millions)	2016			2015			2014
Revenues	$	50.0		$	44.0		$	45.5
Gross profit		8.3			2.3			6.7
Loss from operations		(0.4	)		(5.9	)		(0.8	)
Net loss		(0.5	)		(6.1	)		(0.8	)

7. COMMITMENTS AND CONTINGENCIES

Product Warranty

The following table reflects the changes in the Company’s accrued product warranty:


	Fiscal Years
(In millions)	2016			2015
Accrued product warranty, at beginning of period	$	6.1		$	9.3
Charged to cost of revenues		13.1			9.5
Actual product warranty expenditures		(12.3	)		(12.7	)

Accrued product warranty, at end of period	$	6.9		$	6.1

Lease Commitments

At September 30, 2016, the Company was committed to minimum rentals under non-cancelable operating leases (including rent escalation clauses) for fiscal years 2017 through 2021 and thereafter, as follows: $3.1 million, $2.4 million, $1.7 million, $1.3 million, $1.1 million, and $7.6 million, respectively. Rental expenses were $2.8 million, $1.4 million, and $1.4 million for fiscal years 2016, 2015 and 2014, respectively.

Other Commitments

See Note 6, “Related Party Transactions” for additional information about the Company’s commitments to dpiX.

See Note 8, “Accumulated Other Comprehensive Loss and Noncontrolling Interests” for additional information about the Company’s commitment to the noncontrolling shareholders of MeVis Medical Solutions AG (“MeVis”).

F-24

Restructuring Charges

As part of Varian’s plan to enhance operational performance through productivity initiatives, Varian implemented a workforce reduction, which included employees in the Medical and Industrial segments, in the first quarter of fiscal year 2016. The Company incurred $2.0 million in restructuring charges during fiscal year 2016, most of which was incurred in the first quarter of 2016, in connection with the restructuring program. The restructuring program is complete and no additional charges are expected to be incurred. As of September 30, 2016, the Company did not have any restructuring liability. In fiscal year 2015, the Company incurred $2.5 million in restructuring charges in connection with a previously announced Varian enhanced retirement program and workforce reduction. There were no restructuring charges incurred in fiscal year 2014.

Restructuring charges are included in selling, general and administrative expenses in the Combined Statements of Earnings.

Contingencies

From time to time, the Company is a party to or otherwise involved in legal proceedings, claims and government inspections or investigations and other legal matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. The Company accrues amounts, to the extent they can be reasonably estimated, that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. The Company did not have any contingent liabilities as of September 30, 2016 and October 2, 2015.

Legal expenses relating to legal matters are expensed as incurred.

8. ACCUMULATED OTHER COMPREHENSIVE LOSS AND NONCONTROLLING INTERESTS

Accumulated Other Comprehensive Loss


(In millions)	Net Unrealized Loss Available- for- Sale Investments			Accumulated Other Comprehensive Loss
Balance at September 26, 2014	$	—		$	—
Other comprehensive loss before reclassifications		(0.2	)		(0.2	)
Tax benefit		0.1			0.1

Balance at October 2, 2015		(0.1	)		(0.1	)
Other comprehensive loss before reclassifications		(0.4	)		(0.4	)
Amounts reclassified out of other comprehensive earnings		0.6			0.6
Tax expense		(0.1	)		(0.1	)

Balance at September 30, 2016	$	—		$	—

Noncontrolling Interests

In April 2015, the Company completed the acquisition of 73.5% of the then outstanding shares of MeVis Medical Solutions AG (“MeVis”), a public company based in Bremen, Germany that provides image processing software and services for cancer screening. See Note 2, “Business Combinations” for additional information.

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In August 2015, the Company, through one of its German subsidiaries, entered into a domination and profit and loss transfer agreement (the “DPLTA”) with MeVis. In October 2015, the DPLTA became effective upon its registration at the local court of Bremen, Germany. Under the DPLTA, MeVis subordinates its management to the Company and undertakes to transfer all of its annual profits and losses to the Company. In return, the DPLTA grants the noncontrolling shareholders of MeVis: (1) an annual recurring net compensation of €0.95 per MeVis share starting from January 1, 2015 and (2) a put right for their MeVis shares at €19.77 per MeVis share. Upon effectiveness of the DPLTA, the noncontrolling interests in MeVis became redeemable as a result of the put right and were reclassified to temporary equity. As of September 30, 2016, the redemption value of redeemable noncontrolling interests in MeVis was $10.3 million.

During fiscal year 2016, an immaterial number of MeVis’ shares were purchased under the put right. As of September 30, 2016, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.4% of the outstanding shares.

Changes in noncontrolling interests relating to MeVis were as follows:


	Fiscal Years
	2016						2015
(In millions)	Noncontrolling Interests			Redeemable Noncontrolling Interests			Noncontrolling Interests
Balance at beginning of period	$	11.0		$	—		$	—
Net earnings attributable to noncontrolling interests		—			0.5			0.8
Acquisition of MeVis		—			—			10.2
Reclassification of noncontrolling interests in MeVis to redeemable noncontrolling interests		(10.4	)		10.4			—
Other		(0.6	)		(0.6	)		—

Balance at end of period	$	—		$	10.3		$	11.0

9. EMPLOYEE STOCK PLANS

Employee Stock Plans

Until consummation of the distribution, the Company’s employees will continue to participate in Varian stock-based compensation plans, which provide for the grants of stock options, restricted stock units and performance shares among other types of awards. All current grants of stock options, restricted stock units and performance units are made under Varian’s amended 2005 Omnibus 2005 Plan (the “Third Amended 2005 Plan”). The Third Amended 2005 Plan provides for the grant of equity incentive awards, including stock options, restricted stock, performance units, restricted stock units and performance shares to key employees. The expense associated with the Company’s employees who participate in the Plans is included in the accompanying Combined Statements of Earnings.

Stock options granted under the Third Amended 2005 Plan have an exercise price equal to the closing market price of a share of Varian’s common stock on the grant date. Stock options granted under the Third Amended 2005 Plan generally are exercisable in the following manner: the first one-third one year from the date of grant, with the remainder vesting monthly during the following two-year period. For grants of non-qualified stock options made on or after November 17, 2005 under the Third Amended 2005 Plan to employees who retire from Varian within one year of the grant date, the number of shares subject to the stock option shall be adjusted proportionally by the time during such one-year period that the employee remained an employee of Varian (based upon a 365 day year). The revised number of shares subject to the stock option would continue to vest in accordance with the original vesting schedule, and the remaining shares would be cancelled as of the date of

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retirement. Under the Third Amended 2005 Plan, stock options granted on or prior to February 16, 2007 generally have a term of ten years and stock options granted after February 16, 2007 generally have a term of seven years. The Third Amended 2005 Plan prohibits the repricing of stock options and stock appreciation rights without the approval of Varian’s stockholders.

Restricted stock unit awards generally vest over a period of one to three years from the date of grant and any unvested awards are generally forfeited at the time of termination. However, restricted stock units granted that are unvested at death become fully vested and unvested restricted stock units will generally continue to vest in accordance with the original vesting schedule if a retirement eligible employee retires one year or more from grant date. If a retirement eligible employee retires on or after January 1 of the calendar year immediately following the calendar year in which the grant date occurred, the number of restricted stock units shall be adjusted proportionally, subject to local regulations, by the time during such one year period that the employee remained an employee of Varian (based upon a 365 day year). The revised number of restricted stock units would vest in accordance with the original vesting schedule and the remaining restricted stock units would be cancelled as of the date of retirement.

In fiscal years 2016, 2015 and 2014, Varian granted performance units to certain employees under the Third Amended 2005 Plan. The number of shares of Varian’s common stock ultimately issued under the performance units at vesting depend on the Varian’s business performance and total shareholder return during the performance period, against specified performance targets, both of which are set by the Compensation and Management Development Committee of the Varian Board of Directors at the beginning of the period. The performance units vest at the end of a three-year service period. Performance units granted prior to fiscal year 2015 have one three-year performance period for both Varian’s performance and total shareholder return, and performance units granted in fiscal year 2015 have a one-year Varian performance period and a three-year total shareholder return performance period. Performance unit grants made in fiscal year 2016 have three separate one-year Company performance periods and a three-year total shareholder return. Subject to certain exceptions, any unvested performance unit awards are forfeited at the time of termination. Also, similar to the adjustments discussed above for restricted stock unit awards, the number of performance units that ultimately vest is adjusted in the case of retirement.

Employee Stock Valuation Assumptions

The fair value of options granted and the option component of the shares purchased under Varian’s Employee Stock Purchase Plan (which is described further below) shares was estimated at the date of grant using the Black-Scholes model with the following weighted average assumptions:


	Employee Stock Option Plans									Employee Stock Purchase Plans
	Fiscal Years									Fiscal Years
	2016			2015			2014			2016			2015			2014
Expected term (in years)		4.13			4.13			4.33			0.50			0.50			0.50
Risk-free interest rate		1.1	%		1.3	%		1.3	%		0.3	%		0.1	%		0.1	%
Expected volatility		20.0	%		22.1	%		24.8	%		17.6	%		12.7	%		12.8	%
Expected dividend		—	%		—	%		—	%		—	%		—	%		—	%
Weighted average fair value at grant date	$	13.67		$	18.53		$	19.01		$	16.09		$	15.87		$	14.20

The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to post-vesting exercise and post-vesting cancellations of stock options by the Company employees. Varian used a combination of historical and implied volatility of its traded options, or blended volatility, in deriving the expected volatility assumption. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of Varian’s stock options. The dividend yield assumption is based on Varian’s history and expectation of no dividend payouts.

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Share-Based Compensation Expense

As share-based compensation expense recognized in the Combined Statements of Earnings is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures based on historical experience. Forfeitures are estimated at the time of grant and revised, in subsequent periods, if actual forfeitures differ from those estimates.

Share-based compensation expense includes expenses related to the Company’s direct employees. Varian also charges the Company for the allocated share-based compensation costs of certain employees of Varian who provide selling, general and administrative services on the Company’s behalf. Information included in this note is strictly limited to employees wholly dedicated to Varex, unless otherwise noted. See “Note 6–Related Party Transactions” for more information.

The table below summarizes the effect of recording share-based compensation expense:


	Fiscal Years
(In millions)	2016		2015		2014
Cost of revenues	$	1.0	$	1.3	$	1.1
Research and development		1.4		1.4		1.6
Selling, general and administrative ⁽¹⁾		7.1		6.9		5.3

Total share-based compensation expense	$	9.5	$	9.6	$	8.0

(1)	Includes allocated share-based compensation of $3.4 million, $3.2 million, and $2.8 million for fiscal 2016, 2015 and 2014, respectively, charged by Varian to the Company for certain Varian employees who provide general and administrative services on the Company’s behalf.

Stock Option Activity

The following table summarizes the activity for stock options under Varian’s employee incentive plans for the Company’s employees:


	Options Outstanding
(In millions, except per share amounts)	Number of Shares			Weighted Average Exercise Price
Balance at October 2, 2015		0.3		$	73.35
Granted		0.1			75.86
Canceled, expired or forfeited		—			75.86
Exercised		(0.1	)		55.52

Balance at September 30, 2016		0.3		$	78.69

The total pre-tax intrinsic value of stock options exercised was $2.4 million, $5.3 million, and $4.7 million in fiscal years 2016, 2015 and 2014, respectively. The total fair value of stock options vested was $1.2 million, $1.4 million and $1.2 million in fiscal years 2016, 2015 and 2014, respectively.

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The following table summarizes information related to stock option activity under Varian’s employee incentive plans for the Company’s stock options outstanding and exercisable at September 30, 2016:


	Options Outstanding								Options Exercisable
Range of Exercise Prices	Number of Shares		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Aggregate Intrinsic Value ⁽¹⁾		Number of Shares		Weighted Average Remaining Contractual Term (in years)		Weighted Average Exercise Price		Aggregate Intrinsic Value ⁽¹⁾
(In millions, except years and per-share amounts)
$50.66 – $81.90		0.2		4.6	$	69.80	$	4.1		0.1		2.1	$	61.30	$	2.2
$83.70 – $92.65		0.1		4.8		87.23		1.8		0.1		4.7		86.23		1.4

Total		0.3		4.7	$	78.69	$	5.9		0.2		3.8	$	77.34	$	3.6

(1)

The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Varian common stock of $99.53 as of September 30, 2016, the last trading date of fiscal year 2016, and which represents the amount that would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date.

As of September 30, 2016, the total unrecognized share-based compensation expense related to stock options was $1.3 million. This unrecognized share-based compensation expense is expected to be recognized over a weighted average period of 1.7 years.

Restricted Stock Units and Performance Stock Units Activity

The following table summarizes the activity for restricted stock units and performance units under Varian’s employee incentive plans for the Company’s employees:


(In millions, except per share amounts)	Number of Shares			Weighted Average Grant-Date Fair Value
Balance at October 2, 2015		0.1		$	84.84
Granted		0.1			78.03
Vested		(0.1	)		80.67
Canceled or expired		—			83.86

Balance at September 30, 2016		0.1		$	83.53

The aggregate grant-date fair value of restricted stock units and performance units was $4.9 million, $5.2 million, and $6.0 million in fiscal years 2016, 2015 and 2014, respectively. The aggregate intrinsic value of restricted stock units and performance units vested under equity incentive plans was $4.9 million, $6.4 million, and $3.9 million in fiscal years 2016, 2015 and 2014, respectively.

As of September 30, 2016, the total unrecognized share-based compensation expense related to restricted stock units and performance units was $5.4 million. This unrecognized share-based compensation expense is expected to be recognized over a weighted average period of 1.8 years. Varian withheld restricted stock units and performance units with a fair value of $2.1 million for the Company’s employees’ minimum withholding taxes at vesting of such awards in fiscal year 2016.

Employee Stock Purchase Plan

Prior to the distribution, eligible employees may participate in the Varian employee stock purchase plan. The stock purchase plan provides eligible employees with an opportunity to purchase shares of Varian common

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stock at 85% of the lower of its fair market value at the start and end of a six-month purchase period. The Company’s employees purchased shares for $2.6 million, $2.4 million, and $2.3 million in fiscal years 2016, 2015 and 2014, respectively, under Varian’s employee stock purchase plan.

10. TAXES ON EARNINGS

Taxes on earnings, as presented, are calculated on a separate return basis. Under this method, the Company computes taxes on earnings as if it were a separate taxpayer filing its own income tax returns. The Company’s operations have historically been included in Varian’s U.S. federal and state income tax returns and non-U.S. jurisdiction tax returns. Income tax expense is based on reported income or loss before income taxes. Deferred income taxes reflect the effect of temporary differences between asset and liability amounts that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. These deferred taxes are measured by applying currently enacted tax laws. Valuation allowances are recognized to reduce deferred tax assets to the amount that is more likely than not to be realized.

Taxes on earnings were as follows:


	Fiscal Years
(In millions)	2016		2015			2014
Current provision:
Federal	$	26.4	$	40.2		$	54.9
State and local		3.9		4.9			8.3
Foreign		2.0		2.5			2.4

Total current		32.3		47.6			65.6

Deferred provision (benefit):
Federal		3.6		(1.4	)		(1.3	)
State and local		—		(0.1	)		(0.1	)
Foreign		0.1		0.7			(0.1	)

Total deferred		3.7		(0.8	)		(1.5	)

Taxes on earnings	$	36.0	$	46.8		$	64.1

Earnings before taxes are generated from the following geographic areas:


	Fiscal Years
(In millions)	2016			2015		2014
United States	$	105.6		$	122.9	$	168.7
Foreign		(0.6	)		4.7		5.5

Earnings before taxes	$	105.0		$	127.6	$	174.2

The effective tax rate differs from the U.S. federal statutory tax rate as a result of the following:


	Fiscal Years
	2016			2015			2014
Federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal tax benefit		2.4	%		2.5	%		3.0	%
Domestic production activities deduction		(2.2	)%		(2.3	)%		(1.9	)%
Research and development credit		(2.2	)%		(0.6	)%		(0.1	)%
Other		1.3	%		2.1	%		0.8	%

Effective tax rate		34.3	%		36.7	%		36.8	%

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During fiscal years 2016, 2015 and 2014, the Company’s effective tax rate varied from the U.S. federal statutory rate primarily because the Company’s domestic earnings are also subject to state income taxes. This increase is partially offset by the U.S. domestic production activities deduction and federal research and development credit. Due to the timing of lapses and retroactive reinstatements of the federal research and development credit, the Company received seven quarters of benefit in FY16, four quarters of benefit in fiscal year 2015, and one quarter of benefit in fiscal year 2014.

Significant components of deferred tax assets and liabilities are as follows:


(In millions)	September 30, 2016			October 2, 2015
Deferred Tax Assets:
Inventory adjustments	$	13.3		$	10.9
Share-based compensation		2.8			3.7
Product warranty		2.3			2.0
Deferred compensation		1.2			1.2
Net operating loss carryforwards		7.7			5.9
Other		6.0			5.5

		33.3			29.2
Valuation allowance		(6.4	)		(4.7	)

Total deferred tax assets		26.9			24.5

Deferred Tax Liabilities:
Acquired intangibles		(6.5	)		(7.0	)
Property, plant and equipment		(10.1	)		(5.2	)
Investments in privately held companies		(6.7	)		(5.6	)
Other		(1.1	)		—

Total deferred tax liabilities		(24.4	)		(17.8	)

Net deferred tax assets	$	2.5		$	6.7

Reported As:
Deferred tax assets	$	5.5		$	10.5
Deferred tax liabilities (included in other long-term liabilities)		(3.0	)		(3.8	)

Net deferred tax assets	$	2.5		$	6.7

The Company has not provided for U.S. federal income and foreign withholding taxes on $5.5 million of cumulative undistributed earnings of non-U.S. subsidiaries as of September 30, 2016. Such earnings are intended to be reinvested in the non-U.S. subsidiaries for an indefinite period of time. If such earnings were not considered to be reinvested indefinitely, an additional deferred tax liability of approximately $0.6 million would be provided.

The Company has federal net operating loss carryforwards of approximately $0.1 million expiring in 2027. The Company has state net operating loss carryforwards of $0.1 million expiring in 2027. The Company has foreign net operating loss carryforwards of $13.0 million with an indefinite life. Under local loss utilization rules, none of this amount is available to the Company. The Company has other foreign net operating loss carryforwards of $12.0 million expiring between 2018 and 2021, and $5.2 million expiring between 2022 and 2025.

The valuation allowance relates primarily to net operating losses in certain foreign jurisdictions where, based on the weight of available evidence, it is more likely than not that the tax benefit of the net operating losses will not be realized. The valuation allowance increased by $1.7 million during fiscal year 2016, increased by $3.2 million during fiscal year 2015, and increased by $0.7 million in fiscal year 2014.

F-31

In fiscal year 2016, the Company’s separate, taxpaying legal entities received a federal refund of approximately $0.6 million and paid foreign taxes of approximately $1.0 million. In fiscal year 2015, the Company’s separate, taxpaying legal entities paid foreign taxes of approximately $0.7 million. For other jurisdictions and periods, the Company’s operations have been included in Varian’s U.S. federal and state income tax returns and non-U.S. jurisdiction tax returns.

Changes in the Company’s unrecognized tax benefits were as follows:


	Fiscal Years
(In millions)	2016			2015			2014
Unrecognized tax benefits balance–beginning of fiscal year	$	4.5		$	4.5		$	4.8
Additions based on tax positions related to a prior year		—			0.1			—
Additions based on tax positions related to the current year		1.0			1.0			0.8
Reductions resulting from the expiration of the applicable statute of limitations		(1.1	)		(1.1	)		(1.1	)

Unrecognized tax benefits balance—end of fiscal year	$	4.4		$	4.5		$	4.5

As of September 30, 2016, the total amount of gross unrecognized tax benefits was $4.4 million. Of this amount, $2.6 million would affect the effective tax rate if recognized. The difference would be offset by changes to deferred tax assets and liabilities.

The Company includes interest and penalties related to income taxes within taxes on earnings on the Combined Statements of Earnings. As of September 30, 2016, the Company had accrued $0.4 million for the payment of interest and penalties related to unrecognized tax benefits. During fiscal year 2016, a net benefit of an immaterial amount related to interest and penalties was included in taxes on earnings. As of October 2, 2015, the Company had accrued $0.5 million for the payment of interest and penalties related to unrecognized tax benefits. During fiscal year 2015, a net benefit of an immaterial amount related to interest and penalties was included in taxes on earnings.

The Company’s significant operations have historically been included in Varian’s U.S. federal and state income tax returns and non-U.S. jurisdiction tax returns. The Varian group’s U.S. federal tax returns are generally no longer subject to tax examinations for years prior to 2013. For U.S. states and other foreign tax returns, the Company is generally no longer subject to tax examinations for years prior to 2007.

11. SEGMENT INFORMATION

As the Company is transitioning to a stand-alone company, the Company’s Chief Executive Officer, its Chief Operating Decision maker (“CODM”), re-evaluated the product groupings and how he views and measures the business performance and therefore, subsequent to the filing of the preliminary registration statement on Form 10 on August 11, 2016, the Company reorganized its two reportable operating segments into Medical and Industrial. The realigned segments better align the Company’s products and service offerings with customer use in medical and industrial markets and are consistent with how the CODM evaluates the business for the allocation of resources. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on revenues and gross margin. The new operating and reportable segment structure will provide better visibility and clarity into the financial performance of the Company’s products, and an alignment between business strategies and operating results.

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Description of Segments

The Medical segment designs, manufactures, sells and services X-ray imaging components for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, special procedures, computed tomography, radiation therapy and computer-aided detection. The Company provides a broad range of X-ray imaging components for Medical customers including X-ray tubes, flat panel digital image detectors, high voltage connectors, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers and buckys. The Company’s X-ray imaging components are primarily sold to imaging system OEM customers that incorporate them into their medical diagnostic, radiation therapy, dental, veterinary and industrial imaging systems. The Company also sells its X-ray imaging components to independent service companies, distributors and directly to end-users for replacement purposes.

The Industrial segment designs, manufactures, sells and services security and inspection products, which include Linatron X-ray accelerators, X-ray tubes, flat panel digital image detectors, high voltage connectors, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells its Industrial products to OEM customers that incorporate its products into their inspection systems.

Accordingly, the following information is provided for purposes of achieving an understanding of operations, but may not be indicative of the financial results of the reported segments were they independent organizations. In addition, comparisons of the Company’s operations to similar operations of other companies may not be meaningful.

Segment Data

The following table summarizes the Company’s revenues from its reportable segments:


	Fiscal Years
(In millions)	2016		2015		2014
Medical	$	505.8	$	534.3	$	556.2
Industrial		114.3		98.0		129.0

Total Company	$	620.1	$	632.3	$	685.2

The following table summarizes the Company’s gross margin from its reportable segments:


	Fiscal Years
(In millions)	2016		2015		2014
Medical	$	195.8	$	207.1	$	223.7
Industrial		52.6		43.5		54.9

Total Company	$	248.4	$	250.6	$	278.6

The following table summarizes the Company’s depreciation and amortization from its reportable segments:


	Fiscal Years
(In millions)	2016		2015		2014
Medical	$	11.9	$	9.7	$	8.2
Industrial		3.4		2.6		1.9

Total Company	$	15.3	$	12.3	$	10.1

F-33

The following table summarizes the Company’s total assets by its reportable segments:


	Fiscal Years
(In millions)	2016		2015		2014
Medical	$	481.4	$	454.2	$	319.0
Industrial		134.7		118.5		103.9

Total reportable segments	$	616.1	$	572.7	$	422.9
Unallocated corporate assets		6.3		10.9		10.2

Total Company	$	622.4	$	583.6	$	433.1

Major Customers

The following table represents customers who accounted for 10% or more of the Company’s revenues:


	Fiscal Years
	2016			2015			2014
Toshiba		23	%		26	%		26	%
Carestream		6	%		12	%		13	%

Both customers are customers in the Medical segment. No customer in the Industrial segment accounted for more than 10% of the Company’s total revenues.

Geographic Information


	Revenues						Property, plant and equipment, net
	Fiscal Years						Fiscal Years
(In millions)	2016		2015		2014		2016		2015		2014
United States	$	214.5	$	238.7	$	245.8	$	98.1	$	87.9	$	61.8
International		405.6		393.6		439.4		10.8		8.3		1.2

Total Company	$	620.1	$	632.3	$	685.2	$	108.9	$	96.2	$	63.0

The Company operates various manufacturing and marketing operations outside the United States. Allocation between domestic and foreign revenues is based on known final destination of products sold. Revenues from Japan represented approximately 25%, 26%, and 25% of the Company’s total revenues in fiscal years 2016, 2015 and 2014, respectively.

12. SUBSEQUENT EVENTS

The combined financial statements of the Company are derived from the financial statements of Varian, which issued its annual financial statements for the year ended September 30, 2016 on November 23, 2016. Accordingly, the Company evaluated subsequent events for recognition or disclosure in the combined financial statements through the date of November 23, 2016. Additionally, the Company evaluated subsequent events that occurred through the issuance of its combined financial statements, December 7, 2016, for purposes of disclosure of unrecognized subsequent events.

F-34

VAREX IMAGING CORPORATION

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS


Fiscal Year	Description	Balance at Beginning of Period		Increases		Deductions		Balance at End of Period
		(In millions)
2016	Valuation allowance for deferred tax assets	$	4.7	$	1.7	$	—	$	6.4
2015	Valuation allowance for deferred tax assets	$	1.5	$	3.2	$	—	$	4.7
2014	Valuation allowance for deferred tax assets	$	0.8	$	0.7	$	—	$	1.5

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