Exhibit 10.1

 

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Confidential

 

June 22, 2019

 

Mr. David H. Mowry

1185 Acorn Trail

Lake Forest, Illinois 60045

Via Email: Dave_Mowry@msn.com

 

Dear Mr. Mowry:

 

It is with great pleasure that the Board of Directors of Cutera, Inc. (the
“Board”) would like to extend you an offer to join Cutera, Inc. (the “Company”
or “Cutera”). It is our belief that your industry knowledge, extensive
experience, and proven skills will favorably contribute to the future of Cutera.

 

We are offering you the position of Chief Executive Officer reporting directly
to the Board. We would like a start date of July 8, 2019.

 

Your compensation package shall include the following:

 

 

1)

Annual salary of $650,000, payable to you semi-monthly at $27,083.33 per pay
period, in accordance with the Company’s standard payroll practices, and less
applicable payroll and tax deductions. You should note that the Company may
modify job titles, salaries and benefits from time to time as it deems
necessary.

 

 

2)

Participation in Company Bonus Plans:

 

 

o

Discretionary Management Bonus Plan at a 80% of your annual salary (or
$520,000), target level. This plan is discretionary and shall be based on the
2019 Bonus Plan as approved by the Board and prorated for calendar year 2019
based on the portion of the year during which you are employed with the Company.

 

The existence and amount paid, if any, under these discretionary plans will at
all times remain subject to Cutera’s sole discretion and any payment ever made
under these discretionary plans do not guarantee any further payment.

 

 

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3)

Equity Compensation: Subject to Board approval, the Company will grant you the
following equity awards:

 

 

a)

New Employee Grant:

 

Restricted Stock Units (“RSUs”) covering a number of shares of the Company’s
common stock based on a value of $1,250,000. The actual number of shares subject
to these RSUs is expected to be determined by dividing such value by the volume
weighted average stock price of the Company’s common stock over the fifty (50),
consecutive, trading days immediately preceding (and exclusive of) the first day
of your employment with the Company (your “Start Date” and such average price,
the “Applicable Stock Price”); and

 

Performance-based Restricted Stock Units (“PSUs”) covering a number of shares of
the Company’s common stock at target performance equal to $1,250,000 divided by
the Applicable Stock Price.

 

These RSUs will be scheduled to vest as to 25% of the shares subject to the RSUs
on the one-, two-, three- and four-year anniversaries of your Start Date,
subject to your continued employment with us through the applicable vesting
date. These PSUs will be scheduled to vest generally over a 3.5-year period,
commencing from your Start Date, based on your continued service with the
Company through the applicable vesting dates as determined by the Board, and
vesting of these PSUs further will be subject to achievement of specified
performance metrics, generally contemplated to be as follows.

 

Achievement of the Company’s Annual Operating Budget for Non-GAAP Operating
Margin, as determined by the Board, and measured over the following performance
periods: (i) 15% of the target number of these PSUs will be subject to
performance achievement during the period beginning on your employment start
date and ending December 31, 2019, (ii) 25% of the target number of these PSUs
will be subject to performance achievement during the Company’s 2020 fiscal
year, (iii) 30% of the target number of these PSUs will be subject to
performance achievement during the Company’s 2021 fiscal year, and (iv) 30% of
the target number of these PSUs will be subject to performance achievement
during the Company’s 2022 fiscal year. Achievement of the applicable performance
metrics for the performance period will result in a percentage of the target
number of these PSUs allocated to that performance period vesting, subject to
your continued service through the date that the Board certifies the applicable
performance achievement, as follows:

 

Achievement of Performance Metric at:

Percentage of Target Number of New Employee Grant PSUs allocated to Performance
Period that Become Eligible to Vest

Less than 91%

0%

Equal to or greater than 91% but less than 100%

85%

Equal to or greater than 100% but less than 106%

100%

Equal to or greater than 106% but less than 126%

125%

Equal to or greater than 126%

150%

 

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In the event that a Change of Control (as defined in your Change of Control and
Severance Agreement, as discussed further below) occurs while these PSUs still
remain outstanding and subject to achievement of the applicable performance
metrics, then as of immediately prior to the Change of Control, the portion of
these PSUs allocated to the performance period in which the Change of Control
occurs will be deemed to have met the applicable performance metrics at the
target level and such portion will be scheduled to vest on the last day of such
performance period, subject to your continued employment through that date. In
such event, for purposes of your Change of Control and Severance Agreement, such
portion of the award will be considered to be time-based vesting. Any other
remaining portion of these PSUs for which the performance period has not yet
commenced prior to the Change of Control will terminate automatically as of
immediately prior to the Change of Control.

 

 

b)

Annual Equity Grants for 2020 (to be granted in 2020 generally at the same time
as annual equity grants are granted to senior executives, and subject to
employment with the Company through such grant date):

 

 

i)

RSUs: RSUs covering a number of shares of the Company’s common stock
(equivalency of approximately $400,000, divided by the volume weighted average
stock price of the Company’s common stock over the fifty (50), consecutive,
trading days immediately preceding (and exclusive of) the grant date of the
RSUs). These RSUs will be scheduled to vest generally over a three-year period,
commencing the RSUs’ date of grant, based on your continued service with the
Company through the applicable vesting dates as determined by the Board.

 

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ii)

Performance Stock Units (“PSUs”): PSUs covering a number of shares of the
Company’s common stock at target performance (equivalency of approximately
$400,000, divided by the volume weighted average stock price of the Company’s
common stock over the fifty (50), consecutive, trading days immediately
preceding (and exclusive of) the grant date of the PSUs). Vesting of these PSUs
shall be contingent on the achievement of certain Company performance goals to
be established by the Board for the Company’s 2020 fiscal year and continued
service through applicable dates determined by the Board. In the event that a
Change of Control (as defined in your Change of Control and Severance Agreement,
as discussed further below) occurs while these PSUs still remain outstanding and
subject to achievement of the applicable performance metrics, then as of
immediately prior to the Change of Control, the portion of these PSUs allocated
to the performance period in which the Change of Control occurs will be deemed
to have met the applicable performance metrics at the target level and such
portion will be scheduled to vest on the last day of such performance period,
subject to your continued employment through that date. In such event, for
purposes of your Change of Control and Severance Agreement, such portion of the
award will be considered to be time-based vesting. Any other remaining portion
of these PSUs for which the performance period has not yet commenced prior to
the Change of Control will terminate automatically as of immediately prior to
the Change of Control.

 

Any equity awards described above that are granted to you shall be subject to
the terms and conditions of the Company’s 2019 Equity Incentive Plan and
applicable standard form of award agreement thereunder, including vesting
requirements. No right to any stock is earned or accrued until such time that
vesting occurs, nor does the grant confer any right to continue vesting or
employment.

 

 

4)

Change of Control and Severance Agreement (the “Severance Agreement”):

 

Attached is a Severance Agreement that sets forth the detailed benefits that you
may become entitled to receive in the event of a termination of your employment
under certain circumstances. The following is a brief summary of the key
severance benefits:

 

 

☐

If you are terminated by the Company without “Cause” (and other than due to your
death or disability) not in connection with a Change of Control (“COC”) (as
defined in the Severance Agreement), then you would be entitled to receive a
lump sum cash payment equal to twelve (12) months of your then-current annual
base salary at the time of termination, 100% of the actual bonus paid to you in
the prior fiscal year of the Company, and an amount equal to the product of (x)
12 months multiplied by (y) the amount of the premiums payable for your first
month of continued health coverage premiums under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”) (without regard to
whether you elect continued coverage under COBRA).

 

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☐

If you are terminated by the Company without Cause (and other than due to your
death or disability) or if you resign for “Good Reason,” and the termination
occurs during the period beginning 3 months prior to the date of the COC and
ending 12 months after the date of the COC (commonly referred to as “double
trigger”), then you will receive (a) a lump sum cash payment equal to twelve
(12) months of your then-current annual base salary at the time of termination,
100% of actual bonus paid to you in the prior fiscal year of the Company, and an
amount equal to the product of (x) 12 months multiplied by (y) the amount of the
premiums payable for your first month of continued health coverage premiums
under COBRA (without regard to whether you elect continued coverage under
COBRA), and (b) full vesting acceleration with respect to your then-outstanding,
time-based vesting equity awards.

 

 

Please note that your receipt of any and all severance or Change of Control
benefits or payments will be subject to your signing and not revoking a
separation agreement and release of claims in a form reasonably satisfactory to
the Company (the “Release”) and provided that such Release becomes effective and
irrevocable no later than sixty (60) days following the termination date (such
deadline, the “Release Deadline”).

 

 

5)

Relocation Allowance: We are also offering you reimbursement of relocation
expenses for your move from Lake Forest, Illinois to Brisbane, California or
within the San Francisco Bay Area, up to a maximum reimbursement of $150,000, if
you relocate within eighteen (18) months of your start date. We will only
reimburse you for these expenditures once you submit valid receipts to the
Company and only if you are an employee of the Company on the date of
reimbursement or payment by the Company. Relocation expenses that are taxable
must be substantiated in writing (by valid receipts or any other reasonable
method of invoicing, showing proof of payment for an eligible relocation cost)
within thirty (30) days any such relocation expense is incurred. Any such
relocation expense will be reimbursed to you via check or electronic funds
transfer by the thirtieth (30th) day following the date of receipt by the
Company of your written substantiation.

 

Sign-On Bonus: We are also offering you a one-time sign-on bonus of $100,000,
less applicable withholdings, which will be paid to you within thirty (30) days
of your Start Date (the “Sign-On Bonus”). If 1) you have not relocated to
Brisbane, California or within the San Francisco Bay Area within eighteen (18)
months of your start date, or 2) you terminate your employment with the Company
within eighteen (18) months of your Start Date, then you will be required to
repay to the Company the gross amount of the Sign-On Bonus no later than thirty
(30) days following the date of termination of your employment with the Company.
Employment Eligibility Verification: For purposes of federal immigration law,
you will be required to provide to the Company documentary evidence of your
identity and eligibility for employment in the United States. Such documentation
must be provided to us within three (3) business days of your date of hire, or
our employment relationship with you may be terminated.

 

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Benefits: The Company provides competitive benefits including medical, dental,
vision, EAP, flexible spending, 401(k) retirement savings employer matching,
discounted Employee Stock Purchase Plan, and life insurance.

 

Paid Time Off (PTO): You will be entitled to four (4) weeks of PTO per year (PTO
hours are accrued per pay period) capped at six (6) weeks, in accordance with
the Company’s PTO policy.

 

At Will Employment: You understand and acknowledge that your employment with the
Company is for an unspecified duration and constitutes "at-will" employment.
This means that the Company or you may terminate your employment relationship
with the Company at any time, with or without cause and with or without notice.
The at-will nature of this employment relationship cannot be modified except
expressly in a signed writing by the Company’s president.

 

Proprietary Information Agreement: As a condition of your employment, you must
sign the Company’s standard Employee Proprietary Information Agreement. This
offer letter, and the Employee Proprietary Information Agreement, constitute the
entire agreement between the Company and you relating to your employment with
the Company, and supersede all prior and contemporaneous discussions and
understandings.

 

Conflicting Obligations: We also ask that, if you have not already done so, you
disclose to the Company any and all agreements relating to your prior employment
that may affect your eligibility to be employed by the Company or limit the
manner in which you may be employed. It is the Company’s understanding that any
such agreements will not prevent you from performing the duties of your position
and you represent that such is the case. Moreover, you agree that, during the
term of your employment with the Company, you will not engage in any other
employment, occupation, consulting or other business activity directly related
to the business in which the Company is now involved or becomes involved during
the term of your employment, nor will you engage in any other activities that
conflict with your obligations to the Company. Similarly, you agree not to bring
any third party confidential information to the Company, including that of your
former employer, and that in performing your duties for the Company you will not
in any way utilize any such information. As discussed with you, the Company
acknowledges that you will remain a board member of Alphatec Holdings Inc., only
until, at the Cutera Board’s sole discretion, you are asked by Cutera's Board to
resign, to the extent permissible under applicable law. The Board agrees to
reassess such a decision within twenty-four (24) months.

 

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New Hire Orientation: Your new hire orientation will occur at 10:00 am on your
start date. Please complete the forms enclosed in your new hire packet and bring
the packet with you to this orientation. In addition, please bring applicable
original documents as listed on the “Employment Eligibility Verification” form.

 

Background Check: The Company reserves the right to conduct background
investigations and/or reference checks on all of its potential employees. Your
job offer, therefore, is contingent upon a clearance of such a background
investigation and/or reference check, if any.

 

This offer will remain open until 5:00 p.m. PST on June 24, 2019, with final
approval made through Board resolution on or about July 1, 2019. We believe that
your enthusiasm and past experience will be an asset to our Company and that you
will have a positive impact on the organization. Please acknowledge your
acceptance of this offer by signing below and emailing it to me at
Greg@gregoryabarrett.com by the stated deadline.

 

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We are looking forward to your joining the Cutera team!

 

Sincerely,

 

/s/ Greg Barrett 6/22/19  

 

 

Greg Barrett

For the Cutera Board of Directors

 

 

 

Offer Accepted By:

 

 

 

David Mowry   June 22, 2019   David H. Mowry    Date          

 

 

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